<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997
REGISTRATION NO. 333-31363
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ANCHOR GLASS CONTAINER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3220 59-3417812
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
CONSUMERS U.S., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6719 23-2874087
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
ONE ANCHOR PLAZA
4343 ANCHOR PLAZA PARKWAY
TAMPA, FLORIDA 33634-7513
(813) 884-0000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
C. KENT MAY, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ANCHOR GLASS CONTAINER CORPORATION
ONE ANCHOR PLAZA
4343 ANCHOR PLAZA PARKWAY
TAMPA, FLORIDA 33634-7513
(813) 884-0000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
AGENT FOR SERVICE)
------------------------
COPIES TO:
RANDI L. STRUDLER, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
ANCHOR GLASS CONTAINER CORPORATION
CONSUMERS U.S., INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K SHOWING
THE LOCATION OF INFORMATION REQUIRED BY
PART I OF FORM S-4
<TABLE>
<CAPTION>
NO. CAPTION LOCATION OR CAPTION IN PROSPECTUS
- --- ------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Outside Back Cover
Page; Available Information
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Prospectus Summary; Risk Factors; Unaudited
Pro Forma Financial Statements; Selected
Financial Data; Business; The Exchange
Offer; Financial Statements; Financial
Information for Old Anchor
4. Terms of the Transaction................... Outside Front Cover; Prospectus Summary;
The Exchange Offer; Description of the
Notes; Risk Factors; Certain U.S. Federal
Income Tax Considerations
5. Pro Forma Financial Information............ Prospectus Summary; Unaudited Pro Forma
Financial Statements; Selected Financial
Data; Financial Statements; Financial
Information for Old Anchor
6. Material Contracts with the Company Being
Acquired................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Certain Transactions; Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
10. Information With Respect to S-3
Registrants.............................. Not Applicable
11. Incorporation of Certain Information by
Reference................................ Not Applicable
12. Information with Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
NO. CAPTION LOCATION OR CAPTION IN PROSPECTUS
- --- ------------------------------------------- -------------------------------------------
<C> <S> <C>
14. Information With Respect to Registrants
other than S-2 or S-3 Registrants........ Outside Front Cover Page; Inside Front
Cover Page; Prospectus Summary; Risk
Factors; Business; Use of Proceeds;
Capitalization; Unaudited Pro Forma
Financial Statements; Management's
Discussion and Analysis of Pro Forma
Financial Condition and Results of
Operations; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Management; Description of
Revolving Credit Facility; Experts;
Financial Statements; Financial
Information for Old Anchor
15. Information With Respect to S-3
Companies................................ Not Applicable
16. Information With Respect to S-2 or S-3
Companies................................ Not Applicable
17. Information With Respect to Companies Other
than S-2 or S-3 Companies................ Not Applicable
18. Information if Proxies, Consents or
Authorizations Are to Be Solicited....... Not Applicable
19. Information if Proxies, Consents or
Authorizations Are Not to Be Solicited in
an Exchange Offer........................ Management; Principal Stockholders
</TABLE>
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 12, 1997
PROSPECTUS
[ANCHOR LOGO]
ANCHOR GLASS CONTAINER CORPORATION
OFFER TO EXCHANGE ITS 11 1/4% FIRST MORTGAGE NOTES DUE 2005,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT (AS DEFINED),
FOR ITS OUTSTANDING 11 1/4% FIRST MORTGAGE NOTES DUE 2005
THESE NOTES ARE GUARANTEED ON A SENIOR SECURED BASIS BY
CONSUMERS U.S., INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
------------------------
Anchor Glass Container Corporation, a Delaware corporation ("Anchor" or the
"Company"), hereby offers to exchange (the "Exchange Offer") up to $150,000,000
aggregate principal amount of its new 11 1/4% First Mortgage Notes due 2005 (the
"Exchange Notes") for an equal principal amount of its outstanding 11 1/4% First
Mortgage Notes due 2005 (the "Outstanding Notes") sold by the Company on April
17, 1997, upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (the "Letter of
Transmittal"). The Exchange Notes and the Outstanding Notes are collectively
referred to herein as the "Notes." The terms of the Exchange Notes are identical
in all material respects to those of the Outstanding Notes, except for certain
transfer restrictions and registration rights relating to the Outstanding Notes.
The Exchange Notes will be issued pursuant to, and entitled to the benefits of,
the Indenture (as defined) governing the Outstanding Notes.
Interest on the Exchange Notes will accrue from and including the Exchange
Date (as defined) and will be payable semi-annually in arrears on April 1 and
October 1 of each year, commencing on October 1, 1997, at the rate of 11 1/4%
per annum. Additionally, interest on the Exchange Notes will accrue from the
last interest payment date on which interest was paid on the Outstanding Notes
surrendered in exchange therefor or, if no interest has been paid on the
Outstanding Notes, from the date of original issue of the Outstanding Notes to
but not including the Exchange Date. The Exchange Notes will be redeemable, in
whole or in part, at the option of the Company on or after April 1, 2001, at the
redemption prices set forth herein, plus accrued and unpaid interest, if any, to
the date of redemption. In addition, at any time or from time to time on or
prior to April 1, 2000, the Company, at its option, may redeem up to 35% of the
aggregate principal amount of the Notes originally issued with the net cash
proceeds of one or more Equity Offerings (as defined), at a redemption price
equal to 111.25% of the aggregate principal amount of the Notes to be redeemed
plus accrued and unpaid interest, if any, to the date of redemption; provided,
however, that after giving effect to any such redemption, at least 65% of the
initial aggregate principal amount of the Notes originally issued remains
outstanding.
The Exchange Notes will be senior obligations of the Company secured by a
first priority lien (subject to Permitted Liens (as defined)) on substantially
all existing and future property, plant and equipment owned or leased by the
Company other than the Bank Collateral (as defined) and Purchase Money Assets
(as defined), and a pari passu lien with the lenders under the Company's $110.0
million Revolving Credit Facility (as defined) on the Shared Collateral (as
defined), which includes, among other things, intellectual property and contract
rights and certain insurance proceeds. The Exchange Notes will rank senior in
right of payment to all existing and future subordinated Indebtedness (as
defined) of the Company and pari passu in right of payment with all other
existing and future senior Indebtedness of the Company, including all
Indebtedness outstanding under the Revolving Credit Facility, which is secured
by a first priority lien on the Bank Collateral and a pari passu lien on the
Shared Collateral. The Exchange Notes will be unconditionally guaranteed (each a
"Guarantee" and collectively the "Guarantees" and together with the Exchange
Notes, the "Securities") on a senior secured basis by Consumers U.S., Inc.
("Consumers U.S." or the "Parent Guarantor") and by any future Restricted
Subsidiary (as defined) of the Company, each of which future Restricted
Subsidiaries will become a guarantor in accordance with the terms of the
Indenture (each, including the Parent Guarantor, a "Guarantor" and,
collectively, the "Guarantors"). Each Guarantee will rank senior in right of
payment to all existing and future subordinated Indebtedness of the relevant
Guarantor and pari passu in right of payment to all existing and future senior
Indebtedness of such Guarantor and will be secured, in the case of the Guarantee
by the Parent Guarantor, by a perfected first priority pledge of the capital
stock of the Company owned by Consumers U.S. and, in the case of any Guarantee
by a Restricted Subsidiary, by a first priority lien (subject to Permitted
Liens) on all existing and future property, plant and equipment owned or leased
by such Restricted Subsidiary other than the Bank Collateral and Purchase Money
Assets. At September 30, 1997, the Company had approximately $158.2 million of
Indebtedness outstanding.
(Continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 5
(Continued from previous page)
Upon a Change of Control (as defined), each holder of the Notes will have
the right to require the Company to repurchase such holder's Notes at a price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase. Within 90 days after the consummation of any
Change of Control Offer (as defined) pursuant to which the Company has
repurchased at least 90% of the Notes outstanding immediately prior to such
Change of Control Offer, the Company may, at its option, redeem all of the
remaining Notes at a redemption price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase. In
addition, under certain circumstances, the Company will be required to offer to
purchase the Notes at 100% of the principal amount thereof plus accrued
interest, if any, to the date of repurchase with the net cash proceeds of
certain Asset Sales (as defined). See "Description of the Notes."
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Outstanding Notes where they were acquired by such broker-dealer as a result
of market-making or other trading activities. Each broker-dealer that received
Outstanding Notes from the Company and not as a result of market-making or other
trading activities, in the absence of an exemption, must comply with the
registration requirements of the Securities Act. The Company and the Parent
Guarantor will, for a period of 180 days after consummation of the Exchange
Offer, make copies of this Prospectus available to any broker-dealer for use in
connection with any such resale.
The Outstanding Notes held by "qualified institutional buyers" (as such term
is defined in Rule 144A under the Securities Act, "QIBs") are designated for
trading in the Private Offerings, Resales and Trading through Automated Linkages
Market (the "PORTAL Market") of the National Association of Securities Dealers
Inc. The Exchange Notes constitute securities for which there is no established
trading market. Any Outstanding Notes not tendered and accepted in the Exchange
Offer will remain outstanding. The Company does not intend to list the Exchange
Notes on any securities exchange or to seek approval for quotation through any
automated quotation system, and no active public market for the Exchange Notes
is currently anticipated. If a market for the Exchange Notes should develop,
such Exchange Notes could trade at a discount from their principal amount. To
the extent that any Outstanding Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Outstanding Notes could be
adversely affected. No assurance can be given as to the liquidity of the trading
market for either the Outstanding Notes or the Exchange Notes.
The Exchange Notes are being offered hereby in order to satisfy certain
obligations of the Company and the Parent Guarantor contained in the
Registration Rights Agreement dated as of April 17, 1997 (the "Registration
Rights Agreement") among the Company, the Parent Guarantor and certain
institutional accredited investors (the "Initial Purchasers") entered into at
the time of original issue of the Outstanding Notes. Neither the Company nor the
Parent Guarantor will receive any proceeds from the Exchange Offer. The Company
will pay all expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of
Outstanding Notes being tendered for exchange pursuant to the Exchange Offer.
The date of acceptance and exchange (the "Exchange Date") of the Outstanding
Notes will be the second business day following the Expiration Date. Outstanding
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Date. In the event the Company terminates the Exchange Offer
and does not accept for exchange any Outstanding Notes with respect to the
Exchange Offer, the Company will promptly return such Outstanding Notes to the
holders thereof.
<PAGE> 6
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS
REGARDING, AMONG OTHER ITEMS, (I) THE REALIZATION OF ANCHOR'S BUSINESS STRATEGY
AND THE COST SAVINGS ESTIMATED TO BE ACHIEVED IN CONNECTION THEREWITH AND THE
COSTS ASSOCIATED THEREWITH, (II) THE SUFFICIENCY OF CASH FLOW AND OTHER SOURCES
OF LIQUIDITY TO FUND ANCHOR'S DEBT SERVICE REQUIREMENTS, WORKING CAPITAL NEEDS
AND OTHER SIGNIFICANT EXPENDITURES AND (III) ANTICIPATED TRENDS IN THE GLASS
PACKAGING INDUSTRY, INCLUDING, WITH RESPECT TO INDUSTRY CAPACITY, PRODUCT DEMAND
AND PRICING. FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS
"BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "ESTIMATE," "PROJECT" AND SIMILAR
EXPRESSIONS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS
AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND ANCHOR'S CONTROL. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF FACTORS INCLUDING THOSE DESCRIBED IN "RISK FACTORS."
IN LIGHT OF THESE RISKS AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE
RESULTS AND EVENTS CONTEMPLATED BY THE FORWARD-LOOKING INFORMATION CONTAINED IN
THIS PROSPECTUS WILL IN FACT TRANSPIRE. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THEIR
DATES. ANCHOR DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS.
THIS PROSPECTUS CONTAINS HISTORICAL FINANCIAL INFORMATION REGARDING
GLENSHAW GLASS COMPANY, INC. ("GLENSHAW") AND CONSUMERS PACKAGING INC.
("CONSUMERS"), AFFILIATES OF ANCHOR. PRIOR RESULTS OF CONSUMERS AND GLENSHAW ARE
NOT INDICATIVE OF THE COMPANY'S FUTURE RESULTS. THE NATURE AND RISKS OF THE
RESTRUCTURING CARRIED OUT AT CONSUMERS AND GLENSHAW, AND MARKET CONDITIONS FACED
BY THEM, DIFFER SUBSTANTIALLY FROM THE NATURE AND RISKS OF THE BUSINESS STRATEGY
FOR ANCHOR DESCRIBED UNDER "BUSINESS -- BUSINESS STRATEGY."
------------------------
AVAILABLE INFORMATION
The Company and Consumers U.S. have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (together
with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement") under the Securities Act with respect to the Exchange
Notes being offered hereby. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company,
Consumers U.S. and the Exchange Notes, reference is made to the Registration
Statement. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and, where such contract
or other document is an exhibit to the Registration Statement, each such
statement is qualified in all respects by the provisions in such exhibit, to
which reference is hereby made. Copies of the Registration Statement may be
examined without charge at the Public References Section of the Commission, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of all or any portion of the Registration Statement can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of certain fees prescribed by
the Commission.
Neither the Company nor Consumers U.S. is currently subject to the
informational requirements of Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Upon completion of the Exchange Offer, the Company and
Consumers U.S. will be subject to the informational requirements of the Exchange
Act, and, in accordance therewith, will file periodic reports and other
information with the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of any material so filed can be obtained from the Public
i
<PAGE> 7
Reference Section of the Commission, upon payment of certain fees prescribed by
the Commission. Notwithstanding the foregoing, Consumers U.S. intends to request
that the Commission, pursuant to Section 12(h) of the Exchange Act, grant an
order exempting it from complying with the information requirements of the
Exchange Act.
In addition, the Company is required by the terms of the Indenture to
furnish the Trustee and the holders of the Notes with annual reports containing
consolidated financial statements audited by its independent public accountants
and with quarterly reports containing unaudited condensed consolidated financial
statements for each of the first three quarters of each fiscal year.
ii
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the consolidated financial statements and notes thereto, included elsewhere in
this Prospectus. Unless otherwise noted, references to: (i) "Anchor" or "the
Company" shall mean Anchor Glass Container Corporation; (ii) "Consumers" shall
mean Consumers Packaging Inc. and its Canadian subsidiary, Consumers
International Inc. ("Consumers International"); (iii) "Consumers U.S." or the
"Parent Guarantor" shall mean Consumers U.S., Inc.; (iv) the "Anchor
Acquisition" shall mean the acquisition by the Company of certain assets and the
assumption of certain liabilities of Old Anchor on February 5, 1997; and (v)
"Old Anchor" shall mean the former Anchor Glass Container Corporation, which is
currently a debtor-in-possession under Chapter 11 of the United States
Bankruptcy Code of 1978, as amended (the "Bankruptcy Code") and was renamed
Anchor Resolution Corp. following the Anchor Acquisition. Financial information
set forth in this Prospectus has been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP"). References to "C$"
are to Canadian Dollars.
THE COMPANY
On a pro forma basis after giving effect to the Anchor Acquisition, Anchor
is the third largest manufacturer of glass containers in the United States, with
an approximate 19% share of U.S. glass container sales in 1996. Anchor produces
a diverse line of flint (clear), amber, green and other colored glass containers
of various types, designs and sizes. The Company manufactures and sells its
products to many of the leading producers of beer, liquor, wine, food, juice,
tea, soda and mineral water. The Company focuses on the production of beer
containers as this product category accounted for approximately 50% of the
Company's pro forma 1996 unit sales, nearly twice the volume of its next largest
category. After giving effect to the Anchor Acquisition, for the year ended
December 31, 1996, the Company had pro forma net sales of $722.7 million.
Consumers, Canada's only glass container manufacturer, indirectly owns
approximately 59% of Anchor on a fully diluted basis. By management's estimates,
Consumers produced in excess of 80% of all glass containers sold in Canada in
1996, with U.S. glass container manufacturers (including Old Anchor) having
produced most of the remainder. On a pro forma combined basis, after giving
effect to the Anchor Acquisition, the Company and Consumers would have had total
net sales of over $1.0 billion in 1996, net of intercompany sales.
A new senior management team, including executives from Consumers and its
majority shareholder, G&G Investments, Inc. ("G&G"), who led the turnarounds at
both Consumers and Glenshaw Glass Company, Inc. ("Glenshaw"), will implement a
series of turnaround initiatives at Anchor. This new management team believes
that Old Anchor was slow to respond to the changing dynamics of the market for
glass packaging. Burdened by over $550.0 million of debt and with limited
financial flexibility, Old Anchor's strategy focused on aggressively increasing
its market share in a competitive market that suffered from substantial
overcapacity. Additionally, new management believes that during 1995 and 1996
relationships with some of Old Anchor's customers deteriorated because their
needs were not properly addressed and the pricing terms of certain long-term
contracts with important customers were not honored.
Anchor's strategy to improve upon Old Anchor's operating performance is to
(i) establish and maintain strong customer relationships, (ii) provide high
quality products and service, (iii) control manufacturing, distribution and
overhead costs, and (iv) improve production planning and product mix at the
plant level to increase operating and distribution efficiency. Consistent with
this strategy, management of the Company and of Consumers has closed two Anchor
plants, removed two furnaces from production at two other Anchor plants and
closed one Consumers plant. Management believes that its strategy to eliminate
excess capacity is consistent with certain recent actions of the Company's two
major competitors. The consolidation in the glass packaging industry has
resulted in the three leading manufacturers producing approximately 95% of 1996
U.S. sales and should, management believes, provide stability in pricing.
1
<PAGE> 9
COMPETITIVE STRENGTHS
Management believes the Company has the following key competitive
strengths:
EXPERIENCED TURNAROUND MANAGEMENT TEAM. John J. Ghaznavi, Chairman and
Chief Executive Officer of Anchor and his team of managers plan to implement a
turnaround program at Anchor that will focus on reducing costs and optimizing
production efficiency at the plant level. Mr. Ghaznavi and this management team
have successfully implemented turnarounds at both Consumers and Glenshaw.
In 1993, through G&G, Mr. Ghaznavi acquired a controlling interest in
Consumers, which had experienced annual losses since 1987. Following such
acquisition, Mr. Ghaznavi installed experienced management and technical teams
that restructured Consumers' business. By rationalizing operations, improving
productivity, focusing on niche markets and introducing new production
technology, as well as building and capitalizing on strong customer
relationships, Mr. Ghaznavi and his team of managers were able to improve
Consumers' operating and distribution efficiency. Consumers' sales increased
from C$425.4 million in 1992 to C$462.3 million in 1996 during a period of
general industry decline, while EBITDA increased from C$37.4 million, or 8.8% of
sales, in 1992 to C$63.2 million, or 13.7% of sales, in 1996.
Mr. Ghaznavi and his team of managers also engineered a turnaround at
Glenshaw, a single-plant U.S. glass container manufacturer that focuses on
low-volume, customized production runs. During the years preceding Mr.
Ghaznavi's acquisition of Glenshaw through G&G in 1988, Glenshaw had experienced
declining sales and operating losses. Since its acquisition by G&G, Glenshaw's
sales have more than doubled and EBITDA has more than tripled.
Mr. Ghaznavi has extensive industry and customer networks. He was elected
in 1995 as Chairman of the Board of Trustees of the Glass Packaging Institute,
the leading industry organization that includes as its members manufacturers
representing over 95% of North America's glass container production. Mr.
Ghaznavi intends to build on these industry and customer networks to establish
new customer relationships, as well as to recapture and strengthen Old Anchor's
former customer relationships.
Following the Anchor Acquisition, the Company appointed Edward M. Jonas as
Controller of the Company. Mr. Jonas has nearly 27 years of experience in the
glass container manufacturing industry, including 12 years as the Controller of
Old Anchor from 1983 to early 1995. In June 1997, the Company hired Richard
Deneau as President and Chief Operating Officer, as well as two other senior
executive officers from Ball-Foster Glass Container Co., L.L.C. ("Ball-Foster").
In July 1997, Mr. Deneau, who previously served as Chief Operating Officer at
Ball-Foster, assumed his duties as President and Chief Operating Officer and
began overseeing the day-to-day implementation of the Company's business
strategy.
EFFICIENT MANUFACTURING FACILITIES. From 1991 to 1996, Old Anchor invested
in excess of $218.9 million to maintain and upgrade its machines and furnaces at
the facilities that management has identified as ongoing plants, resulting in
more efficient and modern glass production facilities. In addition, Old Anchor
invested $145.1 million in molds for all plants during the same period. As a
result of these expenditures and the reduction of capacity through plant
closings, the Company believes it has the manufacturing facilities which will
allow it to significantly increase efficiency upon improved allocation of
production. In conjunction with the Note Offering, American Appraisal
Associates, Inc. ("AAA") estimated the market value for real property and the
liquidation in place value of the Company's ongoing plants, machinery and mold
facilities to be $243.0 million. See Summarization Letter of AAA, attached as
Annex A to this Prospectus.
SUPERIOR DESIGN CAPABILITIES. Old Anchor had distinguished itself as a
premier provider of new product designs with the ability to integrate such
designs into the production process. The Company's willingness to work closely
with customers to produce unique package designs is an effective marketing tool
and is expected to assist in re-establishing customer relationships.
ACCESS TO OWENS TECHNOLOGY. Most of Anchor's production facilities utilize
proprietary glass manufacturing technology of Owens-Brockway Glass Container
Inc. ("Owens"), which is generally considered one of the world's most
technologically advanced manufacturers of glass containers. In February 1997,
the Company entered into a Technical Assistance and License Agreement (the
"Technology Agreement") for a term of up
2
<PAGE> 10
to ten years with Owens to use Owens' proprietary glass manufacturing
technology. Management believes that the Technology Agreement provides key
benefits to Anchor in both marketing and manufacturing its products. In
addition, the Technology Agreement allows Anchor to plan capital investments in
line with Owens' advanced production techniques.
BUSINESS STRATEGY
Management believes it can significantly improve upon Old Anchor's recent
operating results by implementing the following strategy:
REDUCE COST STRUCTURE. Management believes that Old Anchor maintained
excessive production capacity, which resulted in higher operating costs. In
addition, management believes that Old Anchor maintained disproportionately
large corporate overhead expenses in relation to its plant operations.
Management has already begun to implement its cost reduction strategy in the
following areas:
Plant Closings. Following the Anchor Acquisition, the Company closed its
Houston, Texas ("Houston") and Dayville, Connecticut ("Dayville") plants (the
"Plant Closings") in order to reduce excess capacity. In September 1997,
Hillsboro Glass Company ("Hillsboro"), a glass container manufacturing plant
owned by G&G, discontinued manufacturing. All of Hillsboro's rights and
obligations to fill orders under a supply contract between Consumers and one of
its major customers will be purchased by Consumers and Anchor. In addition,
management will continue to monitor business conditions and utilization of plant
capacity to determine the appropriateness of further plant closings. The Plant
Closings are expected to eliminate an estimated $24.1 million of annual fixed
costs based on 1996 costs at the two plants. These fixed costs include an
estimated $16.5 million of annual indirect labor costs and an estimated $7.6
million of annual fixed manufacturing costs (fuel, power and repairs) and
operating costs (equipment rentals, taxes and insurance). In connection with the
Anchor Acquisition, Anchor recorded a reserve for expenses estimated to be
incurred in connection with the closing of the Houston and Dayville plants of
approximately $33.0 million to be spent over a three year time frame, of which
$18.0 million is estimated to be incurred in 1997.
Selling and Administrative Expense Savings. Anchor has implemented a
targeted expense reduction program, the objective of which is to create a leaner
organization through the elimination of excess layers of management and
consolidation of certain functions such as purchasing, sales, engineering and
MIS, with Consumers and Glenshaw. The Company has realized an estimated $7.2
million in annual cost savings through the elimination of 25% or 61 of Old
Anchor's corporate headquarters positions as of March 1997 (the "Headquarters
Cost Reductions") and has identified an additional estimated $6.2 million in
annual cost savings from further headquarters employee reductions and related
expenses. Management estimates that Anchor will incur one time severance costs
of approximately $1.8 million in connection with these staff reductions.
Further, in connection with a plan to simplify the corporate ownership structure
of Consumers, Anchor and their affiliates, Glenshaw may become a subsidiary of
Anchor.
IMPROVE PRODUCTION PLANNING AND PRODUCT MIX. With the elimination of
excess capacity, management believes it will be able to improve efficiency and
operating results by reallocating production among the Company's manufacturing
facilities according to machine strength and by instituting longer production
runs with fewer mold and color changes. To implement this strategy, individual
plant managers are now responsible for managing each plant's financial
performance and each product sales organization is responsible for managing the
product mix and the financial performance of its product line.
STRENGTHEN CUSTOMER RELATIONS. The Company believes that reestablishing
the positive customer relationships Old Anchor benefitted from in the past is
essential to improving financial performance. Management believes that Old
Anchor's operating results suffered in part due to a shift in product mix toward
shorter production runs, which require more frequent retooling and increased
costs. This shift occurred when management of Old Anchor began to fill excess
capacity created by the loss of long-term contractual customers with less
desirable spot orders. Establishing long-term customer relationships improves
efficiency through longer production runs and more predictable scheduling.
Management at Anchor has already begun to rebuild relationships with some of Old
Anchor's larger volume customers, including Anheuser-Busch
3
<PAGE> 11
Companies, Inc. ("Anheuser-Busch"), which has confirmed a new purchase order for
1997 after substantially reducing its purchases from Old Anchor. Management's
current production plan indicates that, based on anticipated customer volume,
substantially all remaining 1997 sales will be made pursuant to existing
purchase orders or contracts.
EXPLOIT SYNERGIES. Management intends to exploit synergies that exist
between the Company and its affiliates, including Consumers and Glenshaw:
Purchasing. Management believes that it will be able to obtain lower costs
on certain of its raw materials than Old Anchor did in 1996 by combining
Anchor's purchasing with that of its affiliates thereby creating potential for
more favorable bulk purchasing rates. Management has already experienced some
cost savings as compared to Old Anchor in bulk purchasing of soda ash, sand and
packaging materials.
Freight Savings. Management believes that Old Anchor maintained excess
manufacturing capacity and less than optimal plant by plant product mix relative
to its plant-specific machine strengths and the geographic needs of its
customers. As a result, management believes that Old Anchor suffered from
excessive freight and allowance costs as it sought to utilize excess capacity by
satisfying orders in plants beyond economical shipping distances. Management
expects to reallocate production among Anchor plants and between Anchor and
Consumers to maximize regional production where possible. This represents an
opportunity for Anchor to reduce shipping distances and thus reduce freight and
allowance costs.
Marketing. Management believes that its affiliation with Consumers and
Glenshaw will create a competitive advantage in marketing to the broader United
States and Canadian markets. It is anticipated that Consumers will market
Anchor's production capacity to those existing Canadian customers who currently
have their U.S. orders filled through competitors of Anchor.
THE ANCHOR ACQUISITION AND THE NOTE OFFERING
On February 5, 1997, the Company purchased from Old Anchor eleven operating
plants, several idled plants and other related assets, as well as the
liabilities related to the purchased assets, for consideration (subject to
adjustment) equal to $200.5 million in cash and common and convertible preferred
stock of the Company valued at $59.0 million. See "Risk Factors -- Balance
Sheets; Purchase Price Adjustment." In addition, the Company contributed $9.1
million in cash and convertible preferred stock of the Company valued at $9.0
million to three defined benefit plans of Old Anchor, certain of the liabilities
in respect of which were assumed and which plans are now maintained by the
Company. The Company also incurred approximately $9.9 million of fees and
expenses in connection with the Anchor Acquisition. The Company obtained the
cash portion of the purchase price for the Anchor Acquisition, including the
defined benefit plan contributions, from (i) an $85.0 million cash investment by
Consumers in common stock and convertible preferred stock of the Company
representing approximately 59% of the Company's capital stock on a fully diluted
basis, (ii) a $130.0 million loan facility (the "Anchor Loan Facility"), (iii)
$0.1 million of borrowings under the Company's $110.0 million revolving credit
facility (the "Revolving Credit Facility"), and (iv) $4.4 million from the sale
of certain inventory to Owens. In addition, in connection with the Anchor
Acquisition, Owens acquired certain assets and assumed certain liabilities of
Old Anchor.
On April 17, 1997, the Company sold the Outstanding Notes (the "Note
Offering") and used a portion of the net proceeds therefrom to repay all
outstanding Indebtedness under the Anchor Loan Facility and advances outstanding
under the Revolving Credit Facility. The remainder of such net proceeds will be
used by the Company for working capital.
4
<PAGE> 12
CORPORATE STRUCTURE
[ORGANIZATIONAL FLOW CHART]
- ---------------
(1) Owned directly or indirectly.
(2) Listed on The Toronto Stock Exchange under the symbol "CGC."
(3) Concurrent with the Exchange Offer, Consumers International Inc. ("Consumers
International"), which indirectly owns approximately 59% of the Company on a
fully diluted basis through Consumers U.S., will offer to exchange
("Consumers International Exchange Offer") its 10 1/4% Senior Secured Notes
due 2005, which will have been registered under the Securities Act, for its
outstanding 10 1/4% Senior Secured Notes due 2005.
(4) On a fully diluted basis.
(5) In connection with a plan to simplify the corporate ownership structure of
Consumers, Anchor and their affiliates, Glenshaw may become a subsidiary of
Anchor.
------------------------
The principal executive offices of the Company are located at One Anchor
Plaza, 4343 Anchor Plaza Parkway, Tampa, Florida 33634-7513. The telephone
number is (813) 884-0000.
5
<PAGE> 13
THE EXCHANGE OFFER
The Exchange Offer................. The Company is offering to exchange up to
$150,000,000 aggregate principal amount
of its new 11 1/4% First Mortgage Notes
due 2005 for an equal principal amount of
its outstanding 11 1/4% First Mortgage
Notes due 2005. The terms of the Exchange
Notes are identical in all material
respects to those of the Outstanding
Notes, except for certain transfer
restrictions and registration rights
relating to the Outstanding Notes.
Purpose of the Exchange Offer...... The Exchange Notes are being offered to
satisfy certain obligations of the
Company under the Registration Rights
Agreement.
Expiration Date; Withdrawal of
Tender............................. The Exchange Offer will expire at 5:00
p.m., New York City time, on
, 1997, or such later date
and time to which it is extended by the
Company (the "Expiration Date"). The
tender of Outstanding Notes pursuant to
the Exchange Offer may be withdrawn at
any time prior to the Expiration Date.
Any Outstanding Notes not accepted for
exchange for any reason will be returned
without expense to the tendering holder
thereof as promptly as practicable after
the expiration or termination of the
Exchange Offer.
Procedures for Tendering
Outstanding Notes.................. Each holder of Outstanding Notes wishing
to accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile, together
with the Outstanding Notes and any other
required documentation to the Exchange
Agent (as defined) at the address set
forth in the Letter of Transmittal.
Outstanding Notes may be physically
delivered, but physical delivery is not
required if a confirmation of a
book-entry transfer of such Outstanding
Notes to the Exchange Agent's account at
The Depository Trust Company ("DTC" or
the "Depository") is delivered in a
timely fashion. See "The Exchange
Offer -- Procedures for Tendering
Outstanding Notes."
Conditions to the Exchange Offer... The Exchange Offer is not conditioned
upon any minimum aggregate principal
amount of Outstanding Notes being
tendered for exchange. The Exchange Offer
is subject to certain customary
conditions, which may be waived by the
Company. The Company currently expects
that each of the conditions will be
satisfied and that no waivers will be
necessary. See "The Exchange Offer --
Conditions to the Exchange Offer."
Exchange Agent..................... The Bank of New York (the "Exchange
Agent").
Certain U.S. Federal Income Tax
Considerations................... The exchange of an Outstanding Note for
an Exchange Note by a Holder pursuant to
the Exchange Offer will not
6
<PAGE> 14
constitute a taxable exchange. Such an
exchange will not result in taxable
income, gain or loss being recognized by
such Holder or by the Company.
Immediately after the exchange, such
Holder will have the same adjusted basis
and holding period in each Exchange Note
received as such Holder had immediately
prior to the exchange in the
corresponding Outstanding Note
surrendered. See "Certain U.S. Federal
Income Tax Considerations."
Consequences of Exchanging
Outstanding Notes Pursuant to the
Exchange Offer................... Based on certain interpretive letters
issued by the staff of the Commission to
third parties in unrelated transactions,
holders of Outstanding Notes (other than
any holder who is an "affiliate" of the
Company or the Parent Guarantor within
the meaning of Rule 405 under the
Securities Act) who exchange their
Outstanding Notes for Exchange Notes
pursuant to the Exchange Offer generally
may offer such Exchange Notes for resale,
resell such Exchange Notes and otherwise
transfer such Exchange Notes without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that such
Exchange Notes are acquired in the
ordinary course of the holders' business
and such holders are not participating
in, and have no arrangement or
understanding with any person to
participate in, a distribution of such
Exchange Notes. Each broker-dealer that
receives Exchange Notes for its own
account in exchange for Outstanding
Notes, where such Outstanding Notes were
acquired by such broker-dealer as a
result of market-making activities or
other trading activities, must
acknowledge that it will deliver a
prospectus in connection with any resale
of such Notes. See "Plan of
Distribution." In addition, to comply
with the securities laws of certain
jurisdictions, if applicable, the
Exchange Notes may not be offered or sold
unless they have been registered or
qualified for sale in such jurisdiction
or an exemption from registration or
qualification is available and is
complied with. The Company has agreed,
pursuant to the Registration Rights
Agreement and subject to certain
specified limitations therein, to
register or qualify the Exchange Notes
for offer or sale under the securities or
blue sky laws of such jurisdictions as
any holders of the Notes request in
writing. If a holder of Outstanding Notes
does not exchange such Outstanding Notes
for Exchange Notes pursuant to the
Exchange Offer, such Outstanding Notes
will continue to be subject to the
restrictions on transfer contained in the
legend thereon. In general, the
Outstanding Notes may not be offered or
sold unless registered under the
Securities Act, except pursuant to an
exemption from, or in a transaction not
subject to, the registration requirements
of the Securities Act and applicable
state securities laws.
7
<PAGE> 15
THE EXCHANGE NOTES
The Terms of the Exchange Notes are identical in all material respects to
those of the Outstanding Notes, except for certain transfer restrictions and
registration rights relating to the Outstanding Notes.
Securities Offered................. $150,000,000 aggregate principal amount
of 11 1/4% First Mortgage Notes due 2005.
Issuer............................. Anchor Glass Container Corporation.
Maturity Date...................... April 1, 2005.
Interest Payment Dates............. Interest on the Exchange Notes will be
payable semi-annually in arrears on each
April 1, and October 1, commencing
October 1, 1997 and will accrue from and
including the Exchange Date.
Additionally, interest on the Exchange
Notes will accrue from the last interest
payment date on which interest was paid
on the Outstanding Notes surrendered in
exchange therefor or, if no interest has
been paid on the Outstanding Notes, from
the date of original issue of the
Outstanding Notes to but not including
the Exchange Date. Holders whose
Outstanding Notes are accepted for
exchange will be deemed to have waived
the right to receive any interest accrued
on the Outstanding Notes.
Ranking............................ The Exchange Notes will be senior secured
obligations of the Company ranking pari
passu with all existing and future senior
Indebtedness of the Company, including
all Indebtedness outstanding under the
Company's $110.0 million Revolving Credit
Facility, which is secured by a first
priority lien on the Bank Collateral and
a pari passu lien on the Shared
Collateral, and senior in right of
payment to all existing and future
subordinated Indebtedness of the Company.
At September 30, 1997, the Company had
approximately $158.2 million of
Indebtedness outstanding.
Guarantees......................... The Exchange Notes will be
unconditionally guaranteed on a senior
secured basis by the Guarantors. The
Guarantees will rank pari passu with all
existing and future senior Indebtedness
of the Guarantors and senior in right of
payment to all existing and future
subordinated Indebtedness of the
Guarantors.
Security........................... The Exchange Notes will be secured by a
first priority lien (subject to Permitted
Liens) on substantially all of the
property, plant and equipment owned or
leased by the Company, including the
Shared Collateral but excluding the Bank
Collateral, Capital Stock (as defined)
(other than Capital Stock of Restricted
Subsidiaries) and Purchase Money Assets.
The Guarantee by Consumers U.S. will be
secured by a perfected first priority
pledge of all of the capital stock of the
Company owned by Consumers U.S. Each
Guarantee by any future Restricted
Subsidiary will be secured by a first
priority lien (subject to Permitted
Liens) on all existing and future
property,
8
<PAGE> 16
plant and equipment owned or leased by
such Restricted Subsidiary.
Optional Redemption................ The Exchange Notes will be redeemable, in
whole or in part, at the option of the
Company on or after April 1, 2001, at the
redemption prices set forth herein, plus
accrued and unpaid interest, if any, to
the date of redemption. In addition, at
any time or from time to time on or prior
to April 1, 2000, the Company, at its
option, may redeem up to 35% of the
aggregate principal amount of the Notes
originally issued with the net cash
proceeds of one or more Equity Offerings,
at a redemption price equal to 111.25% of
the aggregate principal amount of the
Notes to be redeemed plus accrued and
unpaid interest, if any, to the date of
redemption; provided, however, that,
after giving effect to any such
redemption, at least 65% of the aggregate
principal amount of the Notes originally
issued remains outstanding.
Change of Control.................. Upon a Change of Control, each holder of
Notes will have the right to require the
Company to repurchase all or any part of
such holder's Notes at a repurchase price
equal to 101% of the principal amount
thereof plus accrued and unpaid interest,
if any, to the date of repurchase. Within
90 days after the consummation of any
Change of Control Offer (as defined)
pursuant to which the Company has
repurchased at least 90% of the Notes
outstanding immediately prior to such
Change of Control Offer, the Company may,
at its option, redeem all of the
remaining Notes at a redemption price
equal to 101% of the principal amount
thereof, plus accrued and unpaid
interest, if any, to the date of
repurchase.
Certain Covenants.................. The indenture relating to the Exchange
Notes and the Guarantees (the
"Indenture") contains certain covenants
that limit the ability of the Company and
its Restricted Subsidiaries to, among
other things, incur additional
Indebtedness, pay dividends or make
certain other restricted payments,
consummate certain asset sales, enter
into certain transactions with
affiliates, incur liens, merge or
consolidate with any other person or
sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially
all of the assets of the Company. In
addition, under certain circumstances,
the Company will be required to offer to
purchase the Exchange Notes, in whole or
in part, at a purchase price equal to
100% of the principal amount thereof plus
accrued and unpaid interest, if any, to
the date of repurchase, with the net cash
proceeds of certain Asset Sales.
For additional information regarding the Exchange Notes, see "Description
of the Notes."
9
<PAGE> 17
USE OF PROCEEDS
Neither the Company nor the Parent Guarantor will receive any proceeds from
the Exchange Offer.
RISK FACTORS
Holders of Outstanding Notes should carefully consider all of the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under "Risk Factors" in connection with the Exchange
Offer.
10
<PAGE> 18
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The following table sets forth certain unaudited pro forma financial
information and certain historical financial information of the Company and the
Company's predecessor, Old Anchor. The summary historical financial data for the
period from February 5, 1997 to September 30, 1997 has been derived from, and
should be read in conjunction with, the Company's unaudited condensed financial
statements, including the notes thereto and the related "Management's Discussion
and Analysis of Financial Condition and Results of Operations," included
elsewhere in this Prospectus. The summary historical financial data for the nine
months ended September 30, 1996 and the period from January 1, 1997 to February
4, 1997 has been derived from and should be read in conjunction with Old
Anchor's consolidated financial statements, including the notes thereto,
included elsewhere in this Prospectus. The historical financial information for
Old Anchor may not be representative of future operating results of the Company.
The unaudited summary pro forma financial information for the Company for
the nine months ended September 30, 1996 and 1997 is for illustrative purposes
only and is not necessarily indicative of what the actual results of operations
and financial position of the Company would have been as of and for the periods
indicated, nor does it purport to represent the Company's future financial
position and results of operations. Such unaudited summary pro forma financial
information has been derived from, and should be read in conjunction with, the
Company's unaudited pro forma consolidated financial information, including the
notes thereto and the related "Management's Discussion and Analysis of Pro Forma
Financial Condition and Results of Operations," included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
OLD ANCHOR ANCHOR PRO FORMA AS ADJUSTED
OLD ANCHOR PERIOD FROM PERIOD FROM --------------------
NINE MONTHS JANUARY 1, FEBRUARY 5, NINE MONTHS ENDED
ENDED 1997 TO 1997 TO SEPTEMBER 30,
SEPTEMBER 30, FEBRUARY 4, SEPTEMBER 30, ---------------------
1996 1997 1997(1) 1996 1997
------------- ------------ ------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................. $ 640,049 $ 62,560 $ 415,636 $ 568,732 $469,713
Cost of products sold................................. 636,917 70,608 386,130 554,156 448,095
Selling and administrative expenses................... 30,736 3,745 18,127 30,736 21,872
Restructuring and other charges(2).................... 49,973 -- -- 49,973 --
-------- -------- -------- -------- --------
Income (loss) from operations......................... (77,577) (11,793) 11,379 (66,133) (254)
Other income (expense), net........................... (3,379) (595) 234 2,413 269
Interest expense(3)................................... (42,160) (2,437) (12,725) (14,430) (14,430)
-------- -------- -------- -------- --------
Loss before reorganization items, income taxes and
extraordinary items................................. (123,116) (14,825) (1,112) (78,150) (14,415)
Reorganization items.................................. (1,576) (827) -- (1,576) (827)
Income taxes(4)....................................... (1,825) -- -- (1,825) --
-------- -------- -------- -------- --------
Loss before extraordinary items....................... (126,517) (15,652) (1,112) (81,551) (15,242)
Extraordinary items(5)................................ (2,336) -- (11,200) (13,536) (11,200)
-------- -------- -------- -------- --------
Net loss.............................................. $(128,853) $(15,652) $ (12,312) $ (95,087) $(26,442)
======== ======== ======== ======== ========
Preferred stock dividends............................. $ (8,032) $ (9,213) $ (9,213)
======== ======== ========
Loss before extraordinary items applicable to common
stock............................................... $ (9,144) $ (90,764) $(24,455)
======== ======== ========
Loss applicable to common stock....................... $ (20,344) $(104,300) $(35,655)
======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(6)............................................. $ 44,256 $ (4,783) $ 48,611 $ 31,304 $ 43,153
Depreciation and amortization......................... 75,239 7,605 36,998 45,051 43,138
Capital expenditures.................................. 36,144 7,184 21,152 36,144 28,336
Ratio of earnings to fixed charges(7)................. -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
OLD ANCHOR OLD ANCHOR ANCHOR
SEPTEMBER 30, FEBRUARY 4, SEPTEMBER 30,
1996 1997 1997(1)(8)
------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Accounts receivable.................................... $ 85,130 $ 60,978 $ 60,840
Inventories............................................ 166,527 148,731 118,191
Total assets........................................... 1,195,601 651,801 588,712
Total debt(9).......................................... 575,732 570,335 158,168
Total stockholders' equity (deficiency in assets)...... 253,234 (284,959) 87,023
</TABLE>
(Footnotes on page 13)
11
<PAGE> 19
The following table sets forth certain unaudited pro forma financial
information and certain historical financial information of the Company's
predecessor, Old Anchor. The summary historical financial data for the three
years ended December 31, 1996 has been derived from, and should be read in
conjunction with, Old Anchor's consolidated financial statements, including the
notes thereto and the related "Management's Discussion and Analysis of
Historical Financial Condition and Results of Operations" for Old Anchor,
included elsewhere in this Prospectus. The summary historical financial data for
the two years ended December 31, 1993 has been derived from consolidated
financial statements of Old Anchor, which are not included in this Prospectus.
Such historical information for Old Anchor may not be representative of future
operating results of the Company. The unaudited summary pro forma financial
information for the year ended December 31, 1996 is for illustrative purposes
only and is not necessarily indicative of what the actual results of operations
and financial position of the Company would have been as of and for the period
indicated, nor does it purport to represent the Company's future financial
position and results of operations. Such unaudited summary pro forma financial
information should be read in conjunction with the Company's unaudited pro forma
consolidated financial information, including the notes thereto, included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OLD ANCHOR HISTORICAL
-------------------------------------------------------------
PRO FORMA
YEAR ENDED ------------
DECEMBER 31, YEAR ENDED
------------------------------------------------------------- DECEMBER 31,
1992 1993 1994 1995 1996 1996(8)
---------- ---------- ---------- ---------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $1,161,925 $1,126,037 $1,089,317 $ 956,639 $ 814,370 $ 722,681
Cost of products sold.............. 1,037,329 1,028,332 996,780 906,393 831,612 718,098
Selling and administrative
expenses......................... 45,785 51,137 52,371 48,998 39,570 39,570
Restructuring and other
charges(2)....................... -- -- 79,481 10,267 49,973 49,973
Impairment of long-lived
assets(10)....................... -- -- -- -- 490,232 --
Write-up of assets held for
sale(2).......................... -- -- -- -- (8,967) (3,767)
---------- ---------- ---------- -------- -------- --------
Income (loss) from operations...... 78,811 46,568 (39,315) (9,019) (588,050) (81,193)
Other income (expense), net........ (523) 500 (2,385) 171 (10,020) 1,995
Interest expense(3)................ (64,659) (62,535) (56,070) (56,871) (48,601) (19,448)
---------- ---------- ---------- -------- -------- --------
Income (loss) before reorganization
items, income taxes,
extraordinary items and
cumulative change................ 13,629 (15,467) (97,770) (65,719) (646,671) (98,646)
Reorganization items............... -- -- -- -- (5,008) (5,008)
Income taxes(4).................... (1,300) (2,400) (250) (250) (1,825) (1,825)
Extraordinary items(5)............. (9,026) (18,152) -- -- (2,336) (13,908)
Cumulative effect of accounting
change........................... -- 1,776 -- -- -- --
---------- ---------- ---------- -------- -------- --------
Net income (loss).................. 3,303 (34,243) (98,020) (65,969) (655,840) (119,387)
Preferred dividends................ -- -- -- -- -- (12,318)
---------- ---------- ---------- -------- -------- --------
Income (loss) applicable to common
stock............................ $ 3,303 $ (34,243) $ (98,020) $ (65,969) $(655,840) $ (131,705)
========== ========== ========== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(6).......................... $ 181,495 $ 150,617 $ 138,257 $ 101,334 $ 34,824 $ 28,752
Depreciation and amortization...... 103,207 103,549 100,476 99,915 101,656 61,744
Capital expenditures............... 77,580 89,901 93,833 70,368 46,254 45,308
Ratio of earnings to fixed
charges(7)....................... 1.19x -- -- -- -- --
BALANCE SHEET DATA (AT END OF
PERIOD):
Accounts receivable................ $ 58,079 $ 58,128 $ 66,618 $ 40,965 $ 55,851 $ 43,445
Inventories........................ 196,827 173,204 176,769 180,574 144,419 118,243
Total assets....................... 1,321,733 1,347,201 1,264,488 1,208,348 643,468 594,064
Total debt(9)...................... 526,405 555,222 584,671 557,450 552,848 152,480
Total stockholder's equity
(deficiency in assets)........... 462,063 412,752 324,554 289,603 (269,307) 91,413
</TABLE>
(footnotes on next page)
12
<PAGE> 20
(footnotes from previous two pages)
(1) The Anchor Acquisition was consummated on February 5, 1997. Accordingly,
the information provided for Old Anchor for the nine months ended September
30, 1996 and for the period from January 1, 1997 to February 4, 1997 is not
comparable to the information provided for the Company for the period from
February 5, 1997 to September 30, 1997.
(2) Restructuring and other charges reflects Old Anchor's implementation of a
series of restructuring plans in an effort to respond to the continued
decline in industry sales volume combined with, in 1996, the loss of a
significant portion of the business of Old Anchor's largest customer.
During the year ended December 31, 1996, Old Anchor recorded an adjustment
to the carrying value of certain idled facilities held for sale. These
assets were previously written down to an estimated net realizable value.
Upon a current evaluation of quotes and offers on these properties in 1996,
Old Anchor increased their net carrying value by approximately $9.0
million. The balance of the restructuring liability is anticipated to be
expended and charged against the liability over the next several years.
(3) Because of the Chapter 11 proceeding of Old Anchor, there had been no
accrual of interest on the $100.0 million 10.25% Senior Notes or the $200.0
million 9.875% Senior Subordinated Debentures of Old Anchor since September
12, 1996. If accrued, interest expense would have increased $1.5 million
during the period ended September 30, 1996, $9.1 million during the year
ended December 31, 1996 and $2.9 million during the period from January 1,
1997 to February 4, 1997.
(4) Income tax provision reflects any additional valuation allowances required
to be recorded under Statement of Financial Accounting Standards No.
109 -- Accounting for Income Taxes ("SFAS 109"). The adoption of SFAS 109
effective January 1, 1993 resulted in an increase in the cumulative net
deferred tax asset of $1.8 million. Under SFAS 109, deferred income taxes
reflect the net tax effects of temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes, and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected
to reverse. If on the basis of available evidence, it is more likely than
not that all or a portion of the deferred tax asset will not be realized,
the asset must be reduced by a valuation allowance.
(5) Extraordinary items in the three years ended December 31, 1992, 1993 and
1996 result from the write-off of financing costs related to debt
extinguished during the relevant periods, net of taxes.
(6) EBITDA (earnings before interest, taxes, depreciation and amortization)
("EBITDA") is an amount equal to income (loss) before reorganization items,
income taxes, extraordinary items, cumulative effect of accounting change
and dividends on preferred stock plus the amounts of restructuring charges
and the impairment of long-lived assets, interest, depreciation and
amortization and less the amount of the write-up of assets held for sale as
calculated below, using income (loss) from operations as a starting point:
<TABLE>
<CAPTION>
PRO FORMA
------------------
OLD ANCHOR
---------------------------------------- ANCHOR NINE MONTHS ENDED
NINE MONTHS PERIOD FROM PERIOD FROM SEPTEMBER 30,
ENDED JANUARY 1, 1997 FEBRUARY 5, 1997 ------------------
SEPTEMBER 30, 1996 TO FEBRUARY 4, 1997 TO SEPTEMBER 30, 1997 1996 1997
------------------ ------------------- --------------------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income (loss) from
operations.............. $(77,577) $ (11,793) $11,379 $(66,133) $ (254)
Other income (expense),
net..................... (3,379) (595) 234 2,413 269
Restructuring and other
charges................. 49,973 -- -- 49,973 --
Depreciation and
amortization............ 75,239 7,605 36,998 45,051 43,138
-------- -------- ------- -------- -------
EBITDA.................... $ 44,256 $ (4,783) $48,611 $ 31,304 $43,153
======== ======== ======= ======== =======
</TABLE>
13
<PAGE> 21
<TABLE>
<CAPTION>
OLD ANCHOR HISTORICAL
----------------------------------------------------- PRO FORMA
------------
YEAR ENDED DECEMBER 31, YEAR ENDED
----------------------------------------------------- DECEMBER 31,
1992 1993 1994 1995 1996 1996
-------- -------- -------- -------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from operations....... $ 78,811 $ 46,568 $(39,315) $ (9,019) $(588,050) $(81,193)
Other income (expense), net......... (523) 500 (2,385) 171 (10,020) 1,995
Write-up of assets held for sale.... -- -- -- -- (8,967) (3,767)
Impairment of long-lived assets..... -- -- -- -- 490,232 --
Restructuring and other charges..... -- -- 79,481 10,267 49,973 49,973
Depreciation and amortization....... 103,207 103,549 100,476 99,915 101,656 61,744
-------- -------- -------- -------- -------- -------
EBITDA.............................. $181,495 $150,617 $138,257 $101,334 $ 34,824 $ 28,752
======== ======== ======== ======== ======== =======
</TABLE>
EBITDA is a measure of the Company's debt service ability. It is not an
alternative to net income as a measure of the Company's results of
operations (as interest, taxes, depreciation and amortization,
restructuring charges, reorganization items, the impairment of long-lived
assets and the write-up of assets held for sale are included in the
determination of net income) or to cash flows as a measure of liquidity (as
cash flows include the cash effects of all operating, financing and
investing activities).
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes and extraordinary items plus fixed
charges. Fixed charges consist of interest and amortization of debt expense
plus a portion of operating lease expense representative of the interest
factor. There was a deficiency of earnings to cover fixed charges in 1993,
1994, 1995, 1996 and pro forma 1996 of $15.5 million, $97.8 million, $65.7
million, $651.7 million and $103.7 million, respectively. There was a
deficiency of earnings to cover fixed charges for the nine months ended
September 30, 1996, the period from January 1, 1997 to February 4, 1997,
the period from February 5, 1997 to September 30, 1997, pro forma nine
months ended September 30, 1996 and 1997 of $124.7 million, $15.7 million,
$1.1 million, $79.7 million and $15.2 million, respectively.
(8) In connection with the procedure to review and, if necessary, adjust the
purchase price paid by the Company in connection with the Anchor
Acquisition, Deloitte & Touche LLP, independent accountants for Old Anchor,
were engaged by Old Anchor to audit (the Closing Balance Sheet). Management
of the Company believes that there may be certain adjustments to the
Closing Balance Sheet required which, if material, could impact the
purchase price paid by the Company in connection with the Anchor
Acquisition, the allocation of such purchase price and, as a result, the
historical balance sheet of the Company at September 30, 1997 and the pro
forma balance sheet for the Company at December 31, 1996, included
elsewhere in this Prospectus. See "Risk Factors -- Balance Sheets; Purchase
Price Adjustment."
(9) Total debt as of December 31, 1996 includes $462.3 million of pre-petition
liabilities and $90.5 million outstanding under Old Anchor's
debtor-in-possession credit facility.
(10) As a result of the declining profitability, decreasing cash flow and the
bankruptcy proceedings, the recoverable value of the carrying amount of
long-lived assets and intangibles was reviewed for impairment. Based upon
this review, the amount of remaining excess of the purchase price over the
fair value of net assets acquired of $457.2 million and $33.0 million of
other long-lived assets were written off at December 31, 1996. The excess
cost over fair value of net assets acquired had been amortized on a
straight line basis over a 40 year period. Amortization expense, included
as a component of cost of products sold, was approximately $13.9 million
for each of the years ended December 31, 1994, 1995 and 1996 and
approximately $10.4 million for the nine months ended September 30, 1996.
See the Notes to Old Anchor's Consolidated Financial Statements included
elsewhere in this Prospectus.
14
<PAGE> 22
RISK FACTORS
An investment in the Exchange Notes represents a high degree of risk. There
are a number of factors, including those specified below, which may adversely
affect the Company's ability to make payments on the Exchange Notes. Holders of
the Exchange Notes could therefore lose a substantial portion or all of their
investment in the Exchange Notes. Consequently, an investment in the Exchange
Notes should only be considered by persons who can assume such risk. The risk
factors described below are not necessarily exhaustive and each potential
investor is encouraged to perform its own investigation with respect to the
Company.
This Prospectus contains forward-looking statements, including statements
regarding, among other items, (i) the expected realization of Anchor's business
strategy and the cost savings estimated to be achieved in connection therewith
and the costs associated therewith, (ii) the sufficiency of cash flow and other
sources of liquidity to fund Anchor's debt service requirements, working capital
needs and other significant expenditures and (iii) anticipated trends in the
glass packaging industry, including with respect to industry capacity, product
demand and pricing. Forward-looking statements are typically identified by the
words "believe," "expect," "anticipate," "intend," "estimate," "project" and
similar expressions. These forward-looking statements are subject to a number of
risks and uncertainties, many of which are beyond Anchor's control. Actual
results could differ materially from those contemplated by these forward-looking
statements as a result of factors including those described below. In light of
these risks and uncertainties, there can be no assurance that the results and
events contemplated by the forward-looking information contained in this
Prospectus will in fact transpire. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. Anchor does not undertake any obligation to update or revise any forward-
looking statements.
This Prospectus contains historical financial information regarding
Glenshaw and Consumers. Prior results of Consumers and Glenshaw are not
indicative of the Company's future results. The nature and risks of the
restructuring carried out at Consumers and Glenshaw, and market conditions faced
by them, differ substantially from the nature and the risks of the business
strategy for the Company described under "Business -- Business Strategy."
LIMITED OPERATING HISTORY; RECENT INSOLVENCY OF OLD ANCHOR
The Company was formed in January 1997 to acquire certain assets and assume
certain liabilities of Old Anchor. Prior to the Anchor Acquisition, the Company
had no operations. In addition, former management of Old Anchor has largely been
replaced since the consummation of the Anchor Acquisition in February 1997 and
new management has concentrated on formulating and refining the Company's
business strategy. Since the Anchor Acquisition, the Company has had a limited
financial performance track record.
Additionally, Old Anchor sought protection under Chapter 11 of the
Bankruptcy Code in September 1996 and is subject to continuing reorganization
proceedings. In the bankruptcy, previous investors in, and lenders to, Old
Anchor incurred substantial losses. From 1993 to 1996, Old Anchor had
significant operating losses, incurring a 1996 net loss of approximately $655.8
million including a $490.2 million impairment of long-lived assets. As of
December 31, 1996, Old Anchor had an accumulated deficit of approximately $823.2
million. Because of the possible material effects of uncertainties resulting
from Old Anchor's filing for reorganization under Chapter 11 of the Federal
Bankruptcy Code and doubts about Old Anchor's ability to continue as a going
concern following its sale of substantially all of its assets on February 5,
1997, Arthur Andersen LLP, independent public accountants, has disclaimed an
opinion on Old Anchor's 1994, 1995 and 1996 financial statements.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
Anchor has incurred significant Indebtedness. At September 30, 1997,
Anchor's aggregate consolidated Indebtedness was $158.2 million, its
stockholders' equity was $87.0 million and it had outstanding advances of $5.9
million and outstanding letters of credit of $12.8 million under the Revolving
Credit Facility. In addition, subject to the restrictions in the Revolving
Credit Facility and the Indenture, the Company may incur
15
<PAGE> 23
additional Indebtedness from time to time to finance capital expenditures or for
other purposes. See "Description of Revolving Credit Facility." Substantially
all of the Company's assets have been pledged to secure the Notes and the
Revolving Credit Facility. On a pro forma basis, the Company's earnings for
fiscal 1996 would have been insufficient to cover its fixed charges. See
"Unaudited Pro Forma Financial Statements."
The level of the Company's Indebtedness could have important consequences
to holders of the Exchange Notes, including: (i) a substantial portion of the
Company's cash flow from operations must be dedicated to service debt and will
not be available for other purposes; (ii) the Company's ability to obtain
additional debt financing in the future for working capital, capital
expenditures or other needs may be limited; and (iii) the Company's level of
Indebtedness could limit its flexibility in reacting to changes in the industry
in which it competes and economic conditions in general. Certain of the
Company's competitors currently operate on a less leveraged basis and have
significantly greater operating and financing flexibility than the Company.
The Company's ability to pay interest on the Notes, to repay portions of
its long-term Indebtedness (including the Notes) and to satisfy its other debt
obligations will depend upon its future operating performance and the
availability of refinancing Indebtedness, which will be affected by prevailing
economic conditions and financial, business and other factors, certain of which
are beyond the Company's control. In addition, the indenture (the "Consumers
Indenture") governing Consumers International's 10 1/4% Senior Secured Notes
(the "Consumers International Notes") and Consumers' revolving credit facility
substantially restrict Consumers' ability to make further investments in the
Company whether through equity investments, loans or otherwise. Accordingly,
Anchor will not be able to rely on Consumers for liquidity or for payments on
the Notes. The Company anticipates that its operating cash flow, together with
borrowings under the Revolving Credit Facility, will be sufficient to meet its
operating needs and to meet its debt service requirements as they become due,
assuming that the Company achieves a significant portion of the cost reduction
components of its business strategy. See "Business -- Business Strategy."
However, if this is not the case, the Company will be forced to seek
alternatives that may include reducing or delaying capital expenditures, selling
assets, restructuring or refinancing its Indebtedness or seeking additional
equity capital. There can be no assurance that any such strategy could be
effected on satisfactory terms, if at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
In addition, the Company's Series A 10% Cumulative Convertible Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock") issued to
certain creditors of Old Anchor and contributed to the Plans (as defined) in
connection with the Anchor Acquisition is subject to mandatory redemption in
2009, which could adversely affect Anchor's ability to refinance the Notes at
their maturity. See "Description of Capital Stock."
SIGNIFICANT EXPENDITURES; DEPENDENCE ON SUCCESSFUL IMPLEMENTATION OF BUSINESS
STRATEGY
Old Anchor experienced net losses for each of the past four years. In
addition, Old Anchor's EBITDA in 1995 of $101.3 million declined to $28.8 for
the Company in 1996 on a pro forma basis after giving effect to the Anchor
Acquisition and the Note Offering. The Company has significant expenditures not
deducted in calculating EBITDA relating to the operation of its business,
including the following: (i) anticipated borrowings under the Revolving Credit
Facility; (ii) required pension plan contributions for underfundings of $13.4
million in 1998, $13.9 million in 1999 and $40.5 million to be contributed over
the three years thereafter; (iii) payments in respect of the Company's supply
agreement with The Stroh Brewery Company ("Stroh's") of $6.0 million in 1997 and
$7.0 million in 1998; (iv) significant capital expenditures of approximately
$24.0 million, $45.0 million and $45.0 million in the remainder of 1997, 1998
and 1999, respectively; (v) significant cash expenses of closing the Houston and
Dayville plants, including an estimated $5.0 million, $8.0 million and $3.0
million in the remainder of 1997, 1998 and 1999, respectively; and (vii) closing
costs associated with certain plants previously closed by Old Anchor, including
approximately $2.0 million, $11.0 million and $5.0 million in the remainder of
1997, 1998 and 1999, respectively. In connection with the Anchor Acquisition,
the Company assumed and amended Old Anchor's lease of the headquarters facility
located in Tampa, Florida and a related option to purchase. The term of the
amended lease expires on
16
<PAGE> 24
January 2, 1998, unless the Company has exercised its purchase right, in which
case the expiration date is February 1, 1998. The property is encumbered by a
mortgage in favor of Citicorp Leasing, Inc. ("Citicorp") which secures a loan
from Citicorp to the landlord, Fountain Associates I, Ltd. ("Fountain"), the
principal balance of which was $10.2 million as of February 5, 1997. This
mortgage indebtedness is required to be repaid or refinanced by February 1,
1998. Anchor is obligated to pay this indebtedness if Anchor does not exercise
its purchase option by January 2, 1998. If the property is subsequently sold, a
portion of the net proceeds is to be paid to Anchor to reimburse it for this
payment.
The Company is also accruing annual dividend payment obligations of
approximately $5.6 million in respect of the Company's Series A Preferred Stock
and approximately $6.7 million in respect of the Company's Series B Preferred
Stock, par value $.01 per share (the "Series B Preferred Stock"), although the
Series B Preferred Stock receives dividends only in kind until February 2000.
In order to meet its fixed payment obligations and retain sufficient
borrowing availability under the Revolving Credit Facility to satisfy its
working capital requirements, the Company must achieve significant cash flow
from operations which requires it to improve its operating results significantly
over those of Old Anchor. Based upon its current production plan, which is
subject to change, the Company estimates that its net sales for 1997 will
decline by approximately 15% as compared to pro forma net sales for 1996. In
order to improve on Old Anchor's operating results with this lower net sales
amount, the Company must achieve substantial cost savings and improvements in
average selling prices resulting from a shift in product mix toward products
with higher average selling prices. In the event that the operating improvements
from management's business strategy are materially less than estimated and/or
require a longer time frame than anticipated to achieve or the estimated costs
of the plant closings are materially higher than anticipated, the Company's
ability to service its debt and pay its other fixed charges could be adversely
impacted.
The estimated cost savings described under "Business -- Business Strategy,"
represent Anchor's current estimates of cost savings from implementation of
management's business strategy. These estimated future cost savings are based
upon a number of assumptions which may not be accurate, in which case the actual
results of such business strategy may differ materially from these estimates.
Moreover, these estimates relate only to estimated cost reductions on the items
described and therefore are not necessarily indicative of Anchor's financial
results, including EBITDA and net income, which are affected by a number of
other factors, including demand and pricing for Anchor's products and other
costs associated with Anchor's production, distribution and other activities.
In the event that Anchor's cash flow from operations is less than
anticipated or its cash expenditures are greater than anticipated and available
borrowings under the Revolving Credit Facility are used, there can be no
assurance that Anchor can raise additional funds through equity or debt
financings or asset sales given the financial and other covenants to which
Anchor is subject under the Indenture and the Revolving Credit Facility, Old
Anchor's recent insolvency and uncertainty regarding Anchor's future operating
performance, the pledge by Anchor of substantially all of its assets to secure
the Notes and the Revolving Credit Facility and the limitations on investments
by Consumers in Anchor imposed under Consumers' credit facilities. See
"-- Substantial Leverage; Ability to Service Debt" and "-- Restrictive Debt
Covenants."
RESTRICTIVE DEBT COVENANTS
The Indenture restricts the ability of the Company and its Restricted
Subsidiaries to, among other things, incur additional Indebtedness, incur liens,
pay dividends or make certain other restricted payments or investments,
consummate certain asset sales, enter into certain transactions with affiliates,
incur Indebtedness that is subordinate in right of payment to any senior
Indebtedness and senior in right of payment to the Notes, merge or consolidate
with any other person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the assets of the Company. The Indenture
also imposes restrictions on the ability of a subsidiary to pay dividends or
make certain payments to the Company. In addition, the Revolving Credit Facility
contains other and more restrictive covenants and prohibits the Company from
prepaying the Notes, except in certain circumstances. The Revolving Credit
Facility also requires the Company to maintain specified financial ratios and
satisfy certain financial tests. The Company's ability to meet such financial
ratios
17
<PAGE> 25
and tests may be affected by events beyond its control. There can be no
assurance that the Company will meet such tests. A breach of any of these
covenants could result in an event of default under the Revolving Credit
Facility. If such an event of default occurs, the lenders could elect to declare
all amounts borrowed under the Revolving Credit Facility, together with accrued
interest, to be immediately due and payable and to terminate all commitments
under the Revolving Credit Facility. If the Company were unable to repay all
amounts declared due and payable, the lenders could proceed against the Bank
Collateral granted to them to satisfy the Indebtedness and other obligations due
and payable. If Indebtedness under the Revolving Credit Facility were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full such Indebtedness and the other Indebtedness of the
Company, including the Notes. See "Description of the Notes -- Certain
Covenants" and "Description of Revolving Credit Facility."
BALANCE SHEETS; PURCHASE PRICE ADJUSTMENT
The purchase price paid by the Company in connection with the Anchor
Acquisition is subject to adjustment. On June 13, 1997, Old Anchor delivered to
the Company the Closing Balance Sheet, which indicates that Old Anchor believes
that it is entitled to additional payments from the Company and Owens totaling
approximately $76.3 million relating primarily to purchase price adjustments. On
July 28, 1997, the Company and Owens delivered individual notices of
disagreement to Old Anchor, opposing some of the adjustments sought by Old
Anchor as well as asserting other adjustments in the Company's or Owen's favor.
The Company's notice of disagreement requested a reduction to the purchase price
of approximately $96.8 million. There may be litigation and/or arbitration over
some or all aspects of adjustments requested by all parties. Such adjustments,
if material, could impact the purchase price paid by the Company in connection
with the Anchor Acquisition, the allocation of the purchase price and, as a
result, the Company's balance sheet at September 30, 1997 and its pro forma
balance sheet at December 31, 1996.
COMPETITION; THE GLASS CONTAINER MARKET
The Company is subject to intense competition from other glass container
producers as well as from makers of alternative forms of packaging, such as
aluminum cans and plastic containers. The Company's principal competitors among
glass container producers are Owens and Ball-Foster, both of which are larger
competitors with less leverage and more financial resources than the Company.
Over the past several years, there has been a decline in the glass container
industry, principally as a result of the loss of market share in the soft drink
and food industries to alternative forms of packaging. Competitive pressures
from alternative forms of packaging, as well as consolidation in the glass
container industry, have resulted in excess capacity and have led to severe
pricing pressures on glass container manufacturers. See "Industry" and
"Business -- Competition."
During the period of its continued losses, insolvency and uncertainty
regarding future operations and ownership, Old Anchor's relationships with many
of its major customers were adversely affected and Old Anchor lost certain
customers or received volume reductions and in many cases reduced prices
substantially in order to maintain production volumes. In order to successfully
improve the Company's operating performance as compared to Old Anchor, the
Company will need to establish and maintain strong relationships with major
customers based upon competitive pricing. There can be no assurance that the
Company will be able to achieve this objective.
DEPENDENCE ON KEY PERSONNEL AND G&G
Certain executive officers of the Company are key to the management and
direction of the Company. In addition, the Company has entered into a Management
Agreement (the "Management Agreement") with G&G, an affiliate of the Company,
for the provision of certain management services, including marketing,
managerial and technical assistance. See "Certain Transactions." The initial
term of the Management Agreement expires on February 5, 2000. Thereafter, the
Management Agreement automatically renews for periods of one year unless either
party gives notice of termination at least six months prior to the expiration of
the then current term. In addition, the Company does not, as a general rule,
enter into employment agreements with its executive officers and/or other key
employees. The loss of the services of such executive
18
<PAGE> 26
officers or of G&G, by termination of the Management Agreement or otherwise,
could have a material adverse effect on the Company, and there can be no
assurance that the Company would be able to find replacements for such executive
officers or G&G with equivalent business experience and skills. See
"Management -- Directors and Executive Officers of the Company" and "Certain
Transactions."
CONTROLLING STOCKHOLDER; TRANSACTIONS WITH RELATED PARTIES
Mr. Ghaznavi effectively controls Anchor through G&G's control of Consumers
and its subsidiaries, Consumers International and Consumers U.S. Consumers U.S.
owns approximately 59% of Anchor on a fully diluted basis and is entitled, as
sole holder of the Company's Class B Common Stock, par value $.10 per share (the
"Class B Common Stock"), to appoint five of the nine members of Anchor's Board
of Directors (the "Board of Directors") until February 5, 2000. See
"Management -- Board of Directors of the Company" and "Description of Capital
Stock." As a result, Anchor is part of a group of glass manufacturing companies
with Consumers and Glenshaw. A portion of the cost savings anticipated to be
achieved by Anchor in connection with the implementation of its business
strategy is dependent upon the successful reallocation of customers between
Anchor and Consumers in order to achieve freight cost savings and plant
operational efficiencies. In addition, it is anticipated that Anchor will be
party to a number of arrangements with Consumers, Glenshaw and other affiliated
companies regarding, among other things, bulk purchasing, production for
customers (for which commissions may be payable), managerial services, including
the Management Agreement with G&G, leasing of fleets and equipment and shipping.
See "Certain Transactions." The Indenture and the Revolving Credit Facility
limit commissions and other fees payable by the Company to Consumers and its
affiliates and otherwise require that transactions and agreements among the
companies be on terms no less favorable to the Company than could be obtained
from third parties and, for transactions in excess of certain thresholds, be
approved by the Company's independent directors and/or submitted to an
independent financial advisor. See "Description of Revolving Credit Facility"
and "Description of the Notes." The business, financial condition and results of
operations of the Company may be adversely affected by decisions made by
Consumers taking into account the needs of Consumers, Glenshaw and other
affiliated companies. Consumers is highly leveraged and a default by Consumers
on its indebtedness or an insolvency or bankruptcy of Consumers would not
constitute a default under the Indenture. A default on indebtedness, insolvency
or bankruptcy of Consumers could adversely affect Anchor's business and results
of operations, given that many members of management at Consumers are involved
in Anchor's affairs and that Anchor may be closely associated with Consumers,
its customers and suppliers, which could adversely affect trading prices for the
Notes or Anchor's ability to raise debt or equity capital.
LABOR RELATIONS
The Company is a party to collective bargaining agreements with labor
unions that will expire between March 1999 and August 1999. In the aggregate,
under those agreements the Company currently employs approximately 2,800
full-time employees. The Company's inability to negotiate acceptable contracts
with these unions could result in strikes by the affected workers and increased
operating costs as a result of higher wages or benefits paid to union members.
Although Old Anchor historically has not had any labor disruptions, if the
unionized workers were to engage in a strike or other work stoppage, the Company
could experience a significant disruption of its operations and higher ongoing
labor costs, which could have an adverse effect on the Company's business,
financial position and results of operations. See "Business -- Employees."
DEPENDENCE ON KEY CUSTOMERS
Old Anchor's two largest customers (Anheuser-Busch and Stroh's) accounted
for 11.3% and 10.8% of its net sales in 1996, respectively, and 8.1% and 15.3%
of its net sales for the period since the Anchor Acquisition on February 5, 1997
to September 30, 1997, respectively. The termination by either of such customers
of its relationship with the Company could have a material adverse effect upon
the Company's business, financial position and results of operations.
The Company's existing customers' purchase orders and contracts typically
vary from one to three years. Prices under these arrangements are tied to market
standards and therefore vary with market conditions. The
19
<PAGE> 27
contracts generally are requirements contracts which do not obligate the
customer to purchase any given amount of product from the Company. Accordingly,
notwithstanding the existence of certain supply contracts, the Company faces the
risk that customers will not purchase the amounts expected by the Company
pursuant to such supply contracts.
SEASONALITY; RAW MATERIALS
Due principally to the seasonal nature of the brewing, iced tea and other
beverage industries, in which demand is stronger during the summer months, the
Company's shipment volume is expected to be higher in the second and third
quarters. Consequently, the Company normally builds inventory during the first
quarter in anticipation of seasonal demands during the second and third
quarters. Historically, the Company has scheduled shutdowns of its plants for
furnace rebuilds and machine repairs in the first and fourth quarters of the
year to coincide with scheduled holiday and vacation time under its labor union
contracts. These shutdowns adversely affect profitability during the first and
fourth quarters.
Sand, soda ash, limestone, cullet and corrugated packaging materials are
the principal raw materials used by the Company. Raw materials represented
approximately 26.2% of the cost of products sold for the Company in 1996. The
Company believes that a sufficient supply of these raw materials exists and that
the Company is not dependent upon any single supplier for any of them. Material
increases in the cost of any of the principal raw materials used by the Company
could have a material adverse impact on the Company's results of operations.
ENVIRONMENTAL AND OTHER GOVERNMENT REGULATION
Environmental Regulation and Compliance. The Company's operations are
subject to increasingly complex and detailed Federal, state and local laws and
regulations including, but not limited to, the Federal Water Pollution Control
Act of 1972, as amended, the U.S. Clean Air Act, as amended, and the Federal
Resource Conservation and Recovery Act, as amended, that are designed to protect
the environment. Among the activities subject to regulation are the disposal of
checker slag (furnace residue usually removed during furnace rebuilds), the
disposal of furnace bricks containing chromium, the disposal of waste, the
discharge of water used to clean machines and cooling water, dust produced by
the batch mixing process, underground storage tanks and air emissions produced
by furnaces. In addition, the Company is required to obtain and maintain permits
in connection with its operations. Many environmental laws and regulations
provide for substantial fines and criminal sanctions for violations. The Company
believes that it is in material compliance with applicable environmental laws
and regulations. It is difficult to predict the future development of such laws
and regulations or their impact on future earnings and operations, but the
Company anticipates that these standards will continue to require increased
capital expenditures. There can be no assurance that material costs or
liabilities will not be incurred.
Certain environmental laws, such as the U.S. Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA" or "Superfund") and analogous
state laws provide for strict, joint and several liability for investigation and
remediation of releases of hazardous substances into the environment. Such laws
may apply to conditions at properties presently or formerly owned or operated by
an entity or its predecessors, as well as properties at which wastes
attributable to an entity or its predecessors were disposed. See
"Business -- Environmental and Other Government Regulation."
The Company is engaged in investigation and remediation projects at plants
currently being operated and at closed facilities. In addition, Old Anchor was
named as a potentially responsible party ("PRP") under CERCLA with respect to a
number of sites. Of these sites, the Company has assumed responsibility with
respect to four sites that are currently active. While the Company may be
jointly and severally liable for costs related to these sites, in most cases, it
is only one of a number of PRPs who are also jointly and severally liable. With
respect to the four currently active sites for which the Company has assumed
responsibility, the Company estimates that its share of the aggregate cleanup
costs of such sites should not exceed $2.0 million, and that the likely range
after taking into consideration the contributions anticipated from other
potentially responsible parties could be significantly less. However, no
assurance can be given that the cleanup costs of
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such sites will not exceed $2.0 million or that the Company will have these
funds available. The Company has established reserves of approximately $16.0
million for environmental costs which it believes are adequate to address the
anticipated costs of remediation of these operated and closed facilities and its
liability as a PRP under CERCLA. The timing and magnitude of such costs cannot
always be determined with certainty due to, among other things, incomplete
information with respect to environmental conditions at certain sites, the
absence of regulatory determinations with respect to environmental requirements
at certain sites, new and amended environmental laws and regulations, and
uncertainties regarding the timing of remedial expenditures.
Management anticipates that capital expenditures required for environmental
compliance will be approximately $1.8 million for 1997 and approximately $1.5
million annually in 1998 and 1999. However, there can be no assurance that
future changes in such laws, regulations or interpretations thereof or the
nature of the Company's operations will not require the Company to make
significant additional capital expenditures to ensure compliance in the future.
ERISA. The Company maintains three defined benefit plans and two profit
sharing plans that, prior to the Anchor Acquisition, were maintained by Old
Anchor. These plans are covered by the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), are tax-qualified under the Internal Revenue Code
of 1986, as amended (the "Code"), and subject to regulation by the Internal
Revenue Service and the Department of Labor. The three defined benefit plans are
also subject to regulation by the Pension Benefit Guaranty Corporation ("PBGC").
The Company's two profit sharing plans contain cash or deferred arrangements
under Section 401(k) of the Code. The Company' tax-qualified plans must meet
stringent requirements both in form and in operation in order to maintain their
tax-qualified status. These requirements are constantly changing with the
enactment of new pension legislation, the issuance of new Treasury regulations
and other guidance from the Internal Revenue Service. The loss of a plan's
qualified status could result in the assessment of tax on the plan's trust
income, disallowance of the Company's tax deduction for contributions, and
immediate income tax liability upon individual participants' benefits.
The defined benefit plan covering salaried employees was frozen at the end
of 1994, and, at the end of 1996, was not underfunded under Statement of
Financial Accounting Standards No. 87 ("SFAS No. 87"). However, the two defined
benefit plans that are maintained for hourly employees are significantly
underfunded and will require substantial cash contributions over the next few
years. At the end of 1996, these two plans in the aggregate had unfunded
benefits under SFAS No. 87 totaling approximately $76.7 million. Pension
underfunding contributions made to the three defined benefit plans during 1997,
excluding contributions made by the Company upon the closing of the Anchor
Acquisition, were approximately $15.1 million. In addition, the underfunding of
the two hourly plans required the payment of increased premiums to the PBGC
under its pension guaranty program of approximately $1.8 million in 1997.
Employee Health and Safety Regulation. The Company's operations are
subject to a variety of worker safety laws. The U.S. Occupational Safety and
Health Act of 1970 ("OSHA") and analogous state laws mandate general
requirements for safe workplaces for all employees. The Company believes that
its operations are in material compliance with applicable employee health and
safety laws.
Deposit and Recycling Legislation. In recent years, legislation has been
introduced at the Federal, state and local levels that would require a deposit
or tax, or impose other restrictions, on the sale or use of certain containers,
particularly beer and carbonated soft drink containers. To date, ten states have
enacted some form of deposit legislation, although no such new legislation has
been enacted since 1986. The enactment of additional laws or comparable
administrative actions that would require a deposit on beer or soft drink
containers, or otherwise restrict their use, could have a material adverse
effect on the Company's business. In jurisdictions where deposit legislation has
been enacted, the consumption of beverages in glass bottles has generally
declined due largely to the preference of retailers for handling returned cans
and plastic bottles. Container deposit legislation continues to be considered
from time to time at various governmental levels.
SECURITY FOR THE NOTES
The Notes will be secured by a first priority lien on the Collateral, which
consists principally of substantially all of the Company's property, plant and
equipment, other than the Bank Collateral. No
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assurance can be given that the proceeds from a sale of the Collateral following
acceleration of the Notes would not be substantially less than would be required
to repay amounts due in respect of the Notes. On a pro forma basis, the net book
value of the Company's existing property, plant and equipment as of December 31,
1996 was $321.0 million. The appraised value as of December 31, 1996 of nine of
the manufacturing facilities, one mold shop and one repair shop, as estimated by
AAA was $243.0 million on a "liquidation in place" basis. See Summarization
Letter of AAA, attached as Annex A to this Prospectus.
By its nature, some or all of the Collateral may be illiquid and, because
of the integrated nature of the Company's facilities, difficult to sell other
than as a complete unit. Accordingly, the amount that might be realized from the
sale of the Collateral may be materially less than its appraised value and no
assurance can be given that the Collateral could be sold expeditiously, if at
all. In addition, the appraised value reflects AAA's estimate as of the date of
the appraisal and assumes that a sale would not be made under distress
conditions. The actual amount realized from a sale of the Collateral in
connection with any foreclosure would be affected by the Company's operating
results, market conditions, the physical condition of the Collateral, the need
for environmental or other capital expenditures with respect to the Collateral
and other factors affecting the Collateral's resale value at the time of sale
and would also be adversely affected if the sale were made under distress
conditions. The ability of the Trustee to realize upon the Collateral will be
delayed if the Company is subject to bankruptcy or receivership proceedings and
may be affected by environmental regulations.
If the proceeds received from the sale of the Collateral (after payment of
any expenses of the sale and repayment of Indebtedness secured by liens
permitted under the Indenture or other liens on the Collateral which might, in
either case, have priority under applicable law to the lien on the Collateral in
favor of the Trustee) were insufficient to pay all amounts due under the Notes,
then the holders of the Notes would (to the extent of such insufficiency) only
have an unsecured claim against any remaining unencumbered assets of the Company
(subject, in the case of subsidiaries of the Company, to the claims of creditors
of each subsidiary). Substantially all of the assets of the Company other than
the Collateral are pledged to secure other Indebtedness of the Company.
Accordingly, there is a risk that holders of the Notes would receive less than
the amount of their investment in the event of a liquidation or reorganization
of the Company. In addition, although Consumers U.S. has pledged the shares of
Anchor that it owns directly to secure its guarantee of the Notes, it is not
expected that a foreclosure of these shares by the Trustee would increase the
amount available to pay the holders of the Notes and, moreover, such shares will
be released as Collateral upon any sale by Consumers U.S. of such shares.
The Owens technology utilized by Anchor pursuant to the Technology
Agreement is important to the operation of its plants. The Trustee and the
collateral agent under the Revolving Credit Facility are parties to an Assurance
Agreement with Owens, which grants certain rights to such collateral agent and
the Trustee in the event of a foreclosure. However, a default by Consumers or
Anchor under, or a termination of, the Technology Agreement would not constitute
a default under the Indenture. Accordingly, the Technology Agreement could be
terminated without giving the Trustee the right to foreclose on the Collateral
under the Indenture. Moreover, the Technology Agreement and the rights
thereunder may not be transferred to or used by a competitor or customer of
Owens (as determined by Owens) without Owens' consent, which limitation may
adversely affect the Trustee's ability to realize on the Collateral, including
the timing of and proceeds obtained in connection with a sale of the Collateral
following a foreclosure.
FRAUDULENT CONVEYANCE RISKS
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court to subordinate or avoid the obligation
of, or liens securing the Notes or any Guarantee in favor of, other existing or
future creditors of the Company or a Guarantor.
The incurrence by the Company of the Indebtedness evidenced by the Notes is
subject to federal and state statutes and principles relating to fraudulent
conveyances ("Fraudulent Conveyance Laws") which could be invoked in a
bankruptcy proceeding or a lawsuit by or on behalf of creditors of the Company.
Under the Fraudulent Conveyance Laws, if, at the time the Notes were issued and
the proceeds applied (a) the Company issued the Notes and applied the proceeds
with the intent of hindering, delaying or defrauding
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creditors, or (b) the Company received less than a reasonably equivalent value
or fair consideration for granting the liens and incurring the Indebtedness
under, or issuing, the Notes, and, after applying the proceeds, the Company (i)
was insolvent or rendered insolvent by reason of such actions, (ii) was engaged
in a business or transaction or was or was about to engage in a business or
transaction for which its assets constituted unreasonably small capital or (iii)
intended to incur, or believed that it would incur, debts beyond its ability to
pay as they matured (as such terms are defined in, or interpreted under,
Fraudulent Conveyance Laws), a court could subordinate all or part of the Notes
to existing and future Indebtedness of the Company, recover any payments made on
the Notes or take other actions detrimental to the holders of the Notes,
including, under certain circumstances, invalidating the Notes and/or the liens
securing the Notes.
In addition, Fraudulent Conveyance Laws may apply to the Guarantors'
issuance of the Guarantees. Pursuant to the terms of the Guarantees, the
liability of each Guarantor is limited to the maximum amount of Indebtedness
permitted, at the time of the grant of the Guarantee, to be incurred in
compliance with the Fraudulent Conveyance Laws or other similar laws. To the
extent that a court were to find that (x) a Guarantee was incurred by a
Guarantor with actual intent to hinder, delay or defraud any present or future
creditor or (y) such Guarantor did not receive fair consideration or reasonably
equivalent value for issuing its Guarantee and such Guarantor (i) was insolvent,
(ii) was rendered insolvent by reason of the issuance of such Guarantee, (iii)
was engaged or about to engage in a business or transaction for which the
remaining assets of such Guarantor constituted unreasonably small capital to
carry on its business or (iv) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured (as such terms
are defined in, or interpreted under, Fraudulent Conveyance Laws), a court could
avoid or subordinate such Guarantee in favor of the Guarantor's creditors. Among
other things, a legal challenge of a Guarantee on fraudulent conveyance grounds
may focus on the benefits, if any, realized by the Guarantor as a result of the
issuance by the Company of the Notes. The Guarantees to be given by future
Restricted Subsidiaries of the Company will have to be supported by a direct
quantifiable benefit for each such Guarantee reasonably equivalent to the
obligation taken on in order to uphold such Guarantee, which will be
particularly difficult to demonstrate with respect to future Guarantees given by
future Restricted Subsidiaries of the Company that are not in existence at the
time of the issuance of the Notes. Such analysis will depend upon the financial
condition of any future Restricted Subsidiary and there can be no assurance that
such a Guarantee will be enforceable in the face of a challenge under the
Fraudulent Conveyance Laws. To the extent any Guarantees were avoided as a
fraudulent conveyance or held unenforceable for any other reason, the claims of
holders of the Notes in respect of such Guarantor would be adversely affected
and such holders would, to such extent, be creditors solely of the Company and
any Guarantor whose Guarantee was not avoided or held unenforceable. To the
extent the claims of the holders of the Notes against the issuer of an invalid
Guarantee were subordinated, they would be subject to the prior payment of all
liabilities of such Guarantor. There can be no assurance that, after providing
for all prior claims, there would be sufficient assets to satisfy the claims of
the holders of the Notes relating to any voided portion of any of the
Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any such proceeding. Under one measure,
however, the Guarantors may be considered insolvent if the sum of their debts,
including contingent liabilities, were greater than the fair marketable value of
all of their assets at a fair valuation or if the present fair marketable value
of their assets were less than the amount that would be required to pay their
probable liability on their existing debts, including contingent liabilities, as
they become absolute and mature.
Based upon financial and other information, the Company believes that the
Notes and the Guarantee by Consumers U.S. are being incurred for proper purposes
and in good faith and that the Company and Consumers U.S. are solvent and will
continue to be solvent after issuing the Notes or its Guarantee, as the case may
be, will have sufficient capital for carrying on its business after such
issuance and will be able to pay its debts as they mature. There can be no
assurance, however, that a court passing on such standards would agree with the
Company. See "Management's Discussion and Analysis of Pro Forma Financial
Condition and Results of Operations."
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PURCHASE OF NOTES UPON CHANGE OF CONTROL
Upon a Change of Control, the Company is required to offer to purchase all
outstanding Notes at 101% of the principal amount thereof plus accrued and
unpaid interest to the date of purchase. The source of funds for any such
purchase would be the Company's available cash or cash generated from other
sources. However, there can be no assurance that sufficient funds would be
available at the time of any Change of Control to make any required repurchases
of Notes tendered or, if applicable, that restrictions in the Revolving Credit
Facility would permit the Company to make such required repurchases. See
"Description of the Notes -- Change of Control."
LACK OF A PUBLIC MARKET FOR THE NOTES
The Outstanding Notes held by QIBs are designated for trading in the PORTAL
Market. The Exchange Notes constitute securities for which there is no
established trading market. The Company does not intend to list the Exchange
Notes on any securities exchange or to seek approval for quotation through any
automated quotation system, and no active public market for the Exchange Notes
is currently anticipated. If a market for the Exchange Notes should develop,
such Exchange Notes could trade at a discount from their principal amount. There
can be no assurance of the liquidity of any markets that may develop for the
Exchange Notes, the ability of holders of the Exchange Notes to sell their
Exchange Notes, or the price at which holders would be able to sell their
Exchange Notes. Future trading prices of the Exchange Notes will depend on many
factors, including prevailing interest rates, the Company's operating results
and the market for similar securities. To the extent that any Outstanding Notes
are tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Outstanding Notes could be adversely affected.
No prediction can be made as to the effect, if any, that future sales of
Exchange Notes, or the availability of Exchange Notes for future sale, will have
on the market price of the Exchange Notes prevailing from time to time. Sales of
substantial amounts of Exchange Notes, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Exchange Notes.
No assurance can be given that sales of substantial amounts of Exchange Notes
will not occur in the foreseeable future or as to the effect that any such
sales, or the perception that such sales may occur, will have on the market or
the market price of the Exchange Notes. No assurance can be given as to the
liquidity of the trading market for the Exchange Notes or that an active public
market for the Exchange Notes will develop or, if developed, will continue. If
an active public market does not develop or is not maintained, the market price
and liquidity of the Exchange Notes may be adversely affected.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a consequence of the offer or sale of the Outstanding Notes pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws, holders
of Outstanding Notes who do not exchange their Outstanding Notes for Exchange
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Outstanding Notes as set forth in the legend
thereon. In general, the Outstanding Notes may not be offered or sold unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the
Outstanding Notes under the Securities Act. See "Outstanding Notes Registration
Rights."
Upon consummation of the Exchange Offer, due to the restrictions on
transfer of the Outstanding Notes and the absence of such restrictions
applicable to the Exchange Notes, it is likely that the market, if any, for
Outstanding Notes will be relatively less liquid than the market for Exchange
Notes. Consequently, holders of Outstanding Notes who do not participate in the
Exchange Offer could experience significant diminution in the value of their
Outstanding Notes, compared to the value of the Exchange Notes.
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<PAGE> 32
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is being made by the Company and the Parent Guarantor to
satisfy certain of their obligations under the Registration Rights Agreement.
The Registration Rights Agreement requires the Company and the Parent Guarantor
to (i) file with the Commission a registration statement (the "Exchange Offer
Registration Statement") under the Securities Act with respect to the Exchange
Notes within 90 days after the issuance of the Outstanding Notes (the "Issue
Date"), (ii) use their best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act within 180 days after the
Issue Date, (iii) keep the Exchange Offer open for acceptance for not less than
30 days (or longer if required by applicable law) after the date that notice of
the Exchange Offer is mailed to holders of the Outstanding Notes, and (iv) use
their best efforts to consummate the Exchange Offer within 225 days after the
Issue Date. In the event that the Company and the Parent Guarantor fail to
satisfy these or certain other of their obligations under the Registration
Rights Agreement, the interest rate on the Outstanding Notes will be increased.
See "Outstanding Notes Registration Rights." As a result of its failure to have
an Exchange Offer Registration Statement or Shelf Registration Statement
declared effective on or prior to October 14, 1997 (the 180th day after the
Issue Date), the Company is currently paying Additional Interest in the amount
of 0.50% per annum on the Notes. In addition, the Company will not have
exchanged all Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to November 28, 1997 (the 225th day after the Issue
Date) and as a result, the Additional Interest rate will increase by an
additional 0.50% per annum commencing on November 29, 1997.
TERMS OF THE EXCHANGE
The Company hereby offers to exchange, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal (which together constitute the Exchange Offer), Exchange Notes for
an equal principal amount of Outstanding Notes. The terms of the Exchange Notes
are identical in all material respects to those of the Outstanding Notes, except
for certain transfer restrictions and registration rights relating to the
Outstanding Notes. The Exchange Notes will be entitled to the benefits of the
Indenture. See "Description of the Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Outstanding Notes being tendered or accepted for exchange. As of the
date of this Prospectus, $150 million aggregate principal amount of the
Outstanding Notes is outstanding. Outstanding Notes tendered in the Exchange
Offer must be in denominations of a minimum principal amount of $1,000 or any
integral multiple thereof.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, holders of Outstanding Notes (other
than any holder who is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) who exchange their Outstanding Notes for Exchange
Notes pursuant to the Exchange Offer generally may offer such Exchange Notes for
resale, resell such Exchange Notes and otherwise transfer such Exchange Notes
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of the holders' business and such holders are not participating
in, and have no arrangement or understanding with any person to participate in,
a distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Outstanding Notes, where such
Outstanding Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution." In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the Exchange Notes may not be offered or
sold unless they have been registered or qualified for sale in such jurisdiction
or an exemption from registration or qualification is available and complied
with. The Company has agreed, pursuant to the Registration Rights Agreement and
subject to certain specified limitations therein, to register or qualify the
Exchange Notes for offer or sale under the securities or blue sky laws of such
jurisdictions as any holders of the Exchange Notes request in writing. If a
holder of Outstanding Notes does not exchange such Outstanding Notes for
Exchange Notes pursuant to the Exchange Offer, such Outstanding Notes will
continue to be subject to the restrictions on transfer contained in the legend
thereon. In general, the Outstanding Notes may not be offered or sold unless
registered under the Securities Act, except pursuant to an
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exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer expires on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1997 unless the
Company in its sole discretion extends the period during which the Exchange
Offer is open, in which event the term "Expiration Date" means the latest time
and date on which the Exchange Offer, as so extended by the Company, expires.
The Company reserves the right to extend the Exchange Offer at any time and from
time to time prior to the Expiration Date by giving written notice to The Bank
of New York (the "Exchange Agent") and by public announcement communicated by no
later than 9:00 a.m., New York City time, on the next business day following the
previously scheduled Expiration Date, unless otherwise required by applicable
law or regulation, by making a release to the Dow Jones News Service. During any
extension of the Exchange Offer, all Outstanding Notes previously tendered
pursuant to the Exchange Offer will remain subject to the Exchange Offer and may
be accepted for exchange by the Company.
The "Exchange Date" will be the second business day following the
Expiration Date. The Company expressly reserves the right to (i) terminate the
Exchange Offer and not accept for exchange any Outstanding Notes for any reason,
including if any of the events set forth below under "-- Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by the
Company and (ii) amend the terms of the Exchange Offer in any manner, whether
before or after any tender of the Outstanding Notes. If any such termination or
amendment occurs, the Company will notify the Exchange Agent in writing and will
either issue a press release or give written notice to the holders of the
Outstanding Notes as promptly as practicable. Unless the Company terminates the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date,
the Company will exchange the Exchange Notes for the tendered Outstanding Notes
on the Exchange Date. Any Outstanding Notes not accepted for exchange for any
reason will be returned without expense to the tendering holder thereof as
promptly as practicable after expiration or termination of the Exchange Offer.
See "-- Acceptance of Outstanding Notes for Exchange; Delivery of Exchange
Notes."
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by the Company to record holders of Outstanding Notes
and will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the lists of holders for subsequent
transmittal to beneficial owners of Outstanding Notes.
PROCEDURES FOR TENDERING OUTSTANDING NOTES
The tender to the Company of Outstanding Notes by a holder thereof pursuant
to any one of the procedures set forth below will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
General Procedures. A holder of an Outstanding Note may tender the same by
(i) properly completing and signing the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) and delivering the same, together with
(a) the certificate or certificates representing the Outstanding Notes being
tendered and any required signature guarantees, to the Exchange Agent at its
address set forth in the Letter of Transmittal on or prior to the Expiration
Date or (b) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of the Outstanding Notes being tendered, if such procedure is
available, into the Exchange Agent's Account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below, or
(ii) complying with the guaranteed delivery procedures described below.
If tendered Outstanding Notes are registered in the name of the signer of
the Letter of Transmittal and the Exchange Notes to be issued in exchange
therefor are to be issued (and any untendered Outstanding Notes are to be
reissued) in the name of the registered holder, the signature of such signer
need not be guaranteed. In any other case, the tendered Outstanding Notes must
be endorsed or accompanied by written instruments of transfer in form
satisfactory to the Company and duly executed by the registered holder and the
signature on the endorsement or instrument of transfer must be guaranteed by a
commercial bank or trust company located or having an office or correspondent in
the United States or by a member firm of a national securities exchange or the
National Association of Securities Dealers, Inc. or by a member of a signature
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<PAGE> 34
medallion program such as "STAMP" (any of the foregoing hereinafter referred to
as an "Eligible Institution"). If the Exchange Notes and/or Outstanding Notes
not exchanged are to be delivered to an address other than that of the
registered holder appearing on the note register for the Outstanding Notes, the
signature on the Letter of Transmittal must be guaranteed by an Eligible
Institution.
Any beneficial owner whose Outstanding Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Outstanding Notes should contact such holder promptly and instruct
such holder to tender Outstanding Notes on such beneficial owner's behalf. If
such beneficial owner wishes to tender such Outstanding Notes itself, such
beneficial owner must, prior to completing and executing the Letter of
Transmittal and delivering such Outstanding Notes, either make appropriate
arrangements to register ownership of the Outstanding Notes in such beneficial
owner's name or follow the procedures described in the immediately preceding
paragraph. The transfer of record ownership may take considerable time.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Outstanding Notes is received by the Exchange Agent, (ii) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by a Book-Entry Confirmation is received by the Exchange Agent or
(iii) a Notice of Guaranteed Delivery or letter or facsimile transmission to
similar effect (as provided above) from an Eligible Institution is received by
the Exchange Agent. Issuances of Exchange Notes in exchange for Outstanding
Notes tendered pursuant to a Notice of Guaranteed Delivery or letter or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the Letter of Transmittal, the
tendered Outstanding Notes (or Book-Entry Confirmation, if applicable) and any
other required documents.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Outstanding Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of counsel to
the Company, be unlawful. The Company also reserves the absolute right to waive
any of the conditions of the Exchange Offer or any defect or irregularities in
tenders of any particular holder whether or not similar defects or
irregularities are waived in the case of other holders. Neither the Company, the
Exchange Agent nor any other person will be under any duty to give notification
of any defects or irregularities in tenders or will incur any liability for
failure to give any such notification. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND ALL OTHER DOCUMENTS IS AT
THE ELECTION AND RISK OF THE TENDERING HOLDERS, AND DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED AND CONFIRMED BY THE EXCHANGE AGENT. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED
WITH RETURN RECEIPT REQUESTED BE USED AND THAT THE MAILING BE MADE SUFFICIENTLY
IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. AS AN ALTERNATIVE TO
DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO
THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Book-Entry Transfer. The Exchange Agent will make a request to establish
an account with respect to the Outstanding Notes at the Book-Entry Transfer
Facility for purposes of the Exchange Offer within two business days after the
date of the Prospectus, and any financial institution that is a participant in
the Book-Entry Transfer Facility's systems may make book-entry delivery of
Outstanding Notes by causing the Book-Entry Transfer Facility to transfer such
Outstanding Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer.
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Guarantee Delivery Procedures. If a holder desires to tender Outstanding
Notes pursuant to the Exchange Offer, but time will not permit a Letter of
Transmittal, the Outstanding Notes or other required documents to reach the
Exchange Agent on or before the Expiration Date, or if the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if the Exchange Agent has received at its office a letter or facsimile
transmission from an Eligible Institution setting forth the name and address of
the tendering holder, the names in which the Outstanding Notes are registered,
the principal amount of the Outstanding Notes being tendered and, if possible,
the certificate numbers of the Outstanding Notes to be tendered, and stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange trading days after the Expiration Date, the Outstanding
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, together with a properly completed and duly executed Letter of
Transmittal and any other required documents, will be delivered by such Eligible
Institution to the Exchange Agent in accordance with the procedures outlined
above. Unless Outstanding Notes being tendered by the above-described method are
deposited with the Exchange Agent (including through a Book-Entry Confirmation)
within the time period set forth above (accompanied or preceded by a properly
completed Letter of Transmittal and any other required documents), the Company
may, at its option, reject the tender. Copies of a Notice of Guaranteed Delivery
which may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Outstanding Notes for exchange (the "Transferor")
thereby exchanges, assigns and transfers the Outstanding Notes to the Company
and irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Outstanding Notes to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the
Outstanding Notes and to acquire Exchange Notes issuable upon the exchange of
such tendered Outstanding Notes and that, when the same are accepted for
exchange, the Company will acquire good and unencumbered title to the tendered
Outstanding Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim. The Transferor also warrants
that it will, upon request, execute and deliver any additional documents deemed
by the Exchange Agent or the Company to be necessary or desirable to complete
the exchange, assignment and transfer of tendered Outstanding Notes. The
Transferor further agrees that acceptance of any tendered Outstanding Notes by
the Company and the issuance of Exchange Notes in exchange therefor will
constitute performance in full by the Company of its obligations under the
Registration Rights Agreement and that the Company will have no further
obligations or liabilities thereunder (except in certain limited circumstances).
All authority conferred by the Transferor will survive the death, bankruptcy or
incapacity of the Transferor and every obligation of the Transferor will be
binding upon the heirs, legal representatives, successors, assigns, executors,
administrators and trustees in bankruptcy of such Transferor.
By tendering Outstanding Notes and executing the Letter of Transmittal, the
Transferor certifies that (i) it is not an affiliate of the Company or Consumers
U.S. or, if the Transferor is an affiliate of the Company or Consumers U.S., it
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (ii) the Exchange Notes are being
acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the holder, (iii) the Transferor
has not entered into an arrangement or understanding with any other person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes, (iv) the Transferor is not a broker-dealer who purchased the
Outstanding Notes for resale pursuant to an exemption under the Securities Act,
and (v) the Transferor will be able to trade the Exchange Notes acquired in the
Exchange Offer without restriction under the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Outstanding Notes where such Outstanding Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities must acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Notes. See "Plan of Distribution."
28
<PAGE> 36
WITHDRAWAL RIGHTS
Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date. For a withdrawal to be effective, a
written letter or facsimile transmission notice of withdrawal must be received
by the Exchange Agent at its address set forth in the Letter of Transmittal not
later than the close of business on the Expiration Date. Any such notice of
withdrawal must specify the person named in the Letter of Transmittal as having
tendered Outstanding Notes to be withdrawn, the certificate numbers and
principal amount of Outstanding Notes to be withdrawn, that such holder is
withdrawing its election to have such Outstanding Notes exchanged and the name
of the registered holder of such Outstanding Notes, and must be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has succeeded
to the beneficial ownership of the Outstanding Notes being withdrawn. The
Exchange Agent will return the properly withdrawn Outstanding Notes promptly
following receipt of notice of withdrawal. Properly withdrawn Outstanding Notes
may be retendered by following one of the procedures described above under
"-- Procedures for Tendering Outstanding Notes" at any time on or prior to the
Expiration Date. If Outstanding Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Outstanding Notes and otherwise comply with
the procedures of such facility. All questions as to the validity of notices of
withdrawals, including time of receipt, will be determined by the Company, and
such determination will be final and binding on all parties.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Outstanding Notes validly tendered and not withdrawn
and the issuance of the Exchange Notes will be made on the Exchange Date. For
purposes of the Exchange Offer, the Company shall be deemed to have accepted for
exchange validly tendered Outstanding Notes when, as and if the Company has
given written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of
Outstanding Notes for the purposes of receiving Exchange Notes from the Company
and causing the Outstanding Notes to be assigned, transferred and exchanged.
Upon the terms and subject to the conditions of the Exchange Offer, delivery of
Exchange Notes to be issued in exchange for accepted Outstanding Notes will be
made by the Exchange Agent promptly after acceptance of the tendered Outstanding
Notes. Any Outstanding Notes which have been tendered for exchange but which are
not exchanged for any reason will be returned to the holder thereof without cost
to such holder (or, in the case of Outstanding Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry procedures described above, such Outstanding Notes
will be credited to an account maintained by such holder with such Book-Entry
Transfer Facility for the Outstanding Notes) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to issue Exchange Notes
in exchange for any properly tendered Outstanding Notes not previously accepted
and may terminate the Exchange Offer (by oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to the Dow Jones News
Service) or, at its option, modify or otherwise amend the Exchange Offer, if (i)
there shall be threatened, instituted or pending any action or proceeding
before, or any injunction, order or decree shall have been issued by, any court
or governmental agency or other governmental regulatory or administrative agency
or commission (a) seeking to restrain or prohibit the making or consummation of
the Exchange Offer or any other transaction contemplated by the Exchange Offer,
(b) assessing or seeking any damages as a result thereof or (c) resulting in a
material delay in the ability of the Company to accept for exchange or exchange
some or all of the Outstanding Notes pursuant to
29
<PAGE> 37
the Exchange Offer; or (ii) the Exchange Offer shall violate any applicable law
or any applicable interpretation of the staff of the Commission.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by it with respect to all or any portion of the Exchange Offer
regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition or may be waived by the Company in whole
or in part at any time or from time to time in its sole discretion. The failure
by the Company at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, and each right will be deemed an ongoing
right which may be asserted at any time or from time to time. In addition, the
Company has reserved the right, notwithstanding the satisfaction of each of the
foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by the Company concerning the fulfillment or
non-fulfillment of any conditions will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Outstanding Notes
tendered, and no Exchange Notes will be issued in exchange for any such
Outstanding Notes, if at such time any stop order shall be threatened or in
effect with respect to the Registration Statement of which this Prospectus
constitutes a part or qualification of the Indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. Questions relating to the procedure for tendering, as well as
requests for additional copies of this Prospectus or the Letter of Transmittal
and requests for Notices of Guaranteed Delivery, should be directed to the
Exchange Agent addressed as follows:
<TABLE>
<S> <C> <C>
By Registered or Certified Facsimile Transmission Number: By Hand/Overnight Delivery:
Mail:
(212) 571-3080
The Bank of New York (For Eligible Institutions The Bank of New York
Only)
101 Barclay Street Confirm by Telephone: 101 Barclay Street
(7 East) (212) 815-2742 Corporate Trust
New York, New York 10286 Services Window
Attn: Reorganization Section, For Information Call: Ground Level
Enrique Lopez (212) 815-2742 Attn: Reorganization Section,
Enrique Lopez
</TABLE>
Delivery of the Letter of Transmittal to an address other than as set forth
above, or transmission of instructions via facsimile other than as set forth
above, will not constitute a valid delivery.
The Bank of New York also acts as Trustee under the Indenture.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Company
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The expenses to be incurred in connection with the
Exchange Offer, including the fees and expenses of the Exchange Agent and
printing, accounting and legal fees, will be paid by the Company and are
estimated to be approximately $1 million.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Outstanding Notes in any jurisdiction
in which the making of the Exchange Offer or the acceptance thereof would not be
in compliance with the laws of such jurisdiction. However, the Company may, at
its
30
<PAGE> 38
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Outstanding
Notes in such jurisdiction. In any jurisdiction the securities laws or blue sky
laws of which require the Exchange Offer to be made by a licensed broker or
dealer, the Exchange Offer is being made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
APPRAISAL RIGHTS
Holders of Outstanding Notes will not have dissenters' rights or appraisal
rights in connection with the Exchange Offer.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the carrying value of the
Outstanding Notes as reflected in the Company's accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company upon the exchange of Exchange Notes for Outstanding
Notes. Expenses incurred in connection with the issuance of the Exchange Notes
will be amortized over the term of the Exchange Notes.
TRANSFER TAXES
Holders who tender their Outstanding Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith except that holders
who instruct the Company to register Exchange Notes in the name of, or request
Outstanding Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
FEDERAL INCOME TAX CONSEQUENCES
Holders of the Outstanding Notes contemplating acceptance of the Exchange
Offer should consult their own tax advisers with respect to their particular
circumstances and with respect to the effects of state, local or foreign tax
laws to which they may be subject. The following discussion is based upon the
provisions of the Internal Revenue Code of 1986, as amended, regulations,
rulings and judicial decisions, in each case as in effect on the date of this
Prospectus, all of which are subject to change.
The exchange of an Outstanding Note for an Exchange Note by a Holder
pursuant to the Exchange Offer will not constitute a taxable exchange. Such an
exchange will not result in taxable income, gain or loss being recognized by
such Holder or by the Company. Immediately after the exchange, such Holder will
have the same adjusted basis and holding period in each Exchange Note received
as such Holder had in the corresponding Outstanding Note surrendered immediately
prior to the exchange. See "Certain U.S. Federal Income Tax Considerations."
CONSEQUENCES OF FAILURE TO EXCHANGE
As a consequence of the offer or sale of the Outstanding Notes pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws, holders
of Outstanding Notes who do not exchange Outstanding Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Outstanding Notes as set forth in the legend thereon. In
general, the Outstanding Notes may not be offered or sold unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and applicable state securities laws. The Company does not currently anticipate
that it will register the Outstanding Notes under the Securities Act.
Upon consummation of the Exchange Offer, due to the restrictions on
transfer of the Outstanding Notes and the absence of such restrictions
applicable to the Exchange Notes, it is likely that the market, if any, for
Outstanding Notes will be relatively less liquid than the market for Exchange
Notes. Consequently, holders of Outstanding Notes who do not participate in the
Exchange Offer could experience significant diminution in the value of their
Outstanding Notes, compared to the value of the Exchange Notes.
31
<PAGE> 39
THE ANCHOR ACQUISITION AND THE NOTE OFFERING
The Anchor Acquisition. On February 5, 1997, pursuant to an Asset Purchase
Agreement dated December 18, 1996, as amended (the "Asset Purchase Agreement"),
between Consumers, Owens and Old Anchor (the rights and obligations of Consumers
under the Asset Purchase Agreement having been assigned to the Company), the
Company and Owens purchased substantially all of the assets of, and assumed
certain liabilities, of Old Anchor. Old Anchor's Antioch and Hayward, California
plants and its interest in Rocky Mountain Bottle Company were acquired, and the
related liabilities assumed, by Owens (the "Owens Purchase"). In June 1997,
Owens closed the Antioch plant. The Company purchased substantially all of the
other assets of Old Anchor, including eleven operating plants, several idled
plants and other related assets. The Company also assumed certain other
liabilities of Old Anchor, including certain of Old Anchor's liabilities in
respect of the Anchor Glass Container Corporation Service Retirement Plan, the
Anchor Glass Container Retirement Plan for Salaried Employees and the Pension
Plan for Hourly Employees of Latchford Glass Company and Associated Companies
(collectively, the "Plans"). The Company did not assume Old Anchor's liabilities
in respect of its bank debt, debt securities and industrial revenue bonds.
The acquisition price is subject to a final adjustment based on an audited
January 10, 1997 balance sheet. For purposes of the closing of the Anchor
Acquisition, the unaudited closing balance sheet was prepared by Old Anchor.
Management of the Company believes that there may be certain adjustments to the
closing balance sheet required which, if material, could impact the purchase
price paid by the Company, the allocation of such purchase price, and as a
result, the historical balance sheet of the Company at September 30, 1997 and
pro forma balance sheet at December 31, 1996, included elsewhere in this
Prospectus. See "Risk Factors -- Balance Sheets; Purchase Price Adjustment."
The total sources and uses of funds in connection with the Anchor
Acquisition and the Owens Purchase were as follows (dollars in millions):
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS
- --------------------------------------------- ---------------------------------------------
<S> <C> <C> <C>
Revolving Credit Facility........... $ 0.1
Anchor Loan Facility................ 130.0
Owens Purchase...................... 128.4
Owens purchase of inventory(1)...... 4.4
Series B Preferred Stock(2)......... 84.0
Class B Common Stock(2)............. 1.0
Series A Preferred Stock(3)(5)...... 56.0
Class A Common Stock(3)............. 12.0
------
TOTAL SOURCES OF FUNDS......... $415.9
======
Cash escrowed for creditors(4)...... $209.2
Repayment of DIP credit facility.... 108.6
Other priority claims............... 11.1
Cash pension payment(5)............. 9.1
Series A Preferred Stock pension
payment(5)........................ 9.0
Series A Preferred Stock(4)......... 47.0
Class A Common Stock(4)............. 12.0
Fees and expenses................... 9.9
------
TOTAL USES OF FUNDS............ $415.9
======
</TABLE>
- ---------------
(1) Anchor purchased certain inventory from Old Anchor, which was immediately
resold to Owens.
(2) Issued to Consumers U.S. in exchange for cash contribution.
(3) Represents (a) 1,879,320 shares of Series A Preferred Stock (valued at $47.0
million) and 490,898 shares of Class A Common Stock (valued at $12.0
million), issued to Smith Barney, Inc. ("Smith Barney") in escrow for the
benefit of certain creditors of Old Anchor in partial satisfaction of Old
Anchor's liabilities to such creditors, including, without limitation, the
holders of Old Anchor's debt securities and industrial revenue bonds and (b)
360,000 shares of Series A Preferred Stock (valued at $9.0 million)
contributed to the Plans.
(4) This amount is being held in escrow until the plan of reorganization for Old
Anchor is consummated. This cash will first be allocated to Old Anchor's
senior secured creditors whose claims aggregate $158.0 million. Thereafter,
the balance of this cash will be allocated among (x) the holders of Old
Anchor's 10.25% Series A Senior Notes due 2002 and 9.875% Senior
Subordinated Debentures due 2008, the holders of which are unsecured
creditors with claims aggregating approximately $307.0 million, and (y)
certain other unsecured creditors of Old Anchor, in both cases to supplement
the 1,879,320 shares of
32
<PAGE> 40
Series A Preferred Stock (valued at $47.0 million) and the 490,898 shares of
Class A Common Stock (valued at $12.0 million) issued to Smith Barney in
escrow for such unsecured creditors.
(5) $9.1 million in cash plus 360,000 shares of Series A Preferred Stock (valued
at $9.0 million) were contributed to the Plans.
The Note Offering. The gross proceeds of the Note Offering were $150.0
million. The Company used approximately $130.0 million of such proceeds to repay
all outstanding Indebtedness under the Anchor Loan Facility, approximately $8.8
million to repay advances outstanding under the Revolving Credit Facility and
approximately $6.0 million to pay fees and expenses incidental to the Note
Offering with the remaining approximately $5.2 million of such proceeds used for
working capital purposes.
USE OF PROCEEDS
Neither the Company nor the Guarantor will receive any proceeds from the
Exchange Offer.
33
<PAGE> 41
CAPITALIZATION
The following table sets forth the cash position and capitalization of the
Company as of September 30, 1997.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Cash and cash equivalents................................................. $ 804
========
Revolving Credit Facility(1).............................................. $ 5,861
Long-term debt (including current maturities):
11 1/4% First Mortgage Notes............................................ 150,000
Other Debt................................................................ 2,307
--------
Total debt...................................................... 158,168
--------
Series A Preferred Stock, par value $.01 per share; 2,239,320 shares
authorized; 2,239,320 shares issued and outstanding(2).................. 55,983
--------
Stockholders' equity:
Series B Preferred Stock, par value $.01 per share; 5,000,000 shares
authorized; 3,360,000 shares issued and outstanding.................. 34
Common Stock, par value $.10 per share; 50,000,000 shares authorized:
Class A Common Stock, 19,000,000 shares authorized; 490,898 shares
issued and outstanding.............................................. 49
Class B Common Stock, 28,000,000 shares authorized; 902,615 shares
issued and outstanding.............................................. 90
Class C Common Stock, 3,000,000 shares authorized; none issued and
outstanding(3)...................................................... --
Issuable preferred stock(4)............................................... 4,382
Warrants(3)............................................................... 10,518
Capital in excess of par value............................................ 92,294
Accumulated deficit....................................................... (20,344)
--------
Total stockholders' equity...................................... 87,023
--------
Total capitalization............................................ $301,174
========
</TABLE>
- ---------------
(1) Under the Revolving Credit Facility, the Company may borrow up to $110.0
million. See "Description of Revolving Credit Facility."
(2) The Series A Preferred Stock is subject to mandatory redemption in 2009.
(3) 2,107,843 shares in aggregate of the Company's Class C Common Stock, par
value $.10 per share (the "Class C Common Stock"), are issuable upon the
exercise of certain warrants issued to the Initial Purchasers in connection
with the Anchor Loan Facility and the Note Offering.
(4) Represents additional shares of Series B Preferred Stock issuable to
Consumers U.S. in satisfaction of dividends, accrued as of September 30,
1997, payable in kind to Consumers U.S. on its shares of Series B Preferred
Stock.
34
<PAGE> 42
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following Unaudited Pro Forma Balance Sheet of the Company as of
December 31, 1996 (the "Pro Forma Balance Sheet") gives effect to the formation
of the Company, the Anchor Acquisition, the Note Offering and the application of
the net proceeds therefrom (collectively, the "Transactions"), as if each such
event had occurred on December 31, 1996. The following Unaudited Pro Forma
Statements of Operations of the Company for the year ended December 31, 1996 and
the nine months ended September 30, 1996 and 1997 (the "Pro Forma Statements of
Operations" and, together with the Pro Forma Balance Sheet, the "Pro Forma
Financial Statements") give effect to the Transactions as if each such event had
occurred on January 1, 1996 and 1997, respectively. The Pro Forma Financial
Statements should be read in conjunction with "Management's Discussion and
Analysis of Pro Forma Financial Condition and Results of Operations," the
financial statements of the Company, together with the notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and with the historical consolidated financial statements of Old
Anchor, together with the notes thereto and the related "Management's Discussion
and Analysis of Financial Condition and Results of Operations for Old Anchor,"
included elsewhere in this Prospectus. The Pro Forma Financial Statements do not
purport to be indicative of the results that would have actually been obtained
had such Transactions been completed as of the assumed dates and for the periods
presented, or that may be obtained in the future.
The Anchor Acquisition has been accounted for using the purchase method of
accounting, pursuant to which the purchase price is allocated among the acquired
assets and liabilities in accordance with estimates of fair value as of the date
of acquisition. The purchase price is subject to adjustment as provided in the
Asset Purchase Agreement. Accordingly, the Pro Forma Balance Sheet reflects
management's preliminary estimates of fair value as of the date of acquisition
and of purchase accounting adjustments, and are based upon available information
and certain assumptions that the Company considers reasonable under the
circumstances. On June 13, 1997, Old Anchor delivered to the Company the Closing
Balance Sheet, which indicates that Old Anchor believes that it is entitled to
additional payments from the Company and Owens totaling approximately $76.3
million relating primarily to purchase price adjustments. On July 28, 1997, the
Company and Owens delivered individual notices of disagreement to Old Anchor,
opposing some of the adjustments sought by Old Anchor as well as asserting other
adjustments in the Company's or Owen's favor. The Company's notice of
disagreement requested a reduction to the purchase price of approximately $96.8
million. There may be litigation and/or arbitration over some or all aspects of
adjustments requested by all parties. Such adjustments, if material, could
impact the purchase price paid by the Company in connection with the Anchor
Acquisition, the allocation of the purchase price and, as a result, the Pro
Forma Balance Sheet. There have been numerous settlement discussions between the
Company's management and key members of the creditors committee for Old Anchor
which would eliminate the necessity for either arbitration or litigation. Based
on these settlement discussions, management believes that any such settlement
would not have a material adverse impact on the Pro Forma Balance Sheet. See
"Risk Factors -- Balance Sheets; Purchase Price Adjustment." Consequently, the
amounts reflected in the Pro Forma Balance Sheet are subject to change.
In addition, for purposes of the Pro Forma Financial Statements, the
historical financial information of Old Anchor as of and for the periods
presented has been adjusted to eliminate the effect of certain assets and
liabilities of Old Anchor not acquired or assumed by the Company in the Anchor
Acquisition, in accordance with the terms of the Asset Purchase Agreement.
35
<PAGE> 43
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ANCHOR
RESOLUTION
CORP. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 4,898 $ (4,812)(a) $ 14,078
(8)(b)
14,000(d)
Accounts receivable................................... 55,851 (139)(a) 43,445
(6,238)(b)
(6,029)(c)
Inventories --
Raw materials and manufacturing supplies............ 28,528 1,749(a) 24,685
(2,620)(b)
(2,972)(c)
Semi-finished and finished products................. 115,891 15,403(a) 93,558
(14,875)(c)
(22,861)(b)
Other current assets.................................. 18,593 (8,880)(a) 13,743
(573)(b)
4,603(c)
Financing costs....................................... -- 11,572(g) --
(11,572)(g)(n)
------- -------- --------
Total current assets........................ 223,761 (34,252) 189,509
Property, plant and equipment, net.................... 310,770 (7,200)(a) 320,985
(26,683)(b)
44,098(c)
Other assets.......................................... 52,072 (10,506)(a) 22,421
(2,804)(b)
(16,341)(c)
Financing costs....................................... -- 14,149(d)(g) 14,149
Intangible pension asset.............................. 17,140 (17,140)(a) --
Investment in joint venture........................... 39,725 (39,725)(b) --
Goodwill.............................................. -- 47,000(c) 47,000
------- -------- --------
Total assets................................ $ 643,468 $ (49,404) $ 594,064
======= ======== ========
</TABLE>
See notes to unaudited pro forma financial statements.
36
<PAGE> 44
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ANCHOR
RESOLUTION
CORP. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY IN ASSETS)
Liabilities not subject to compromise:
Current liabilities:
Debtor-in-Possession Facility........................ $ 90,455 $ (90,455)(a) $ --
Revolving Credit Facility............................ -- 104(g) 104
Senior Secured Notes................................. 158,025 (158,025)(a) --
Accounts payable..................................... 25,727 (387)(a) 20,757
(1,961)(b)
(2,622)(c)(e)
Accrued expenses..................................... 32,740 (6,217)(a) 57,416
(2,033)(b)
32,926(c)(e)
Accrued interest..................................... 1,510 (1,510)(a) --
Accrued compensation and employee benefits........... 60,423 (5,630)(b) 36,737
(18,056)(f)
--------- --------- --------
Total current liabilities.................. 368,880 (253,866) 115,014
Long-term debt....................................... -- 150,000(d) 152,376
2,376(c)(e)
Pension liabilities.................................. 44,179 (11,161)(b) 59,476
26,458(c)(e)
Other long-term liabilities.......................... 119,722 (16,294)(a) 119,802
(1,000)(b)
17,374(c)(e)
Prepetition liabilities subject to compromise........ 379,994 (379,994)(a) --
--------- --------- --------
Total liabilities.......................... 912,775 (466,107) 446,668
--------- --------- --------
Series A Preferred Stock............................. -- 55,983(h)(i) 55,983
--------- --------- --------
Stockholders' equity (deficiency in assets):
Series B Preferred Stock........................... -- 84,000(g) 84,000
Common Stock....................................... -- 139(g) 139
Warrants........................................... -- 10,518(g) 10,518
Capital in excess of par value..................... 576,300 (576,300)(a) 8,328
6,828(g)
1,500(g)
Accumulated deficit................................ (823,213) 823,213(a) (11,572)
(11,572)(g)(n)
Amount related to minimum pension liability........ (22,394) 22,394(a) --
--------- --------- --------
(269,307) 360,720 91,413
--------- --------- --------
Total liabilities and stockholders' equity
(deficiency in assets)................... $ 643,468 $ (49,404) $ 594,064
========= ========= ========
</TABLE>
See notes to unaudited pro forma financial statements.
37
<PAGE> 45
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ANCHOR
RESOLUTION
CORP. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
<S> <C> <C> <C>
Net sales............................................. $ 814,370 $ (91,689)(h) $ 722,681
Costs and expenses:
Cost of products sold............................... 831,612 (85,242)(h) 718,098
(13,920)(i)
(3,141)(j)
(13,519)(k)
2,308(l)
Selling and administrative expenses................. 39,570 -- 39,570
Restructuring and other charges..................... 49,973 -- 49,973
Impairment of long-lived assets..................... 490,232 (490,232)(i) --
Write-up of assets held for sale.................... (8,967) 5,200(p) (3,767)
--------- --------- ----------
Loss from operations.................................. (588,050) 506,857 (81,193)
Other income (expense), net........................... (10,020) 5,553(h) 1,995
6,462(m)
Interest expense...................................... (48,601) 29,153(n) (19,448)
--------- --------- ----------
Loss before reorganization items, income taxes and
extraordinary items................................. (646,671) 548,025 (98,646)
Reorganization items.................................. (5,008) -- (5,008)
Income taxes.......................................... (1,825) -- (1,825)
--------- --------- ----------
Loss before extraordinary items....................... $ (653,504) $ 548,025 $ (105,479)
========= ========= ==========
Preferred stock dividends............................. $ (12,318)(o) $ (12,318)
========= ==========
Loss before extraordinary items applicable to common
stock............................................... $ (653,504) $ 535,707 $ (117,797)
========= ========= ==========
Weighted average common shares outstanding............ 1,393,513
Loss per share applicable to common stock before
extraordinary items................................. $ (84.53)
OTHER DATA:
EBITDA(q)........................................... $ 34,824 $ (6,072) $ 28,752
========= ========= ==========
Depreciation and amortization....................... $ 101,656 $ (39,912) $ 61,744
========= ========= ==========
Deficiency of earnings to cover fixed charges....... $ 651,679 $(548,025) $ 103,654
========= ========= ==========
</TABLE>
See notes to unaudited pro forma financial statements.
38
<PAGE> 46
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ANCHOR
RESOLUTION ANCHOR
CORP. PERIOD PERIOD FROM
FROM JAN. 1, FEB. 5, 1997
1997 TO TO PRO FORMA
FEB. 4, 1997 SEPT. 30, 1997 ADJUSTMENTS PRO FORMA
------------ -------------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales............................... $ 62,560 $ 415,636 $(8,483)(h) $ 469,713
Costs and expenses:
Cost of products sold................. 70,608 386,130 (8,207)(h) 448,095
(613)(k)
177(l)
Selling and administrative expenses... 3,745 18,127 -- 21,872
-------- -------- ------- ----------
Income (loss) from operations........... (11,793) 11,379 160 (254)
Other income (expense), net............. (595) 234 630(m) 269
Interest expense........................ (2,437) (12,725) 732(n) (14,430)
-------- -------- ------- ----------
Loss before reorganization items and
extraordinary item.................... (14,825) (1,112) 1,522 (14,415)
Reorganization items.................... (827) -- -- (827)
-------- -------- ------- ----------
Loss before extraordinary item.......... $(15,652) $ (1,112) $ 1,522 $ (15,242)
======== ======== ======= ==========
Preferred stock dividends............... $ (8,032) $(1,181)(o) $ (9,213)
======== ======= ==========
Loss before extraordinary item
applicable to common stock............ $(15,652) $ (9,144) $ 341 $ (24,455)
======== ======== ======= ==========
Weighted average common shares
outstanding........................... 1,183,909 1,393,513
Loss per share applicable to common
stock before extraordinary item....... $ (7.72) $ (17.55)
OTHER DATA:
EBITDA(q)............................. $ (4,783) $ 48,611 $ (675) $ 43,153
======== ======== ======= ==========
Depreciation and amortization......... $ 7,605 $ 36,998 $(1,465) $ 43,138
======== ======== ======= ==========
Deficiency of earnings to cover fixed
charges............................ $ 15,652 $ 1,112 $(1,522) $ 15,242
======== ======== ======= ==========
</TABLE>
See notes to unaudited pro forma financial statements.
39
<PAGE> 47
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ANCHOR
RESOLUTION
CORP. PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Net sales.............................................. $ 640,049 $ (71,317)(h) $ 568,732
Costs and expenses:
Cost of products sold................................ 636,917 (65,416)(h) 554,156
(10,440)(i)
(8,636)(k)
1,731(l)
Selling and administrative expenses.................. 30,736 -- 30,736
Restructuring and other charges...................... 49,973 -- 49,973
--------- -------- ---------
Loss from operations................................... (77,577) 11,444 (66,133)
Other income (expense), net............................ (3,379) 1,319(h) 2,413
4,473(m)
Interest expense....................................... (42,160) 27,730(n) (14,430)
--------- -------- ---------
Loss before reorganization items, income taxes and
extraordinary items.................................. (123,116) 44,966 (78,150)
Reorganization items................................... (1,576) -- (1,576)
Income taxes........................................... (1,825) -- (1,825)
--------- -------- ---------
Loss before extraordinary items........................ $ (126,517) $ 44,966 $ (81,551)
========= ======== =========
Preferred stock dividends.............................. $ (9,213)(o) $ (9,213)
======== =========
Loss before extraordinary items applicable to common
stock................................................ $ (126,517) $ 35,753 $ (90,764)
========= ======== =========
Weighted average common shares outstanding............. 1,393,513
Loss per share applicable to common stock before
extraordinary items.................................. $ (65.13)
OTHER DATA:
EBITDA(q)............................................ $ 44,256 $ (12,952) $ 31,304
========= ======== =========
Depreciation and amortization........................ $ 75,239 $ (30,188) $ 45,051
========= ======== =========
Deficiency of earnings to cover fixed charges........ $ 124,692 $ (44,966) $ 79,726
========= ======== =========
</TABLE>
See notes to unaudited pro forma financial statements.
40
<PAGE> 48
NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996 AND NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
The unaudited pro forma balance sheet as of December 31, 1996, gives effect
to the following unaudited pro forma adjustments:
(a) Represents elimination of the assets not purchased and liabilities not
assumed, including the elimination of LIFO (last-in, first-out) reserves,
in the acquisition of certain assets and the assumption of certain
liabilities by the Company in accordance with the Asset Purchase Agreement.
(b) Represents elimination of the assets purchased and liabilities assumed by
Owens in accordance with their acquisition of the Antioch and Hayward,
California plants and Old Anchor's investment in the Rocky Mountain Bottle
Company joint venture in accordance with the Agreement.
(c) The purchase price has been preliminarily allocated to the net assets of
Old Anchor based on estimated fair values at the date of acquisition with
the excess of the cost fair value allocated to goodwill. Goodwill will be
amortized on a straight line basis over 20 years. The preliminary
allocation of the purchase price of the assets and liabilities acquired by
the Company is as follows:
<TABLE>
<S> <C>
Purchase price:
Cash............................................................ $200,470
Class A Common Stock............................................ 2,454
Series A Preferred Stock........................................ 46,983
Fees and expenses............................................... 1,500
--------
$251,407
========
Preliminary allocation of purchase price:
Adjusted book value of Old Anchor............................... $272,435
Estimated adjustments to various assets......................... (35,614)
Estimated adjustment to reflect property, plant and equipment at
fair value................................................... 44,098
Estimated acquisition, plant closing and reorganization related
liabilities(e)............................................... (76,512)
Goodwill........................................................ 47,000
--------
$251,407
========
</TABLE>
(d) Reflects the Note Offering. The gross proceeds of $150.0 million therefrom,
net of fees of approximately $6.0 million, classified as long-term
financing costs, were used to repay the indebtedness under the Anchor Loan
Facility, to repay advances under the Revolving Credit Facility and to
provide Anchor with working capital of approximately $5.2 million.
Financing costs will be amortized over the term of the related debt.
(e) Reflects the cost to close two manufacturing plants and other liabilities
incurred in the Anchor Acquisition. Anchor closed its Houston, Texas plant
in February 1997 and its Dayville, Connecticut plant in April 1997.
(f) Reflects a payment of plan contributions to Anchor pension plans of $9.1
million in cash and face amount $9.0 million (360,000 shares) of Series A
Preferred Stock.
(g) Reflects issuance of equity in connection with the Anchor Acquisition. For
$85.0 millon in cash, Anchor issued to Consumers U.S. $84.0 million of
Series B Preferred Stock and $1.0 million of Class B Common Stock. Also
reflected in stockholders' equity is $15.5 million representing transaction
fees paid by Consumers and other financing costs incurred by Anchor, of
which $7.0 million is classified as long-term financing costs and $7.0
million is classified as short-term financing costs. As part of the
proceeds of the Anchor Acquisition, Anchor issued to the creditors of Old
Anchor, $47.0 million of Series A
41
<PAGE> 49
NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS -- (CONTINUED)
YEAR ENDED DECEMBER 31, 1996 AND NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
Preferred Stock and $2.5 million of Class A Common Stock of Anchor. Debt
incurred in the Anchor Acquisition consists of $130.0 million under the
Anchor Loan Facility (which was repaid with proceeds of the Note Offering),
and $0.1 million of advances outstanding under the Revolving Credit
Facility (which was also repaid with proceeds from the Note Offering). Fees
on the Anchor Loan Facility of $11.6 million are written off as an
extraordinary loss and fees on the Revolving Credit Facility of $3.1
million are classified as long-term financing costs. In conjunction with
the Note Offering, the Company entered into a currency exchange rate
agreement, the balance of which is recorded as a reduction of deferred
financing fees.
The unaudited pro forma statements of operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997 and 1996, give
effect to the following unaudited pro forma adjustments:
(h) Reflects the elimination of the operations of Old Anchor plants purchased
by Owens and the elimination of Old Anchor's share of operations of the
Rocky Mountain Bottle Company joint venture for the periods presented.
(i) Reflects the elimination of Old Anchor's historical amortization of
goodwill for the periods presented and the elimination of Old Anchor's
historical impairment of long-lived assets as of December 31, 1996.
(j) Reflects the elimination of the LIFO (last-in, first-out) provision
recorded for the year ended December 31, 1996.
(k) Reflects the reduction of Old Anchor's historical depreciation for the
effects of the purchase price allocation to property, plant and equipment.
(l) Reflects the amortization of goodwill on a straight-line basis over 20
years.
(m) Reflects the elimination of the amortization of deferred financing fees
recorded by Old Anchor.
(n) Pro forma interest expense and amortization of financing costs has been
calculated on pro forma debt levels and applicable interest rates assuming
the Note Offering was consummated as of the beginning of the periods
indicated:
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1996
------------ ------------- -------------
<S> <C> <C> <C>
Elimination of interest expense recorded by Old
Anchor......................................... $(48,601) $(2,437) $ (42,160)
Elimination of interest expense related to the
Anchor Loan Facility........................... -- (3,220) --
Interest on borrowings under the Notes of $150.0
million at an interest rate of 11.25% assumed
to be outstanding for the full period.......... 16,875 5,062 12,656
Interest on borrowings under the Revolving Credit
Facility of $0.1 million assuming an interest
rate of 8.25%.................................. 8 (216) 6
Other interest expense........................... 560 -- 264
Amortization of financing fees related to the
Notes over a term of eight years and the
Revolving Credit Facility over a term of five
years.......................................... 2,005 79 1,504
-------- ------- --------
$(29,153) $ (732) $ (27,730)
======== ======= ========
</TABLE>
42
<PAGE> 50
NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS -- (CONTINUED)
YEAR ENDED DECEMBER 31, 1996 AND NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
On a historical basis, the Company has written off the capitalized deferred
financing fees of the Anchor Loan Facility as of the date that the Note
Offering was consummated. This amount, $11.2 million, was recorded as an
extraordinary loss in the second quarter of 1997.
(o) Reflects the dividends on Series A Preferred Stock of $56.0 million and
Series B Preferred Stock of $84.0 million.
(p) Reflects the elimination of a portion of Old Anchor's historical write-up
of assets held for sale related to plant facilities not acquired in the
Anchor Acquisition for the year ended December 31, 1996.
(q) EBITDA (earnings before interest, taxes, depreciation and amortization) is
an amount equal to income (loss) before income taxes and extraordinary
items, plus the amounts of restructuring charges, reorganization items, the
impairment of long-lived assets, interest, depreciation and amortization
and less the write-up of assets held for sale included in the determination
of income (loss) before income taxes and extraordinary items. EBITDA is a
measure of the Company's debt service ability. It is not an alternative to
net income as a measure of the Company's results of operations (as
interest, taxes, depreciation and amortization are included in the
determination of net income) or to cash flows as a measure of liquidity (as
cash flows include the cash effects of all operating, financing and
investing activities).
43
<PAGE> 51
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PRO FORMA
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PRO FORMA RESULTS OF OPERATIONS
The discussion set forth below compares the Company's pro forma results of
operations for the nine months ended September 30, 1996 and 1997 after giving
effect to the formation of the Company, the Anchor Acquisition, the Note
Offering and the application of the net proceeds therefrom as if each such event
had occurred at the beginning of the periods presented. A discussion of Old
Anchor's historical results of operations for the year ended December 31, 1996
as compared to Old Anchor's historical results of operations for the year ended
December 31, 1995, and the year ended December 31, 1995 as compared to the year
ended December 31, 1994, is also included elsewhere in this Prospectus. The
information and data included in the following discussion has been derived from
the unaudited Pro Forma Financial Statements of the Company, and exclude the Old
Anchor plants and joint venture interest acquired by Owens in connection with
the Anchor Acquisition, and give effect to the replacement of Old Anchor's
capital structure with the capital structure of the Company. The Company is
implementing a new business strategy, including the Plant Closings and the
Headquarters Cost Reductions, although the effects on the Company's results of
operations resulting therefrom are not reflected in the pro forma results of
operations discussed below.
The data included in the following table for the nine months ended
September 30, 1996 and 1997 has been derived from the Pro Forma Statements of
Operations of the Company. See "Unaudited Pro Forma Financial Statements."
Management believes this data is not necessarily indicative of the results of
operations that would have been achieved by the Company had the Anchor
Acquisition actually occurred at the beginning of the respective periods.
Furthermore, management believes this data is not necessarily indicative of
Anchor's future results.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------
1996 % OF SALES 1997 % OF SALES
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Net sales............................................ $568,732 100.0% $469,713 100.0%
Cost of products sold................................ 554,156 97.4 448,095 95.4
Selling and administrative expenses.................. 30,736 5.4 21,872 4.7
Restructuring and other charges...................... 49,973 8.8 -- --
Loss from operations................................. (66,133) (11.6) (254) (0.1)
Interest expense..................................... (14,430) (2.5) (14,430) (3.1)
Loss before reorganization items and extraordinary
item............................................... (78,150) (13.7) (14,415) (3.1)
Loss before extraordinary item....................... (81,551) (14.3) (15,242) (3.2)
</TABLE>
PRO FORMA FIRST NINE MONTHS OF 1997 COMPARED TO PRO FORMA FIRST NINE MONTHS OF
1996
The loss from operations for the pro forma nine months ended September 30,
1997 was $0.3 million compared to a loss from operations of $66.1 million for
the pro forma nine months ended September 30, 1996. The loss before
extraordinary item was $15.2 million for the pro forma first nine months of 1997
compared to $81.6 million for the comparable pro forma period of 1996. Included
in the pro forma 1996 results was a first quarter charge of $50.0 million for
Old Anchor's 1996 restructuring program. Net sales for the pro forma first nine
months of 1997 were $469.7 million, a decrease of 17.4% compared with the 1996
pro forma first nine months.
Following the Anchor Acquisition on February 5, 1997, management began an
implementation of a business strategy that it believes can significantly improve
upon Old Anchor's operating results. The objectives of this strategy are to (i)
reduce the cost structure of the Company, (ii) improve production planning and
product mix and (iii) strengthen customer relations.
Cost reductions are being effected through the closure of certain plants to
remove excess capacity and a targeted expense reduction program to create a
leaner organization through the elimination of excess layers of management
including the consolidation of certain corporate functions. Since the Anchor
Acquisition, the
44
<PAGE> 52
Company has closed its Houston, Texas plant effective February 1997 and its
Dayville, Connecticut plant effective April 1997. The Company has reduced 25% of
corporate headquarters positions effective as of March 1997.
With the elimination of excess capacity, management believes it will be
able to improve efficiency and operating results by reallocating production
among the Company's manufacturing facilities according to machine strength and
by instituting longer production runs with fewer mold and color changes.
The Company believes that reestablishing the positive customer
relationships Old Anchor benefitted from in the past is essential to improving
financial performance. Management has already begun to rebuild relationships
with some of Old Anchor's larger volume customers.
LIQUIDITY AND CAPITAL RESOURCES
For a discussion of Liquidity and Capital Resources, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
45
<PAGE> 53
SELECTED FINANCIAL DATA
The following table sets forth certain historical financial information of
the Company and of Old Anchor. The selected financial data for the period from
February 5, 1997 to September 30, 1997 has been derived from the Company's
unaudited condensed financial statements included elsewhere in this Prospectus.
The selected financial data for the nine months ended September 30, 1996 and for
the period from January 1, 1997 to February 4, 1997 has been derived from Old
Anchor's unaudited condensed financial statements included elsewhere in this
Prospectus. The following information should be read in conjunction with the
Company's unaudited condensed financial statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OLD ANCHOR HISTORICAL
--------------------------------------- ANCHOR
NINE MONTHS PERIOD FROM PERIOD FROM
ENDED JANUARY 1, 1997 TO FEBRUARY 5, 1997 TO
SEPTEMBER 30, 1996 FEBRUARY 4, 1997 SEPTEMBER 30, 1997(1)(8)
------------------ ------------------ ------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $ 640,049 $ 62,560 $415,636
Cost of products sold.................... 636,917 70,608 386,130
Selling and administrative expenses...... 30,736 3,745 18,127
Restructuring and other charges(2)....... 49,973 -- --
-------- -------- -------
Income (loss) from operations............ (77,577) (11,793) 11,379
Other income (expense), net.............. (3,379) (595) 234
Interest expense(3)...................... (42,160) (2,437) (12,725)
-------- -------- -------
Loss before reorganization items, income
taxes and extraordinary items(5)....... (123,116) (14,825) (1,112)
Reorganization items..................... (1,576) (827) --
Income taxes(4).......................... (1,825) -- --
Extraordinary items(5)................... (2,336) -- (11,200)
-------- -------- -------
Net loss................................. $ (128,853) $(15,652) $(12,312)
======== ======== =======
Preferred stock dividends................ $ (8,032)
=======
Loss before extraordinary items
applicable to common stock............. $ (9,144)
=======
Loss applicable to common stock.......... $(20,344)
=======
BALANCE SHEET DATA (at end of period):
Accounts receivable...................... $ 85,130 $ 60,978 $ 60,840
Inventories.............................. 166,527 148,731 118,191
Total assets............................. 1,195,601 651,801 588,712
Total debt............................... 575,732 570,335 158,168
Total stockholders' equity (deficiency in
assets)................................ 253,234 (284,959) 87,023
OTHER FINANCIAL DATA:
EBITDA(6)................................ $ 44,256 $ (4,783) $ 48,611
Depreciation and amortization............ 75,239 7,605 36,998
Capital expenditures..................... 36,144 7,184 21,152
Ratio of earnings to fixed charges(7).... -- -- --
</TABLE>
- ---------------
(1) The Anchor Acquisition was consummated on February 5, 1997. Accordingly, the
information provided for Old Anchor for the nine months ended September 30,
1996 and for the period from January 1, 1997 to February 4, 1997 is not
comparable to the information provided for the Company for the period from
February 5, 1997 to September 30, 1997.
46
<PAGE> 54
(2) Restructuring and other charges reflects Old Anchor's implementation of a
series of restructuring plans in an effort to respond to the continued
decline in industry sales volume combined with, in 1996, the loss of a
significant portion of the business of Old Anchor's largest customer. During
the year ended December 31, 1996, the Company recorded an adjustment to the
carrying value of certain idled facilities held for sale. These assets were
previously written down to an estimated net realizable value. Upon a current
evaluation of quotes and offers on these properties in 1996, Old Anchor
increased their net carrying value by approximately $9.0 million. The
balance of the restructuring liability is anticipated to be expended and
charged against the liability over the next three years.
(3) Because of the Chapter 11 proceeding of Old Anchor, there had been no
accrual of interest on the $100.0 million 10.25% Senior Notes or the $200.0
million 9.875% Senior Subordinated Debentures of Old Anchor since September
12, 1996. If accrued, interest expense would have increased $1.5 million
during the nine months ended September 30, 1996.
(4) Income tax provision reflects any additional valuation allowances required
to be recorded under Statement of Financial Accounting Standards No.
109 -- Accounting for Income Taxes ("SFAS 109"). The adoption of SFAS 109
effective January 1, 1993 resulted in an increase in the cumulative net
deferred tax asset by $1.8 million. Under SFAS 109, deferred income taxes
reflect the net tax effects of temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes, and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. If on the basis of available evidence, it is more likely than not
that all or a portion of the deferred tax asset will not be realized, the
asset must be reduced by a valuation allowance.
(5) Extraordinary items in the nine months ended September 30, 1996 and the
period from February 5, 1997 to September 30, 1997 resulted from the
write-off of financing costs related to debt extinguished during these
periods.
(6) EBITDA (earnings before interest, taxes, depreciation and amortization)
("EBITDA") is an amount equal to income (loss) before income taxes,
reorganization items and extraordinary items plus the amounts of
restructuring charges, interest, depreciation and amortization as calculated
below, using income (loss) from operations as a starting point:
<TABLE>
<CAPTION>
OLD ANCHOR
--------------------------------------- ANCHOR
NINE MONTHS PERIOD FROM PERIOD FROM
ENDED JANUARY 1, 1997 TO FEBRUARY 5, 1997 TO
SEPTEMBER 30, 1996 FEBRUARY 4, 1997 SEPTEMBER 30, 1997
------------------ ------------------ ---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) from operations........... $(77,577) $(11,793) $11,379
Other income (expense), net............. (3,379) (595) 234
Restructuring and other charges......... 49,973 -- --
Depreciation and amortization........... 75,239 7,605 36,998
-------- -------- -------
EBITDA.................................. $ 44,256 $ (4,783) $48,611
======== ======== =======
</TABLE>
EBITDA is a measure of the Company's debt service ability. It is not an
alternative to net income as a measure of the Company's results of
operations (as interest, taxes, depreciation and amortization,
reorganization items and restructuring charges are included in the
determination of net income) or to cash flows as a measure of liquidity (as
cash flows include the cash effects of all operating, financing and
investing activities).
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes and extraordinary items plus fixed
charges. Fixed charges consist of interest and amortization of debt expense
plus a portion of operating lease expense representative of the interest
factor. There was a deficiency of earnings to cover fixed charges in the
nine months ended September 30, 1996, the period from January 1, 1997 to
February 4, 1997 and the period from February 5, 1997 to September 30, 1997
of $124.7 million, $15.7 million and $1.1 million, respectively.
47
<PAGE> 55
(8) In connection with the procedure to review and, if necessary, adjust the
purchase price paid by the Company in connection with the Anchor
Acquisition, Deloitte & Touche LLP, independent accountants for Old Anchor,
were engaged by Old Anchor to audit the Closing Balance Sheet. Management of
the Company believes that there may be certain adjustments to the Closing
Balance Sheet required which, if material, could impact the purchase price
paid by the Company in connection with the Anchor Acquisition, the
allocation of such purchase price and, as a result, the historical balance
sheet of the Company at September 30, 1997 and the pro forma balance sheet
for the Company at December 31, 1996, included elsewhere in this Prospectus.
See "Risk-Factors -- Balance Sheets; Purchase Price Adjustment."
48
<PAGE> 56
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was formed in January 1997 to consummate the Anchor
Acquisition. On February 5, 1997, pursuant to the Asset Purchase Agreement, the
Company and Owens acquired substantially all of the assets of, and assumed
certain liabilities, of Old Anchor. In the Anchor Acquisition, the Company
purchased eleven operating glass container manufacturing facilities and other
related assets. Prior to the Anchor Acquisition, the Company had no operations
and therefore the following discussion represents activity from February 5, 1997
through September 30, 1997 (the "1997 Period").
RESULTS OF OPERATIONS
Income from operations for the 1997 Period was $11.4 million, and the
Company recorded a net loss of $12.3 million. Included in the results of
operations for the 1997 Period is an extraordinary loss of $11.2 million for the
write-off of certain financing fees in connection with the issuance of the
Outstanding Notes and repayment of the Anchor Loan Facility. Without this
extraordinary loss, the Company would have had a net loss for the 1997 Period of
$1.1 million.
While operations for the Company are not comparable to those of Old Anchor,
sales for the continuing plants operated by the Company were $415.6 million for
the 34 weeks ended September 30, 1997 or approximately $12.2 million per week.
Sales for the comparable plants for the first nine months of 1996 (39 weeks)
under Old Anchor were approximately $507.0 million or approximately $13.0
million per week. Income from operations for the continuing plants for the 33
weeks ended September 30, 1997 was approximately $11.4 million while these same
plants produced an operating loss of approximately $16.0 million during the
first nine months of 1996.
Following the Anchor Acquisition, management began implementation of a
business strategy that it believes can significantly improve upon Old Anchor's
operating results. The objectives of this strategy are to (i) reduce the cost
structure of the Company, (ii) improve production planning and product mix and
(iii) strengthen customer relations.
Cost reductions are effected through the closure of certain plants to
remove excess capacity and a targeted expense reduction program to create a
leaner organization through the elimination of excess layers of management
including the consolidation of certain corporate functions. Since the Anchor
Acquisition, the Company has closed its Houston, Texas plant effective February
1997 and its Dayville, Connecticut plant effective April 1997 and removed from
production two furnaces, one at each of two other plants. The Company has
reduced approximately 25% of corporate headquarters positions.
With the elimination of excess capacity, management believes it will be
able to improve efficiency and operating results by reallocating production
among the Company's manufacturing facilities according to machine strength and
by instituting longer production runs with fewer mold and color changes.
The Company believes that reestablishing the positive customer
relationships Old Anchor benefitted from in the past is essential to improving
financial performance. Management has already begun to rebuild relationships
with some of Old Anchor's larger volume customers.
LIQUIDITY AND CAPITAL RESOURCES
In the 1997 Period, operating activities provided $3.3 million in cash,
reflecting a loss before extraordinary item adjusted for changes in working
capital items. Cash consumed in investing activities for the 1997 Period was
$231.3 million, principally reflecting the cash component of the Anchor
Acquisition. Additionally, in February 1997, the Company contributed $9.0
million in cash to the Company's defined benefit pension plans. Capital
expenditures in the 1997 Period were $21.0 million. Cash increased from
financing activities for the 1997 Period by $228.8 million reflecting the
issuance of capital stock and borrowings in connection with the Anchor
Acquisition.
The purchase price of the Anchor Acquisition was approximately $250.0
million and was comprised of: approximately $200.5 million in cash, $47.0
million face amount (1,879,320 shares) of Series A Preferred
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Stock and $2.5 million of Class A Common Stock. However, the purchase price is
subject to adjustment. On June 13, 1997, Old Anchor delivered to the Company the
Closing Balance Sheet, which indicates that Old Anchor believes that it is
entitled to additional payments from the Company and Owens totaling
approximately $76.3 million primarily relating to purchase price adjustments. On
July 28, 1997, the Company and Owens delivered individual notices of
disagreement to Old Anchor, opposing some of the adjustments sought by Old
Anchor as well as asserting other adjustments in the Company's or Owen's favor.
The Company's notice of disagreement requested a reduction to the purchase price
of approximately $96.8 million. There may be litigation and/or arbitration over
some or all aspects of adjustments requested by all parties. Such adjustments,
if material, could impact the purchase price paid by the Company in connection
with the Anchor Acquisition, the allocation of the purchase price and, as a
result, the Company's balance sheet at September 30, 1997. There have been
numerous settlement discussions between the Company's management and key members
of the creditors committee for Old Anchor which would eliminate the necessity
for either arbitration or litigation. Based on these settlement discussions,
management believes that any such settlement would not have a material adverse
impact on the September 30, 1997 Condensed Balance Sheet.
The Company obtained the cash portion of the purchase price principally
from an $85.0 million cash investment by Consumers consisting of $84.0 million
face amount (3,360,000 shares) of Series B Preferred Stock and $1.0 million of
Class B Common Stock and borrowings under the $130.0 million Anchor Loan
Facility.
In conjunction with the Anchor Acquisition, the Company also entered into a
credit agreement providing for the $110.0 million Revolving Credit Facility. At
November 3, 1997, advances outstanding under the Revolving Credit Facility were
$19.6 million and the total outstanding letters of credit on this facility were
$12.8 million. See "Description of Revolving Credit Facility."
On April 17, 1997, the Company completed the Note Offering. The Outstanding
Notes are senior secured obligations of the Company, ranking senior in right of
payment to all existing and future subordinate indebtedness of the Company and
pari passu with all existing and future senior indebtedness of the Company. The
Outstanding Notes are guaranteed by Consumers U.S. Proceeds from the issuance of
the Outstanding Notes, net of fees, were approximately $144.0 million and were
used to repay $130.0 million outstanding under the Anchor Loan Facility and $8.8
million outstanding under the Revolving Credit Facility, with the balance used
for general corporate purposes. In connection with the refinancing of the Anchor
Loan Facility with the Note Offering, the Company also issued 702,615 shares of
Class B Common Stock to Consumers U.S. and 702,614 warrants to the Initial
Purchasers. The warrants and common stock are each valued at $5.00 per share.
The Revolving Credit Facility and the Indenture contain certain covenants
that restrict the Company from taking various actions, including, subject to
specified exceptions, the incurrence of additional indebtedness, the granting of
additional liens, the making of investments, the payment of dividends and other
restricted payments, mergers, acquisitions and other fundamental corporate
changes, capital expenditures, operating lease payments and transactions with
affiliates. The Revolving Credit Facility also contains certain financial
covenants that require the Company to meet and maintain certain financial tests
and minimum ratios, including a minimum working capital ratio, a minimum
consolidated net worth test and a minimum interest coverage ratio.
The Company expects significant expenditures in the remainder of 1997 and
in 1998, including interest expense on the Notes, required pension plan
contributions of approximately $17.0 million in 1998, payment in respect of the
Company's supply agreement with The Stroh Brewery Company of $6.0 million in
1997 and $7.0 million in 1998, capital expenditures of approximately $24.0
million in the remainder of 1997 and $45.0 million in 1998 and closing costs
associated with the closed manufacturing facilities of approximately $7.0
million in the remainder of 1997. Additionally, peak needs are in spring and
fall at which time working capital borrowings are estimated to be $20.0 million
higher than at other times of the year. The Company's principal sources of
liquidity through 1997 are expected to be funds derived from operations,
borrowings under the Revolving Credit Facility and proceeds from asset sales.
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IMPACT OF INFLATION
The impact of inflation on the costs of the Company, and the ability to
pass on cost increases in the form of increased sales prices, is dependent upon
market conditions. While the general level of inflation in the domestic economy
has been at relatively low levels, the Company has begun to pass on inflationary
cost increases either as a result of contractual arrangements permitting the
pass on of cost increases or as the result of recent negotiations with various
customers.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and other
beverage industries, in which demand is stronger during the summer months, the
Company's shipment volume is expected to be higher in the second and third
quarters. Consequently, the Company normally builds inventory during the first
quarter in anticipation of seasonal demands during the second and third
quarters. Historically, the Company has scheduled shutdowns of its plants for
furnace rebuilds and machine repairs in the first and fourth quarters of the
year to coincide with scheduled holiday and vacation time under its labor union
contracts. These shutdowns adversely affect profitability during the first and
fourth quarters. The Company is reviewing alternatives to reduce downtime during
these holiday periods in order to minimize disruptions to the production process
and its negative affect on profitability.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 -- Earnings per Share ("SFAS 128").
SFAS 128 differs from current accounting guidance in that earnings per share is
classified as basic earnings per share and diluted earnings per share, compared
to primary earnings per share and fully diluted earnings per share under current
standards. Basic earnings per share differs from primary earnings per share in
that it includes only the weighted average common shares outstanding and does
not include any dilutive securities in the calculation. Diluted earnings per
share under the new standard differs in certain calculations compared to fully
diluted earnings per share under the existing standards. Adoption of SFAS 128 is
required for interim and annual periods ending after December 15, 1997. Had the
Company applied the provisions of SFAS 128 in the period from February 5, 1997
to September 30, 1997 to the earnings per share calculations, there would have
been no impact compared to that which is reported.
INDEPENDENT PUBLIC ACCOUNTANTS FOR OLD ANCHOR
During 1997, the Company retained Arthur Andersen LLP as its independent
public accountants, and requested Arthur Andersen LLP to report on Anchor
Resolution Corp. financial statements as at December 31, 1995 and 1996 and for
the three years in the period ended December 31, 1996. Other auditors had
previously reported on these statements. The reason for requesting Arthur
Andersen LLP to audit the above financial statements was not because of any
disagreements with the former auditors on any matter of accounting principles,
financial statement disclosure or auditing scope or procedure at that time.
INDUSTRY
The following industry information reflects management's estimates based on
its own review of industry data.
INDUSTRY OVERVIEW
The United States glass container industry is a mature $3.9 billion per
year marketplace concentrated in three major competitors: Owens, Ball-Foster and
Anchor. Unit sales in the U.S. glass container manufacturing industry in 1996
were down approximately 2.1% from 1995. The compound annual decline in unit
shipments from 1991 to 1996 was approximately 1.5%. Management believes that
industry results reflect continued decline in overall glass unit volume as well
as the impact of a highly competitive pricing environment which was driven, in
part, by industry-wide overcapacity. However, management believes that since
significant capacity has been removed from the industry in each of 1995, 1996
and 1997, prices should stabilize.
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Glass has been preferred for various packaging applications because it is
inert, transparent and impermeable, offering the product protection from
moisture and oxygen and thus ensuring product freshness and flavor retention.
Glass containers are commonly used to package most types of beverages and food
products. Glass containers can be formed into a wide range of shapes and sizes.
Furthermore, decorating possibilities are endless through colors, labels, silk
screening, enameling and coatings, all helping to create product identity. Two
major types of glass containers are widemouth (jars) and narrow-neck (bottle)
styles.
Over the past decade, glass containers lost considerable market share to
plastic beverage and food packaging containers. While multi-barrier plastic
bottles and jars are often more costly to produce than their glass alternatives,
plastics have lower transportation costs, lighter weight than glass and no
breakage costs. Plastics have made considerable inroads in the food segment as
well as dominating the carbonated beverage segment.
Due to the competitive pressure of alternative packaging products and
technological advances in the glass container industry, in the past 15 years the
glass container industry has undergone substantial consolidation in the number
of producers and production facilities. This process of industry consolidation
and capacity reduction was further accelerated during 1996 and early 1997. Since
1995, 12 glass container manufacturing plants have been closed in the United
States and Canada, eliminating substantial capacity from the industry.
Although management believes that these capacity reductions have improved
the outlook for 1997 as compared to 1996, in certain product categories,
consistent productivity improvements among glass and glass alternatives can be
expected to continue to decrease capacity utilization rates for the industry or
result in additional plant closures.
Beer. Beer containers accounted for approximately 47.3% of total glass
container unit shipments in 1996. The compound annual growth rate in unit
shipments for beer containers from 1991 to 1996 was approximately 7.1% while
consumption increased only approximately 1.0%. Management believes growth will
continue as beer producers continue to shift to glass containers from aluminum
cans, in line with beer producers marketing of beer as a premium product most
appropriately consumed from a glass container.
Food. Food containers accounted for approximately 36.6% of total glass
container unit shipments in 1996. The compound annual decline in unit shipments
for food containers from 1991 to 1996 was approximately 1.5%. Management expects
such decline to continue as plastics slowly gain share from glass as a result of
reduced breakage characteristics.
Beverage. Beverage containers accounted for approximately 6.3% of total
glass container unit shipments in 1996. The compound annual decline in unit
shipments for beverage containers from 1991 to 1996 was approximately 23.4%.
From 1991 to 1993, gradual share declines occurred in glass beverage containers
as manufacturers opted for the non-breakability and lightweight features of
plastic. From 1994 to 1996, rapid declines in glass share versus plastics
occurred as beverage manufacturers began to focus more heavily on commodity
packaging.
Wine. Wine containers accounted for approximately 3.8% of total glass
container unit shipments in 1996. The compound annual growth rate in unit
shipments for wine containers from 1991 to 1996 was approximately 1.0%.
Management expects continued limited growth in the wine segment attributable
solely to increased wine consumption with no effect from competing packaging
materials.
Liquor. Liquor containers accounted for approximately 3.6% of the total
glass container unit shipments in 1996. The compound annual decline in unit
shipments for liquor containers from 1991 to 1996 was approximately 1.5%.
Management expects unit shipments to remain flat as consumer preference for the
premium image of glass containers for liquor is offset by increasing use of
plastics. Management believes glass is perceived by manufacturers to be a
high-end product marketing enhancement tool with premium product customers.
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INDUSTRY OUTLOOK
While competitive pressures from plastics are expected to remain intense,
management has identified several product segments where it believes that there
are still growth opportunities. In general, management believes that the beer
segment provides stronger potential for growth than the food segment which has
seen declines of over 7.0% in each of 1995 and 1996. In particular, sales of
glass beer containers, were up approximately 7.0% in 1996 and have experienced
comparable growth rates over the past five years. Management expects that glass
beer containers will continue to grow at a faster rate than beer consumption, as
they regain share from aluminum cans driven in part by the introduction of the
long neck style bottle. Glass beer bottles are also expected to continue to
benefit from consumer preferences for a more sophisticated appearing container.
Management also believes there is opportunity for modest growth in the wine and
distilled liquor markets which account for less than 10.0% of industry shipments
though those markets have seen declines of 1.0%-2.0% in the last few years.
Generally, losses in the liquor market have been somewhat offset by gains in the
wine market.
Overall, management believes that the majority of consolidation and
capacity reductions have occurred, with the industry approaching equilibrium
over the near term. As the need to reduce capacity diminishes, management
believes that the industry should see a stabilization in pricing and eventually
an ability to implement selected price increases.
BUSINESS
COMPANY OVERVIEW
On a pro forma basis after giving effect to the Anchor Acquisition, Anchor
is the third largest manufacturer of glass containers in the United States, with
an approximate 19% share of U. S. glass container sales in 1996. Anchor produces
a diverse line of flint (clear), amber, green and other colored glass containers
of various types, designs and sizes. The Company manufactures and sells its
products to many of the leading producers of beer, liquor, food, juice, tea,
soda and mineral water. The Company focuses on the production of beer containers
as this product category accounted for 50% of the Company's pro forma 1996 unit
sales, nearly twice the volume of its next largest category. After giving effect
to the Anchor Acquisition, for the year ended December 31, 1996, the Company had
pro forma net sales of $722.7 million.
Consumers, Canada's only glass container manufacturer, indirectly owns
approximately 59% of Anchor on a fully diluted basis. By management's estimates,
Consumers produced in excess of 80% of all glass containers sold in Canada in
1996, with U.S. glass container manufacturers (including Old Anchor) having
produced most of the remainder. On a pro forma combined basis, after giving
effect to the Anchor Acquisition, the Company and Consumers would have had total
net sales of over $1.0 billion in 1996, net of intercompany sales. See
"Prospectus Summary -- Corporate Structure."
The Company was formed in January 1997 by Consumers to consummate the
Anchor Acquisition. Prior to the Anchor Acquisition on February 5, 1997, the
Company did not conduct any operations. Consumers U.S. was also formed in
January 1997 by Consumers as a holding company for Anchor. Old Anchor was formed
by members of the management of the Glass Container Division of Anchor Hocking
Corporation (the "Glass Container Division") and persons associated with Wesray
Corporation to carry out the leveraged acquisition in 1983 of the business and
certain of the assets of the Glass Container Division. Old Anchor acquired
Midland Glass Company, Inc. in 1984 and Diamond-Bathurst Inc. in 1987.
In November 1989, Vitro S.A. ("Vitro") acquired substantially all of the
stock of Old Anchor. Simultaneously, Vitro acquired all of the stock of
Latchford Glass Company, which was subsequently merged into Old Anchor.
During 1995, Old Anchor's performance began to deteriorate. Management
believes such deterioration was due to a number of factors, including the
maintenance of excess production capacity at the expense of profitability. By
keeping plants operating at less than efficient levels of operation, management
believes Old
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Anchor suffered from high per unit production costs. In 1995 and 1996, Old
Anchor lost significant sales volumes with long-term contract based customers.
Old Anchor continued to operate underutilized production capacity by accepting
contracts for shorter production runs, which require more frequent retooling. In
addition to filling plants with this lower margin business, management believes
Old Anchor manufactured product for customers at facilities that were beyond a
cost effective distribution range, incurring excessive shipping and freight
costs. In addition, in 1996, facing surplus production capacity in a mature
market, U.S. and Canadian glass container manufacturers engaged in intense price
competition. In September 1996, Old Anchor filed for protection under Chapter 11
of the Bankruptcy Code.
A new senior management team, including executives from Consumers and its
majority shareholder, G&G, who led the turnarounds at both Consumers and
Glenshaw, will implement a series of turnaround initiatives at Anchor. This new
management team believes that Old Anchor was slow to respond to the changing
dynamics of the market for glass packaging. Burdened by over $550.0 million of
debt and with limited financial flexibility, Old Anchor's strategy focused on
aggressively increasing its market share in a competitive market that suffered
from substantial overcapacity. Additionally, new management believes that during
1995 and 1996 relationships with some of Old Anchor's customers deteriorated
because their needs were not properly addressed and the pricing terms of certain
long-term contracts with important customers were not honored.
Anchor's strategy to improve upon Old Anchor's operating performance is to
(i) establish and maintain strong customer relationships, (ii) provide high
quality products and service, (iii) control manufacturing, distribution and
overhead costs, and (iv) improve production planning and product mix at the
plant level to increase operating and distribution efficiency. Consistent with
this strategy, management of the Company and of Consumers has closed two Anchor
plants, removed of two furnaces from production, one at each of two other Anchor
plants and closed one Consumers plant. Management believes that its strategy to
eliminate excess capacity is consistent with certain recent actions of the
Company's two major competitors. The consolidation in the glass packaging
industry has resulted in the three leading manufacturers producing 95% of 1996
U.S. sales and should, management believes, provide stability in pricing.
COMPETITIVE STRENGTHS
Management believes the Company has the following key competitive
strengths:
EXPERIENCED TURNAROUND MANAGEMENT TEAM. John J. Ghaznavi, Chairman and
Chief Executive Officer of Anchor, and his team of managers plan to implement a
turnaround program at Anchor that will focus on reducing costs and optimizing
production efficiency at the plant level. Mr. Ghaznavi and this management team
have successfully implemented turnarounds at both Consumers and Glenshaw.
In 1993, through G&G, Mr. Ghaznavi acquired a controlling interest in
Consumers, which had experienced annual losses since 1987. Following such
acquisition, Mr. Ghaznavi installed experienced management and technical teams
that restructured Consumers' business. By rationalizing operations, improving
productivity, focusing on niche markets and introducing new production
technology, as well as building and capitalizing on strong customer
relationships, Mr. Ghaznavi and his team of managers were able to improve
Consumers' operating and distribution efficiency. Consumers' sales increased
from C$405.6 million in 1992 to C$462.3 million in 1996 during a period of
general industry decline, while EBITDA increased from C$33.6 million, or 8.3% of
sales, in 1992 to C$63.2 million, or 13.7% of sales, in 1996.
Mr. Ghaznavi and his team of managers also engineered a turnaround at
Glenshaw, a single plant U.S. glass container manufacturer that focuses on
low-volume, customized production runs. During the years preceding Mr.
Ghaznavi's acquisition of Glenshaw through G&G in 1988, Glenshaw had experienced
declining sales and operating losses. Since its acquisition by G&G, Glenshaw's
sales have more than doubled and EBITDA has more than tripled. However, prior
results of Consumers and Glenshaw are not indicative of the Company's future
results. The nature and risks of the restructuring carried out at Consumers and
Glenshaw, and market conditions faced by them, differ substantially from the
nature and risks of the business strategy for the Company described under
"-- Business Strategy."
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Mr. Ghaznavi has extensive industry and customer networks. He was elected
in 1995 as Chairman of the Board of Trustees of the Glass Packaging Institute,
the leading industry organization that includes as its members manufacturers
representing over 95% of North America's glass container production. Mr.
Ghaznavi intends to build on these industry and customer networks to establish
new customer relationships, as well as to recapture and strengthen Old Anchor's
former customer relationships.
Following the Anchor Acquisition, the Company appointed Edward M. Jonas as
Controller of the Company. Mr. Jonas has nearly 27 years of experience in the
glass container manufacturing industry, including 12 years as the Controller of
Old Anchor from 1983 to early 1995. In June 1997 the Company hired Richard
Deneau as President and Chief Operating Officer, as well as two other senior
executive officers from Ball-Foster. In July 1997 Mr. Deneau, who previously
served as Chief Operating Officer at Ball-Foster, assumed his duties as
President and Chief Operating Officer and began overseeing the day-to-day
implementation of the Company's business strategy.
EFFICIENT MANUFACTURING FACILITIES. From 1991 to 1996, Old Anchor invested
in excess of $218.9 million to maintain and upgrade its machines and furnaces at
the facilities that management has identified as ongoing plants, resulting in
more efficient and modern glass production facilities. In addition, Old Anchor
invested $145.1 million in molds for all plants during the same period. As a
result of these expenditures and the reduction of capacity through plant
closings, the Company believes it has the manufacturing facilities which will
allow it to significantly increase efficiency. In conjunction with the Note
Offering, AAA estimated the market value for real property and the liquidation
in place value of the Company's nine operating plants, machinery and mold
facilities to be $243.0 million. See Summarization Letter of AAA, attached as
Annex A to this Prospectus.
SUPERIOR DESIGN CAPABILITIES. Old Anchor had distinguished itself as a
premier provider of new product designs with the ability to integrate such
designs into the production process. The Company's willingness to work closely
with customers to produce unique package designs is an effective marketing tool
and is expected to assist in reestablishing customer relationships.
ACCESS TO OWENS TECHNOLOGY. Most of Anchor's production facilities utilize
proprietary glass manufacturing technology of Owens, which is generally
considered one of the world's most technologically advanced manufacturers of
glass containers. In February 1997, the Company entered into a Technology
Agreement for a term of up to ten years with Owens to use Owens' proprietary
glass manufacturing technology. Management believes that the Technology
Agreement provides key benefits to Anchor in both marketing and manufacturing
its products. In addition, the Technology Agreement will allow Anchor to upgrade
its manufacturing facilities and plan capital investment in line with advancing
production techniques.
BUSINESS STRATEGY
Management believes it can significantly improve upon Old Anchor's recent
operating results by implementing the following strategy:
REDUCE COST STRUCTURE. Management believes that Old Anchor maintained
excessive production capacity, which resulted in higher operating costs. In
addition, management believes that Old Anchor maintained disproportionately
large corporate overhead expenses in relation to its plant operations.
Management has already begun to implement its cost reduction strategy in the
following areas:
Plant Closings. Following the Anchor Acquisition, the Company closed its
Houston and Dayville plants in order to reduce excess capacity. In September
1997, Hillsboro, a glass container manufacturing plant owned by G&G,
discontinued manufacturing. All of Hillsboro's rights and obligations to fill
orders under a supply contract between Consumers and one of its major customers
will be purchased by Consumers and Anchor. In addition, management will continue
to monitor business conditions and utilization of plant capacity to determine
the appropriateness of further plant closings. The Plant Closings are expected
to eliminate an estimated $24.1 million of annual fixed costs based on 1996
costs at the two plants. These fixed costs include an estimated $16.5 million of
annual indirect labor costs and an estimated $7.6 million of annual fixed
manufacturing costs (fuel, power and repairs) and operating costs (equipment
rentals, taxes and insurance). In connection with the Anchor Acquisition, Anchor
recorded a reserve for expenses estimated to be incurred
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in connection with the closing of the Houston and Dayville plants of
approximately $33.0 million to be spent over a three year time frame, of which
$18.0 million is estimated to be incurred in 1997.
Selling and Administrative Expense Savings. Anchor has implemented a
targeted expense reduction program, the objective of which is to create a leaner
organization through the elimination of excess layers of management and
consolidation of certain functions such as purchasing, sales, engineering and
MIS, with Consumers and Glenshaw. The Company has realized an estimated $7.2
million in annual cost savings through the elimination of 25% or 61 of Old
Anchor's corporate headquarters positions as of March 1997 and has identified an
additional estimated $6.2 million in annual cost savings from further
headquarters employee reductions and related expenses. Management estimates that
Anchor will incur one time severance costs of approximately $1.8 million in
connection with these staff reductions. Further, in connection with a plan to
simplify the corporate ownership structure of Consumers, Anchor and their
affiliates, Glenshaw may become a subsidiary of Anchor.
IMPROVE PRODUCTION PLANNING AND PRODUCT MIX. With the elimination of
excess capacity, management believes it will be able to improve efficiency and
operating results by reallocating production among the Company's manufacturing
facilities according to machine strength and by instituting longer production
runs with fewer mold and color changes. To implement this strategy, individual
plant managers are now responsible for managing each plant's financial
performance and each product sales organization is responsible for managing the
product mix and the financial performance of its product line.
STRENGTHEN CUSTOMER RELATIONS. The Company believes that reestablishing
the positive customer relationships Old Anchor benefitted from in the past is
essential to improving financial performance. Management believes that Old
Anchor's operating results suffered in part due to a shift in product mix toward
shorter production runs, which require more frequent retooling and increased
costs. This shift occurred when management of Old Anchor began to fill excess
capacity created by the loss of long-term contractual customers with less
desirable spot orders. Establishing long-term customer relationships improves
efficiency through longer production runs and more predictable scheduling.
Management at Anchor has already begun to rebuild relationships with some of Old
Anchor's larger volume customers, including Anheuser-Busch, which has confirmed
a new purchase order for 1997 after substantially reducing its purchases from
Old Anchor. Management's current production plan indicates that, based on
anticipated customer volume, substantially all remaining 1997 sales will be made
pursuant to existing purchase orders or contracts.
EXPLOIT SYNERGIES. Management intends to exploit synergies that exist
between the Company and its affiliates, including Consumers and Glenshaw:
Purchasing. Management believes that it will be able to obtain lower costs
on certain of its raw materials than Old Anchor did in 1996 by combining
Anchor's purchasing with that of its affiliates thereby creating potential for
more favorable bulk purchasing rates. Management has already experienced cost
savings as compared to Old Anchor in bulk purchasing of soda ash, sand and
packaging materials.
Freight Savings. Management believes that Old Anchor maintained excess
manufacturing capacity and less than optimal plant by plant product mix relative
to its plant-specific machine strengths and the geographic needs of its
customers. As a result, management believes that Old Anchor suffered from
excessive freight and allowance costs as it sought to utilize excess capacity by
satisfying orders in plants beyond economical shipping distances. Management
expects to reallocate production among Anchor plants and between Anchor and
Consumers to maximize regional production where possible. This represents an
opportunity for Anchor to reduce shipping distances and thus reduce freight and
allowance costs.
Marketing. Management believes that its affiliation with Consumers and
Glenshaw will create a competitive advantage in marketing to the broader United
States and Canadian markets. It is anticipated that Consumers will market
Anchor's production capacity to those existing Canadian customers who currently
have their U.S. orders filled through competitors of Anchor.
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PRODUCTS
The table below provides a summary by product group of Old Anchor's net
sales (in millions of dollars) and approximate percentage of net sales by
product group for the years 1994 through 1996:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1994 1995 1996
------------------ ---------------- ----------------
PRODUCT
- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beer.................................. $ 448.1 41.1% $377.1 39.4% $304.7 37.4%
Liquor/Wine........................... 197.9 18.2 202.6 21.2 200.4 24.6
Food.................................. 202.9 18.6 172.1 18.0 166.0 20.4
Tea................................... 126.0 11.6 104.7 10.9 61.0 7.5
Beverage/Water........................ 70.5 6.5 60.1 6.3 42.1 5.2
Other................................. 43.9 4.0 40.0 4.2 40.2 4.9
-------- ----- ------ ----- ------ -----
Total....................... $1,089.3 100.0% $956.6 100.0% $814.4 100.0%
======== ===== ====== ===== ====== =====
</TABLE>
There can be no assurance that the information provided in the preceding
table is indicative of the glass container product mix of the Company in the
remainder of 1997 or in subsequent years. Management's strategy is to focus on
shifting its product mix towards those products management believes likely to
both improve operating results and increase unit volume. In particular, Anchor
will focus on the production of beer bottles, the market for which has grown at
an average annual rate of 7% from 1991 to 1996. In addition, management is also
implementing a strategy of cultivating longer term relationships with high
volume customers.
CUSTOMERS
The Company produces glass containers mainly for a broad base of customers
in the food and beverage industries in the United States. The Company's top ten
customers include well-known brand names such as Stroh's, Anheuser-Busch,
Latrobe (Rolling Rock), The Coca-Cola Trading Company (non-carbonated), Bacardi
International Limited, PepsiCo, Inc., Austin Nichols & Co., Inc. (Yoo Hoo), The
J.M. Smucker Company, Saxco International Inc. and Specialty Products Company
(Nabisco). The majority of the Company's glass container designs are produced to
customer specifications and sold on a contract basis.
The Company's largest customer, Stroh's, accounted for 15.3% of its net
sales for the period from February 5, 1997 to September 30, 1997. Anheuser-Busch
and Stroh's accounted for 12.9% and 12.1%, respectively, of its pro forma net
sales in 1996. The loss of either of such customers could have a material
adverse effect on the Company's business, results of operations and financial
condition. The Company's ten largest customers accounted for approximately 59.9%
of pro forma net sales in 1996, and 53.5% of net sales for the period from
February 5, 1997 to September 30, 1997.
Anchor has entered into a contract with Stroh's to become the exclusive
producer of all glass beer containers for Stroh's product in the United States.
In addition, following the Anchor Acquisition, the Company secured a contract
with Anheuser-Busch to produce, subject to Anheuser-Busch's requirements,
approximately 4.0 million gross during 1997, which represents approximately
12.0% of the Company's 1997 volume currently under contract. During 1996,
Anheuser-Busch substantially reduced its purchases from Old Anchor to 6.8
million gross in 1996 and, before the Anchor Acquisition, had indicated its
intention to cease doing business with Old Anchor after 1996. Management
believes that the 1997 requirements contract for Anheuser-Busch represents an
initial step in its strategy to strengthen customer relationships.
Certain of the Company's manufacturing plants currently produce bottles for
Adolph Coors Company ("Coors"), accounting for 11.1% of the Company's pro forma
net sales in 1996. In connection with the Anchor Acquisition, the Company
entered into an arrangement with Owens whereby the Company's facilities that
historically produced bottles for Coors continued to produce bottles ordered by
Coors from Owens during a transition period that ended in May 1997 with an
extension for a limited number of lower volume items.
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<PAGE> 65
MARKETING AND DISTRIBUTION
The Company's products are primarily marketed by an internal sales and
marketing organization that consists of 13 direct sales people and 27 business
managers who are organized into teams with responsibility for each specific
product line. Old Anchor's sales force was principally compensated based on
increase of sales volume without regard to margin. Management has recently
implemented a sales compensation program based on improving margin at the plant
level as well as increases in sales volume. Marketing efforts by the Company's
employees will be supplemented by Mr. Ghaznavi and his team of managers who plan
to leverage their relationships in the glass industry to increase sales at the
Company. As a result of the Company's affiliation with Consumers and Glenshaw,
management expects that Consumers and Glenshaw sales personnel will also market
the capabilities of Anchor with respect to certain production in exchange for a
market-based commission, thereby resulting in increased sales opportunities at
Anchor.
Anchor anticipates that certain production will be reallocated among its
ongoing plants in order to maximize machine capability and geographic proximity
to customers. In addition, Anchor intends to capitalize on its affiliation with
Consumers, with certain U.S. customers formerly served by Consumers having their
production shifted to U.S.-based Anchor facilities closer to such customers and
certain Canadian customers formerly served by Anchor having their production
shifted to Canadian-based Consumers facilities closer to such customers, in each
case in exchange for a market-based commission payable to the entity shifting
its existing production or responsible for the new business. With reduced
shipping distances as a result of this reallocation of production, Anchor
believes it will be able to reduce shipping time to customers, decrease levels
of breakage incurred in shipping product over longer distances and improve
efficiency at its plants resulting in faster and higher quality production and
service for its customers.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and other
beverage industries, in which demand is stronger during the summer months, the
Company's shipment volume is expected to be higher in the second and third
quarters. Consequently, the Company normally builds inventory during the first
quarter in anticipation of seasonal demands during the second and third
quarters. Historically, the Company has scheduled shutdowns of its plants for
furnace rebuilds and machine repairs in the first and fourth quarters of the
year to coincide with scheduled holiday and vacation time under its labor union
contracts. These shutdowns adversely affect profitability during the first and
fourth quarters. The Company is reviewing alternatives to reduce downtime during
these holiday periods in order to minimize disruptions to the production process
and its negative affect on profitability.
FACILITIES
The Company's administrative and executive offices are located in Tampa,
Florida. The Company owns and operates nine glass manufacturing plants (giving
effect to the Plant Closings). The Company also leases a building located in
Streator, Illinois, that is used as a machine shop to rebuild glass-forming
related machinery and one mold shop located in Zanesville, Ohio, as well as
additional warehouses for finished products in various cities throughout the
United States. Substantially all of the Company's owned and leased properties
are pledged as collateral securing the Company's obligations under the Notes and
the Indenture.
As part of its long-term business strategy, the Company closed its Houston
plant effective as of February 1997 and its Dayville plant effective as of April
1997. Two furnaces and five machines have also been removed from service, one
furnace and one machine at the Company's Jacksonville plant and one furnace and
four machines at its Connellsville plant. In addition, management will continue
to monitor business conditions and utilization of plant capacity to determine
the appropriateness of further plant closings.
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<PAGE> 66
In conjunction with the Anchor Acquisition, AAA estimated the market value
for real property and the liquidation in place value of personal property
consisting of the Company's ongoing plants, machinery and mold facilities to be
$243.0 million. See Summarization Letter of AAA, attached as Annex A to this
Prospectus. The following table sets forth certain information about the
facilities owned and being operated by the Company as of November 1, 1997.
<TABLE>
<CAPTION>
BUILDING
AREA
NUMBER OF NUMBER OF (SQ.
LOCATION(1) FURNACES MACHINES FT.)
- ------------------------------------------------------------ --------- --------- --------
<S> <C> <C> <C>
Operating Plants:
Jacksonville, Florida(2).................................. 3 5 624,000
Warner Robins, Georgia.................................... 2 8 864,000
Lawrenceburg, Indiana..................................... 1 4 504,000
Winchester, Indiana....................................... 2 6 627,000
Shakopee, Minnesota....................................... 2 6 360,000
Salem, New Jersey(3)...................................... 3 6 733,000
Elmira, New York.......................................... 2 6 912,000
Henryetta, Oklahoma....................................... 2 6 664,000
Connellsville, Pennsylvania(4)............................ 2 4 624,000
</TABLE>
- ---------------
(1) Keyser, West Virginia, Gas City, Indiana, Cliffwood, New Jersey, Royersford,
Pennsylvania, Chattanooga, Tennessee, Houston, Texas and Dayville,
Connecticut are closed plants that are part of the collateral securing the
Notes and the Company's obligations under the Indenture, but were not
included in AAA's appraisal.
(2) The Company removed one furnace and one machine from production at this
facility in February 1997.
(3) A portion of the site on which this facility is located is leased pursuant
to several long-term leases.
(4) The Company removed one furnace and four machines from production at this
facility in February 1997.
The following table sets forth certain information about the facilities
leased by the Company as of November 1, 1997 (other than the Tampa
headquarters):
<TABLE>
<CAPTION>
LEASE
BUILDING AREA EXPIRATION
LOCATION (SQ. FT.) DATE
- ------------------------------------------------------------ ------------- ---------------
<S> <C> <C>
Warehouses:
Dayville, Connecticut..................................... 985,000 August 2018
Jacksonville, Florida..................................... 120,000 August 1998
Adairsville, Georgia...................................... 165,000 June 1999
Winchester, Indiana....................................... 120,000 June 2000
Savage, Minnesota......................................... 102,000 November 1997
Salem, New Jersey(1)...................................... land only January 2029
Mt. Pleasant, Pennsylvania................................ 100,000 month to month
Mississauga, Ontario, Canada.............................. 48,000 month to month
Fort Collins, Colorado.................................... 120,000 June 1998
Machine Shop:
Streator, Illinois........................................ 130,000 month to month
Mold Shop:
Zanesville, Ohio.......................................... 102,000 December 2008
</TABLE>
- ---------------
(1) The building is owned by the Company and has 733,000 square feet.
Headquarters Lease. In connection with the Anchor Acquisition, the Company
assumed and amended Old Anchor's lease of the headquarters facility located in
Tampa, Florida and a related option to purchase. The term of the amended lease
expires on January 2, 1998, unless the Company has exercised its purchase right,
in which case the expiration date is February 1, 1998. The property is
encumbered by a mortgage in
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<PAGE> 67
favor of Citicorp which secures a loan from Citicorp to the landlord, Fountain,
the principal balance of which was $10.2 million as of February 5, 1997. This
mortgage indebtedness is required to be repaid or refinanced by February 11,
1998. Anchor is obligated to pay this indebtedness if Anchor does not exercise
its purchase option by January 2, 1998. If the property is subsequently sold, a
portion of the net proceeds is to be paid to Anchor to reimburse it for this
payment. The building has been appraised by an independent appraisal firm, as of
February 17, 1997, to have a current market value, assuming the building is
vacant, of $9.2 million and to have a market value, assuming continued occupancy
with market lease terms, of $11.1 million.
MANUFACTURING PROCESS
To manufacture glass containers, sand, limestone, soda ash and minor
ingredients, along with crushed recycled glass (also known as "cullet"), are
mixed in specific proportions and automatically fed into furnaces which,
operating at temperatures of up to 2,860 degrees Fahrenheit, melt the raw
material batch and produce molten glass. The molten glass flows from the furnace
through feeder orifices, is cut into gobs and then drops into molds located in
automatic "individual section" glass forming machines ("IS Machines"). In these
machines, mechanical devices and air pressure form the glass into its final
shape. The containers are conveyed through an oven known as an annealing lehr to
anneal (or harden) the glass. Surface coatings are applied to strengthen the
glass and lubricate it for easier handling.
Glass forming machines are generally operated for approximately five to
seven years before they are removed from the plant for rebuilding. When a
machine is removed for rebuilding, a new or rebuilt machine is immediately
installed in its place so as to minimize plant downtime.
IS Machines vary in size, usually having eight, ten or twelve "sections."
Each section in turn may have from two to four bottle-producing "cavities"
consisting of two sets of molds each. The first mold set receives the gob of
glass from the furnace feeder and forms a "parison," which is roughly in the
shape of the container. The parison is then transferred by the machine to the
second (finish) mold set where it is blown into the final container shape using
compressed air. During each machine "cycle," an IS Machine produces one bottle
in each of its cavities. Accordingly, an eight-section double-cavity machine
produces sixteen bottles per machine cycle, while a ten-section triple-cavity
machine produces thirty bottles per machine cycle. Typically, the largest
machines are the most productive as they require less labor and related costs
per unit produced.
Glass forming machines also differ in the "speed," or number of cycles per
unit of time, that they can achieve. Typically, the faster the machine, the more
efficient and productive it is as, among other things, the fixed labor costs per
unit produced are reduced. However, certain products are not necessarily
well-suited for the fastest IS Machines or those with the most bottle-producing
cavities. IS Machines with a high number of bottle producing cavities would not
be capable of producing particular product lines such as large or unusually
shaped liquor bottles.
Finally, IS Machines form containers by one of two processes: (i) the "blow
and blow" process, whereby both the parison and the final container are formed
using compressed air or (ii) the more advanced "press and blow" method, whereby,
a precisely aligned metal plunger is used to press the molten glass into shape
in the first mold set. The "press and blow" method has been used for many years
to form all wide mouth food containers. A significant manufacturing advance has
been the development of high speed IS Machines capable of producing high quality
beer and soft drink containers using the narrow-neck-press-and-blow process. The
narrow-neck-press-and-blow process enables bottles to be made with less glass
and still meet strength requirements, which results in production cost savings.
More importantly, it results in a lighter weight bottle that costs less to
produce in terms of raw materials and energy per unit. These lightweight bottles
are also typically produced at higher machine speeds that increase productivity
and further reduce per unit costs.
SUPPLIERS AND RAW MATERIALS
Sand, soda ash, limestone, cullet and corrugated packaging materials are
the principal materials used by the Company. All of these materials are
available from a number of suppliers and the Company is not dependent upon any
single supplier for any of these materials. Management believes that adequate
quantities
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of these materials are and will be available from various suppliers. Material
increases in the cost of any of these items could have a significant impact on
the Company's operating results.
All of the Company's glass melting furnaces are equipped to burn natural
gas, which is the primary fuel used at its manufacturing facilities. Backup
systems are in place at most facilities to permit the use of fuel oil or propane
should that become necessary. Electricity is used in certain instances for
supplementary melting. The Company expects to be continually involved in
programs to conserve and reduce its consumption of fuel. Although natural gas
remains generally less expensive than electricity, prices for natural gas have
fluctuated in recent years, with significant increases in 1993, declines in 1994
and 1995 and a significant increase again in 1996. While certain of these energy
sources may become increasingly in short supply, or subject to governmental
allocation or excise taxes, the Company cannot predict the effects, if any, of
such events on its future operations. In addition, the Company utilizes a
natural gas risk management program to hedge future requirements and to minimize
fluctuations in the price of natural gas.
COMPETITION
The glass container industry is a low growth and mature industry. This low
growth combined with excess capacity in the industry have made pricing an
important competitive factor. In addition to price, companies in the glass
container manufacturing industry compete on the basis of quality, reliability of
delivery and general customer service. The Company's principal competitors are
Owens and Ball-Foster. These competitors are larger and have greater financial
and other resources than the Company. The glass container industry in the United
States is highly concentrated, with the three largest producers in 1996, which
included Old Anchor, estimated to have accounted for 95% of 1996 production.
Owens is generally believed to be the industry's lowest cost producer. Owens has
a relatively large research and development staff and has in place numerous
technology licensing agreements with other glass producers, including the
Company. See "-- Intellectual Property."
The Company's business consists exclusively of the manufacture and sale of
glass containers. Certain other glass container manufacturers engage in more
diversified business activities than the Company (including the manufacture and
sale of plastic and metal containers). In addition, plastics and other forms of
alternative packaging have made substantial inroads into the container markets
in recent years and will continue to affect demand for glass container products.
According to industry sources, unit sales in the U.S. glass container
manufacturing industry in 1996 were down 2.1% from 1995. Competitive pressures
from alternative forms of packaging, including plastics, as well as
consolidation in the glass container industry, have resulted in excess capacity
and have led to severe pricing pressures on glass container manufacturers. See
"Industry" and "Risk Factors -- Competition."
During the period of its continued losses, insolvency and uncertainty
regarding future operations and ownership, Old Anchor's relationships with many
of its major customers were adversely affected and Old Anchor lost certain
customers or received volume reductions and in many cases reduced prices
substantially in order to maintain production volumes. In order to successfully
improve the Company's operating performance as compared to Old Anchor, the
Company will need to establish and maintain strong relationships with major
customers based upon competitive pricing. However no assurance can be given that
the Company will be able to achieve this objective.
QUALITY CONTROL
The Company maintains a program of quality control with respect to
suppliers, line performance and packaging integrity for glass containers. The
Company's production lines are equipped with a variety of automatic and
electronic devices that inspect containers for dimensional conformity, flaws in
the glass and various other performance attributes. Additionally, products are
sample inspected and tested by Company employees on the production line for
dimensions and performance and are also inspected and audited after packaging.
Containers which do not meet quality standards are crushed and recycled as raw
materials.
The Company monitors and updates its inspection programs to keep pace with
modern technologies and customer demands. The Company maintains its own
laboratory at its corporate headquarters where samples of
61
<PAGE> 69
glass and raw materials from its plants are routinely chemically and
electronically analyzed to monitor compliance with quality standards.
Laboratories are also maintained at each manufacturing facility to test various
physical characteristics of products.
INTELLECTUAL PROPERTY
Pursuant to the Technology Agreement between Owens and Consumers, the
Company is entitled to use patents, trade secrets and other technical
information of Owens relating to glass manufacturing technology. The agreement,
entered into in February 1997, provides for a term of up to ten years. Owens is
generally considered one of the world's most technologically advanced
manufacturers of glass containers. The Technology Agreement allows Anchor to
plan capital investments in line with Owens' advanced production techniques.
While the Company holds various patents, trademarks and copyrights of its
own, it believes its business is not dependent upon any one of such patents,
trademarks or copyrights.
EMPLOYEES
As of November 1, 1997, the Company employed approximately 3,350 persons on
a full-time basis. Approximately 550 of these employees are salaried office,
supervisory and sales personnel. The remaining employees are represented
principally by two unions, Glass, Molders, Pottery, Plastics and Allied Workers
(the "GMP"), which represents approximately 90% of the Company's hourly
employees, and the American Flint Glass Workers Union (the "AFGWU"), which
represents approximately 10% of the Company's hourly employees. The Company's
two labor contracts with the GMP and its two labor contracts with the AFGWU have
three year terms expiring on March 31, 1999 and August 31, 1999, respectively.
Old Anchor was granted a deferral of the scheduled 1996 wage increase under its
collective bargaining agreements. The Company granted the 1996 increase
effective as of the date of the Anchor Acquisition, and the 1997 increase
effective as of April 1, 1997. These two increases represent a 9% increase in
wage rates as of April 1, 1997 as compared to 1996 wage rates. The Company is
subject to OSHA and other laws regulating safety and noise exposure levels in
the production area of its plants. See "-- Environmental and Other Government
Regulation -- Health and Safety Regulation"
Old Anchor had not experienced a work stoppage since an industry-wide
strike in 1968. The Company considers its employee relations to be good, and
does not anticipate any material work stoppages in the near term.
ENVIRONMENTAL AND OTHER GOVERNMENT REGULATION
Environmental Regulation and Compliance. The Company's operations are
subject to increasingly complex and detailed Federal, state and local laws and
regulations including, but not limited to, the Federal Water Pollution Control
Act of 1972, as amended, the U.S. Clean Air Act, as amended, and the Federal
Resource Conservation and Recovery Act, as amended, that are designed to protect
the environment. Among the activities subject to regulation are the disposal of
checker slag (furnace residue usually removed during furnace rebuilds), the
disposal of furnace bricks containing chromium, the disposal of waste, the
discharge of water used to clean machines and cooling water, dust produced by
the batch mixing process, underground storage tanks and, air emissions produced
by furnaces. In addition, the Company is required to obtain and maintain permits
in connection with its operations. Many environmental laws and regulations
provide for substantial fines and criminal sanctions for violations. The Company
believes it is in material compliance with applicable environmental laws and
regulations. It is difficult to predict the future development of such laws and
regulations or their impact on future earnings and operations, but the Company
anticipates that these standards will continue to require increased capital
expenditures. There can be no assurance that material costs or liabilities will
not be incurred.
Certain environmental laws, such as CERCLA and analogous State laws provide
for strict, joint and several liability for investigation and remediation of
releases of hazardous substances into the environment. Such laws may apply to
properties presently or formerly owned or operated by an entity or its
predecessors, as
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<PAGE> 70
well as to conditions at properties at which wastes attributable to an entity or
its predecessors were disposed. There can be no assurance that the Company or
entities for which it may be responsible will not incur such liability in a
manner that could have a material adverse effect on the financial condition or
results of operations of the Company.
The Company is engaged in investigation and remediation projects at plants
currently being operated and at closed facilities. In addition, Old Anchor was
named as a PRP under CERCLA with respect to a number of sites. Of these sites,
the Company has assumed responsibility with respect to four sites that are
currently active. While the Company may be jointly and severally liable for
costs related to these sites, in most cases, it is only one of a number of PRPs
who are also jointly and severally liable. With respect to the four currently
active sites for which the Company has assumed responsibility, the Company
estimates that its share of the aggregate cleanup costs of such sites should not
exceed $2.0 million, and that the likely range after taking into consideration
the contributions anticipated from other potentially responsible parties could
be significantly less. However, no assurance can be given that the cleanup costs
of such sites will not exceed $2.0 million or that the Company will have these
funds available. The Company has established reserves of approximately $16.0
million for environmental costs which it believes are adequate to address the
anticipated costs of remediation of these operated and closed facilities and its
liability as a PRP under CERCLA. The timing and magnitude of such costs cannot
always be determined with certainty due to, among other things, incomplete
information with respect to environmental conditions at certain sites, the
absence of regulatory determinations with respect to environmental requirements
at certain sites, new and amended environmental laws and regulations, and
uncertainties regarding the timing of remedial expenditures.
Management anticipates that capital expenditures required for environmental
compliance will be approximately $1.8 million for 1997 and approximately $1.5
million annually in 1998 and 1999. However, there can be no assurance that
future changes in such laws, regulations or interpretations thereof or the
nature of the Company's operations will not require the Company to make
significant additional capital expenditures to ensure compliance in the future.
ERISA and Pension Deficiencies. The Company maintains three defined
benefit plans and two profit sharing plans that, prior to the Anchor
Acquisition, were maintained by Old Anchor. These plans are covered by ERISA and
are tax qualified under the Code, subject to regulation by the Internal Revenue
Service and the Department of Labor. The three defined benefit plans are also
subject to regulation by the PBGC. The Company's two profit sharing plans
contain cash or deferred arrangements under Section 401(k) of the Code. The
Company's tax-qualified plans must meet stringent requirements both in form and
in operation in order to maintain their tax-qualified status. These requirements
are constantly changing with the enactment of new pension legislation, the
issuance of new Treasury regulations and other guidance from the Internal
Revenue Service. The loss of a plan's qualified status could result in the
assessment of tax on the plan's trust income, disallowance of the Company's tax
deduction for contributions, and immediate income tax liability upon individual
participant's benefits.
The three defined benefit plans are subject to minimum funding requirements
under the Code and Title IV of ERISA. These funding requirements include the
obligation to make quarterly contributions to the plans. Under ERISA, if any
contribution is missed which, when added to any other missed payment, exceeds
the amount of $1.0 million, an automatic lien in favor of the PBGC will arise on
all property of the Company and all members of its controlled group. In
addition, under ERISA, the PBGC can institute proceedings to terminate any
defined benefit plan for a number of reasons, including (i) the failure of the
plan to meet ERISA's minimum funding requirements, (ii) the inability of the
plan to pay benefits when due or (iii) the possible long-run loss of the PBGC
with respect to the plan may reasonably be expected to increase unreasonably if
the plan is not terminated. Upon termination of a plan, a lien arises in favor
of the PBGC for the amount of the underfunding of the plan.
On January 9, 1997, the PBGC notified Old Anchor that it intended to
institute involuntary termination proceedings with respect to the three defined
benefit plans then maintained by Old Anchor that are now maintained by the
Company. However, the PBGC reached an agreement with Vitro (the "Termination
Agreement"), the parent of Old Anchor, in which Vitro agreed to provide a
limited guaranty to the PBGC
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with respect to the unfunded benefit liabilities of the Company's defined
benefit plans, if the plans, or any one of them, are terminated before August 1,
2006. As a result of this agreement with Vitro, the threatened involuntary
termination proceeding was never commenced. Under the terms of the Termination
Agreement, the PBGC agreed that it would not implement proceedings to terminate
the Company's defined benefit plans solely as a result of the Anchor Acquisition
or the transactions contemplated by the Asset Purchase Agreement.
The defined benefit plan covering salaried employees was frozen at the end
of 1994, and, at the end of 1996, was not underfunded under SFAS No. 87.
However, the two defined benefit plans that are maintained for hourly employees
are significantly underfunded and will require substantial cash contributions
over the next few years. At the end of 1996, these two plans in the aggregate
had unfunded benefits under SFAS No. 87 totaling approximately $76.7 million.
Pension contributions made to the three defined benefit plans during 1997,
including the contributions made by the Company upon the closing of the Anchor
Acquisition ($9.1 million in cash and $9.0 million in Series A Preferred Stock,
including $8.1 million in cash and $8.0 million in Series A Preferred Stock
contributed to the two hourly plans), were approximately $38.4 million. In
addition, the underfunding of the two hourly plans required the payment of
increased premiums to the PBGC under its pension guaranty program of
approximately $1.8 million in 1997.
Pursuant to the Termination Agreement, a valuation of the shares of Series
A Preferred Stock contributed by the Company to the three defined benefit plans
is to be performed, and if, based on such valuation, it is determined that the
value of such shares as of February 5, 1997 plus the aggregate cash contribution
of $9.1 million made to those plans was less than $18.1 million, the Company
will be obligated to contribute an amount in cash or "qualifying employer
securities" (as defined in section 407(d)(5) of ERISA) equal to the difference
between $18.1 million and the value of the shares and cash contributed.
Management believes that the Company is now in material compliance with all
laws and regulations governing its employee benefit plans. In addition, based
upon the Company's business plan, management believes the Company will have
sufficient cash flow to meet its obligations to make pension contributions and
pay PBGC premiums. However, there can be no assurance that future changes in
such laws or regulations, or interpretations thereof, changes in the Company's
business or in market conditions affecting the value of plan assets will not
require the Company to expend amounts that exceed those that are now
anticipated.
Employee Health and Safety Regulation. The Company's operations are
subject to a variety of worker safety laws. OSHA and analogous laws mandate
general requirements for safe workplaces for all employees. The Company believes
that its operations are in material compliance with applicable employee health
and safety laws.
Deposit and Recycling Legislation. In recent years, legislation has been
introduced at the Federal, state and local levels that would require a deposit
or tax, or impose other restrictions, on the sale or use of certain containers,
particularly beer and carbonated soft drink containers. To date, 10 states have
enacted some form of deposit legislation, although no such new legislation has
been enacted since 1986. The enactment of additional laws or comparable
administrative actions that would require a deposit on beer or soft drink
containers, or otherwise restrict their use, could have a material adverse
effect on the Company's business. In jurisdictions where deposit legislation has
been enacted, the consumption of beverages in glass bottles has generally
declined due largely to the preference of retailers for handling returned cans
and plastic bottles. Container deposit legislation continues to be considered
from time to time at various governmental levels.
In lieu of this type of deposit legislation, several states have enacted
various anti-littering recycling laws that do not involve the return of
containers to retailers. The use of recycled glass, and recycling in general,
are not expected to have a material adverse effect on the Company's operations.
LEGAL PROCEEDINGS
The Company is, and from time to time may be, a party to routine legal
proceedings incidental to the operation of its business. The outcome of these
proceedings is not expected to have a material adverse effect on the financial
condition or operating results of the Company, based on the Company's current
understanding of the relevant facts and law.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding each of the
Company's directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---
<S> <C> <C>
John J. Ghaznavi................... 62 Chairman, Chief Executive Officer and Director
Richard M. Deneau.................. 51 President and Chief Operating Officer
M. William Lightner, Jr............ 63 Senior Vice President -- Finance, Chief Financial
Officer, Treasurer and Director
David T. Gutowski.................. 48 Senior Vice President -- Administration, Chief
Administrative Officer and Director
C. Kent May........................ 57 Senior Vice President, General Counsel,
Secretary and Director
Paul H. Farrar..................... 62 Director
Roger L. Erb....................... 55 Senior Vice President -- Engineering
Gordon S. Love..................... 47 Senior Vice President -- Sales and Marketing
Edward M. Jonas.................... 59 Controller
Eugene K. Pool..................... 61 Vice President, Associate General Counsel and
Assistant Secretary
John F. Robichaud.................. 52 Vice President -- Order Management and Scheduling
Logistics
George C. Lusby III................ 54 Industry Vice President -- Sales and Marketing
John L. Day........................ 50 Industry Vice President -- Sales and Marketing
Gregory C. Sinatro................. 46 Industry Vice President -- Sales and Marketing
- ---------------
DIRECTORS AND OFFICERS OF CONSUMERS U.S.
NAME AGE POSITION
---
John J. Ghaznavi................... 62 Chairman, Chief Executive Officer and Director
David T. Gutowski.................. 48 Vice-President, Treasurer, Assistant Secretary and
Director
C. Kent May........................ 57 Secretary and Director
M. William Lightner, Jr............ 63 Vice President and Chief Financial Officer
</TABLE>
John J. Ghaznavi became Chairman of the Board and Chief Executive Officer
of the Company in January 1997. He has been Chairman and Chief Executive Officer
of each of Consumers, Glenshaw and G&G since 1993, 1988 and 1987, respectively.
Mr. Ghaznavi currently serves as Chairman of the Board of Trustees of the Glass
Packaging Institute.
Richard M. Deneau assumed his duties as President and Chief Operating
Officer of the Company in July 1997. From January 1996 until June 1997, Mr.
Deneau was Senior Vice President and Chief Operating Officer of Ball-Foster.
From October 1992 to January 1996, he was Senior Vice President in charge of the
domestic beverage can operations of American National Can Company. Prior to
October 1992, Mr. Deneau was Senior Vice President of Sales at American National
Can Company's division and the predecessor of Ball-Foster, Foster Forbes
("Foster-Forbes").
M. William Lightner, Jr. joined the Company in January 1997 as a director
and as Vice President, Treasurer and Chief Financial Officer. He became Vice
President -- Finance in March 1997 and Senior Vice President -- Finance in June
1997. Since July 1994, Mr. Lightner has been Vice President of Finance and Chief
Financial Officer of Consumers. From 1989 to 1992, Mr. Lightner served as
Chairman of MICA Resources, a privately held aluminum processor and brokerage
company. Mr. Lightner was a partner with Arthur Andersen & Co. from 1969 to
1989.
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David T. Gutowski joined the Company in January 1997 as a director and as a
Vice President and became Chief Administrative Officer and Vice
President -- Administration in March 1997 and Senior Vice
President -- Administration in June 1997. He has been a director of Consumers
since 1993. Mr. Gutowski served as Treasurer and Chief Financial Officer of G&G
since 1988.
C. Kent May became a director of the Company in January 1997 and became
Vice President, General Counsel and Secretary of the Company in March 1997. He
became Senior Vice President in June 1997. Mr. May has served as a director of
Consumers since 1993 and he was appointed General Counsel of Consumers in March
1997. Mr. May has been an associate, partner or member of the law firm of Eckert
Seamans Cherin & Mellott, LLC since 1964, and served as the managing partner of
such firm from 1991 to 1996.
Paul H. Farrar became a director of the Company in February 1997 and has
served as a director of Consumers since 1994 Mr. Farrar has been Chairman of
Adelaide Capital Corporation, an investment company, since 1994, and he served
as Senior Vice President of Canadian Imperial Bank of Commerce, a Canadian
chartered bank from 1986 to December 1993.
Roger L. Erb became Senior Vice President -- Engineering of the Company in
October 1997. From September 1995 until June 1997, Mr. Erb was Senior Vice
President of Technical Services at Ball-Foster. Prior thereto, he was employed
at Foster Forbes, serving as Senior Vice President of Technical Services from
June 1994 to September 1995, Senior Vice President of Operations from January
1993 to June 1994, and Vice President of Technical Services prior to 1993.
Gordon S. Love became Senior Vice President -- Sales and Marketing of the
Company in July 1997. From October 1996 until June 1997, Mr. Love was Vice
President of Sales for Beer and Liquor at Ball-Foster. From September 1995 until
October 1996, he was Senior Vice President of Beverage Sales at Ball-Foster.
Prior thereto, he was employed at Foster Forbes, serving as Senior Vice
President of Sales and Marketing from July 1993 to September 1995, Vice
President of Sales from October 1992 to July 1993, and Beer Product Manager
prior to October 1992.
Edward M. Jonas joined the Company in February 1997 and became Controller
of the Company in March 1997. Mr. Jonas joined the predecessor to Old Anchor in
1968 and was Comptroller of Old Anchor from 1983 through early 1995.
Eugene K. Pool joined Old Anchor in June 1988 as Senior Counsel. Mr. Pool
was appointed Assistant Secretary of Old Anchor in 1988, Associate General
Counsel of Old Anchor in 1991 and Vice President -- Associate General Counsel of
Old Anchor in 1995. In February 1997, Mr. Pool became Assistant Secretary of the
Company and in March 1997, he became Vice President and Associate General
Counsel for the Company.
John F. Robichaud joined the Company in September 1997 as Vice
President -- Order Management and Scheduling Logistics. From 1992 until
September 1997 he was Director of Logistics for Consumers and from 1986 to 1992
was Director of Marketing for Consumers.
George C. Lusby III joined the Company in March 1997 as Industry Vice
President of Sales and Marketing. Mr. Lusby has served as Vice President of
Sales and Marketing and as a director of Glenshaw since 1987.
John L. Day became Industry Vice President of Sales and Marketing for the
Company in March 1997. From September 1993 to February 1997, Mr. Day served as
Vice President -- Beer Sales of Old Anchor and from August 1990 to September
1993, he served as Director of Sales of Old Anchor.
Gregory C. Sinatro became Industry Vice President of Sales and Marketing
for the Company in March 1997. From October 1994 to February 1997, Mr. Sinatro
served as Senior Vice President of Food/Consumer Products of Old Anchor and from
January 1989 to September 1994, he served as Vice President -- Consumer Products
Division of Old Anchor.
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BOARD OF DIRECTORS OF THE COMPANY
Classification of Board. Pursuant to the Amended and Restated Certificate
of Incorporation (the "Restated Charter") of the Company, until February 5,
2000, the holders of the Class A Common Stock are entitled to elect four
directors (the "Class A Directors") and the holders of the Class B Common Stock
are entitled to elect five directors (the "Class B Directors"). The Class A
Directors have not yet been designated. Messrs. Ghaznavi, Lightner, Gutowski,
Farrar and May are Class B Directors. From and after February 5, 2000, the Board
of Directors has discretion to determine the number of directors (each a
"Director") constituting the Board of Directors, and such number of Directors
will be divided into three classes, as nearly equal in the number of Directors
as possible. The term of Directors of the first, second and third class will
expire at the first, second and third annual meeting after their election,
respectively. At each annual meeting, the number of Directors constituting the
class whose term has expired at the time of such meeting will be elected to hold
office until the third succeeding annual meeting. Until February 5, 2000, Class
A Directors may be removed with or without cause only by the holders of Class A
Common Stock and Class B Directors may be removed with or without cause only by
the holders of Class B Common Stock. Thereafter, all classes of Common Stock (as
defined) of the Company will be consolidated into one class of Common Stock,
and, pursuant to the Bylaws of the Company (the "Bylaws"), Directors may be
removed only with cause by the affirmative vote of the holders of 75% of the
outstanding shares of capital stock of the Company then entitled to vote at an
election of Directors.
The foregoing provisions of the Restated Charter and the Bylaws are subject
to the rights, if any, of any series of preferred stock of the Company to elect
additional Directors under circumstances specified in the certificate of
designation relating to such preferred stock.
Officers of the Company serve at the discretion of the Board of Directors.
Compensation of Directors. Directors of the Company are entitled to
receive an annual director's fee of $7,000. In addition, fees of $750 are paid
for each directors' meeting and committee meeting attended unless more than one
meeting is held on the same day, in which case the fee for attending each
subsequent meeting is $500.
BOARD OF DIRECTORS OF CONSUMERS U.S.
Compensation of Directors. Directors of Consumers U.S. do not receive any
compensation or reimbursements.
EXECUTIVE COMPENSATION
The Company. The Company was organized in January 1997 and did not conduct
any operations or have any employees prior to the Anchor Acquisition in February
1997. As a result, the Company does not have any executive officers with respect
to whom disclosure of executive compensation is required under the Securities
Act or the rules and regulations promulgated thereunder.
Consumers U.S. Consumers U.S. was organized in January 1997 as a holding
company for Anchor. Consumers U.S. does not conduct any operations and does not
have any executive officers with respect to whom disclosure of executive
compensation is required under the Securities Act or the rules and regulations
promulgated thereunder.
EMPLOYMENT CONTRACTS
The Company does not, as a general rule, enter into employment agreements
with its executive officers and/or other key employees. See "Risk
Factors--Dependence on Key Personnel and G&G."
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EMPLOYEE PLAN
As part of the Anchor Acquisition, the Company assumed Old Anchor's
obligations under the Anchor Glass Container Corporation Executive/Key Employee
Retention Plan which covers approximately 35 employees including Messrs. Pool,
Day and Sinatro. Under this plan, if a participating employee is terminated by
the Company without cause or terminates his or her employment with the Company
for good reason (such as a reduction in base salary, a material change in
position, duties or responsibilities, or a material change in job location), the
Company is obligated to pay a severance benefit to such employee. If all
participating employees were to be terminated by the Company without cause
and/or were to terminate their employment with the Company for good reason, the
aggregate amount of severance benefits payable by the Company under this plan
would be $1.1 million.
PRINCIPAL STOCKHOLDERS
PRINCIPAL STOCKHOLDERS OF COMPANY
The following table sets forth information with respect to the beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock (the
"Voting Common Stock") as of November 1, 1997 by (i) each person who is known by
the Company to beneficially own 5% or more of such Voting Common Stock, (ii)
each Director of the Company, (iii) the Company's Chief Executive Officer and
(iv) all current Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
CLASS AND AMOUNT OF
BENEFICIAL OWNERSHIP(1) PERCENTAGE PERCENTAGE
------------------------- (BY CLASS)(1) (BOTH CLASSES)(1)
PRIMARY AND ------------------------- -------------------------
NAME(1) ACTUAL FULLY DILUTED PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
------- -------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
John J. Ghaznavi(2)...................... -- -- -- -- -- --
M. William Lightner(3)................... -- -- -- -- -- --
David T. Gutowski(4)..................... -- -- -- -- -- --
Paul H. Farrar(5)........................ -- -- -- -- -- --
C. Kent May(6)........................... -- -- -- -- -- --
All Directors and executive officers as a
group (14 persons)..................... -- -- -- -- -- --
FIVE PERCENT STOCKHOLDERS:
Smith Barney, as escrow
agent for certain creditors 490,898 8,321,398
of Old Anchor(7)....................... Class A Class A 100.0 84.7 90.2 31.0
Anchor Glass Container
Corporation Service -- 1,260,787
Retirement Plan(8)(9).................. Class A 72.0 12.9 47.5 4.7
Anchor Glass Container
Corporation Retirement
Plan for Salaried -- 158,921
Employees(8)(10)....................... Class A 24.5 1.6 10.2 0.6
Pension Plan for Hourly
Employees of Latchford
Glass Company and -- 80,292
Associated Companies(8)(11)............ Class A 14.1 0.8 5.5 0.3
902,615 16,985,636
Consumers U.S., Inc.(12)................. Class B Class B 100.0 100.0 97.2 63.4
</TABLE>
- ---------------
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to shares beneficially owned and
all addresses are in care of the Company. All primary share amounts and
percentages reflect beneficial ownership determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All fully diluted share amounts and percentages reflect beneficial
ownership of Voting Common Stock determined on a fully diluted basis. All
information with respect to beneficial ownership has been furnished by the
respective Director, executive officer or stockholder, as the case may be,
as of December 31, 1996.
(2) Through G&G, Ghaznavi Canada Inc. and other affiliates, Mr. Ghaznavi
beneficially owns 21,619,584 shares of the voting common stock of
Consumers, including 1,588,126 shares issuable upon the exercise of
currently exercisable options.
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(3) Mr. Lightner beneficially owns 61,500 shares of the voting common stock of
Consumers, including 60,000 shares issuable upon the exercise of currently
exercisable options, but not including 500 shares owned by Mr. Lightner's
spouse with respect to which Mr. Lightner disclaims beneficial ownership.
(4) Mr. Gutowski beneficially owns 63,000 shares of the voting common stock of
Consumers, including 55,000 shares issuable upon the exercise of currently
exercisable options, but not including 8,000 shares owned by Mr. Gutowski's
children with respect to which Mr. Gutowski disclaims beneficial ownership.
(5) Mr. Farrar beneficially owns 30,000 shares of the voting common stock of
Consumers, including 25,000 shares issuable upon the exercise of currently
exercisable options.
(6) Mr. May beneficially owns 25,000 options to purchase shares of the voting
common stock of Consumers, all of which are issuable upon the exercise of
currently exercisable options.
(7) Includes 7,830,500 shares issuable upon conversion of 1,879,320 shares of
Series A Preferred Stock. The 490,898 shares of Class A Common Stock and
1,879,320 shares of Series A Preferred Stock are held by Smith Barney, as
escrow agent, pursuant to an escrow agreement between Old Anchor and Smith
Barney. Such shares are to be distributed to the creditors of Old Anchor or
to a court appointed disbursing agent upon the effective date of a plan of
reorganization of Old Anchor approved by the United States Bankruptcy Court
of the District of Delaware. Under the terms of such escrow agreement,
Smith Barney may not exercise any voting rights with respect to the Class A
Common Stock held in escrow except as expressly instructed in an order of
such Bankruptcy Court. The address of Smith Barney 388 Greenwich Street,
19th Floor, New York, New York 10013.
(8) This stockholder's shares of Series A Preferred Stock are held in trust by
The Chase Manhattan Bank, as trustee of such benefit plan and the current
address for this stockholder is c/o The Chase Manhattan Bank, 3 Chase
Metrotech Center, Brooklyn, New York 11245. However, an "investment
manager," as that term is defined in Section 3(38) of ERISA, will be
appointed to control the shares contributed to the plans. When appointed,
such investment manager will have exclusive control over this stockholder's
shares of Series A Preferred Stock and any shares of Class A Common Stock
into which such shares of Series A Preferred Stock may be converted.
Pursuant to an agreement among the Company, Consumers and the PBGC, a
valuation of the shares of Series A Preferred Stock contributed to the
Plans is to be performed, and if, based on such valuation, it is determined
that the value of such shares as of February 5, 1997 plus the aggregate
cash contribution of $9.1 million made to the Plans was less than
$18,056,100, the Company will be obligated to contribute to the Plans an
amount in cash or "qualifying employer securities" (as defined in section
407(d)(5) of ERISA) equal to the difference between $18,056,100 and the
value of the shares and cash contributed. Such valuation is expected to be
completed during the second half of 1997.
(9) All 1,260,787 shares of this stockholder's beneficially owned shares of
Class A Common Stock are issuable upon conversion of 302,589 shares of
Series A Preferred Stock.
(10) All 158,921 shares of this stockholder's beneficially owned shares are
issuable upon conversion of 38,141 shares of Series A Preferred Stock.
(11) All 80,292 shares of this stockholder's beneficially owned shares are
issuable upon conversion of 19,270 shares of Series A Preferred Stock.
(12) Includes 16,083,021 shares issuable upon conversion of 3,538,265 shares of
Series B Preferred Stock (including 178,265 shares of Series B Preferred
Stock, accrued as of September 30, 1997 as a payment in kind dividend).
Does not include, however, shares of Series B Preferred Stock which have
accrued since September 30, 1997 as a payment in kind dividend. On a fully
diluted basis, Consumers U.S. owns approximately 59% of the three classes
of common stock of the Company. Not including the Class C Common Stock
(which is nonvoting), Consumers U.S. owns approximately 63.4% of the voting
common stock of the Company on a fully diluted basis. See "Description of
Capital Stock." All of the shares of Class B Common Stock and Series B
Preferred Stock currently owned or subsequently acquired by Consumers U.S.
will be pledged to secure the Consumers U.S. guarantee of the Company's
obligations under the Notes and the Indenture. See "Description of
Revolving Credit Facility" and "Description of Notes." Pursuant to the
Warrant Agreement, upon the closing of the Note Offering, the Company
issued to Consumers U.S. 702,615 shares of Class B Common Stock (or 2.5% of
the Common Stock outstanding on such date on a fully diluted basis
outstanding or issuable as of such
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date). The address for Consumers U.S. is 3140 William Flinn Highway,
Allison Park, Pennsylvania 15101.
PRINCIPAL STOCKHOLDERS OF CONSUMERS U.S.
All of the issued and outstanding capital stock of Consumers U.S. is owned
by Consumers International. All of such shares were pledged by Consumers
International to secure its obligations under the Consumers International Notes
and the Consumers International Indenture. See "Description of Revolving Credit
Facility" and "Description of Notes."
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CERTAIN TRANSACTIONS
The Company is part of a group of glass manufacturing companies (the
"Affiliated Glass Manufacturers") with Consumers and Glenshaw, each of which is
controlled by Mr. Ghaznavi through G&G. The Company intends to engage in a
variety of transactions with Consumers and Glenshaw as a part of its strategy to
achieve synergies among the companies. These expected transactions may include
bulk purchasing of raw and packaging materials, provision of technical and
engineering services, joint utilization of Anchor's mold and repair shops and
the possible consolidation of certain functions such as sales, engineering and
management information services.
The Company has entered into an Intercompany Agreement (the "Intercompany
Agreement") with G&G, Consumers, Consumers U.S., Consumers International Inc.,
Glenshaw, Hillsboro, I.M.T.E.C., Enterprises Inc., a machinery manufacturer
majority-owned by G&G, and certain related companies which establishes standards
for certain intercompany transactions. Pursuant to the Intercompany Agreement,
the Company may, from time to time, fill orders for customers of Affiliated
Glass Manufacturers and Affiliated Glass Manufacturers may, from time to time,
fill orders for customers of the Company. In such case, where the customer is
not a common customer, the company that does the manufacturing will pay a market
commission, set at 5% of the invoiced amount, to the company that referred the
customer. In the event of a transfer of a customer to the Company by a
Affiliated Glass Manufacturers or to a Affiliated Glass Manufacturers by the
Company, the transfer is treated as though the transferee had filled the orders
for the transferred customer.
In connection with any bulk purchasing of raw materials, packaging
materials, machinery, insurance, maintenance services, environmental services
and other items and services used in this business, each of the Affiliated Glass
Manufacturers will share out-of-pocket costs of the purchasing activities
without payment of commissions. Similarly, in connection with the provision of
technical, engineering or mold design services, the company providing the
services will receive reasonable per diem fees and costs for the employees
provided. For services such as the provision of molds, the company providing the
service will receive cost plus a reasonable market mark-up.
Transactions carried out in accordance with the Intercompany Agreement do
not require approval of the board of directors or fairness opinions. Any
amendment to the Intercompany Agreement is subject to the Indenture requirement
that it be in writing, on terms no less favorable to the Company than could have
been obtained in a comparable arms' length transaction between the Company and
third parties and is subject to the approval of the Board of Directors
("Affiliate Transaction Provisions"). The Revolving Credit Agreement and the
Indenture require that transactions between the Company and an affiliate be in
writing on no less favorable terms to the Company than would be obtainable in a
comparable arms' length transaction between the Company and a person that is not
an affiliate. In addition, transactions exceeding certain threshold values
require the approval of the Company's board of directors, the approval of the
Company's independent directors or an independent fairness opinion. See
"Description of Notes -- Certain Covenants -- Limitation on Transactions with
Affiliates."
Certain affiliates of the Company are engaged in businesses other than the
manufacture of glass containers, such as manufacturing or rehabilitating
manufacturing equipment, automobile and truck leasing, shipping and real estate
management. These transactions are subject to the Affiliate Transaction
Provisions of the Indenture.
The Company is party to the Management Agreement with G&G. Pursuant to the
Management Agreement, G&G is to provide specified managerial services for the
Company. For these services G&G is entitled to receive an annual management fee
of $3.0 million and to reimbursement of its out-of-pocket costs plus an
administrative charge not to exceed 10% of those costs. The Revolving Credit
Agreement and the Indenture limit management fee payments by the Company under
the Management Agreement to $1.5 million per year unless the Company meets
certain financial tests, in which case such fees will accrue. See "Description
of Notes -- Certain Covenants -- Limitation on Restricted Payments."
In September 1997, Hillsboro, a glass container manufacturing plant owned
by G&G, discontinued manufacturing. All of Hillsboro's rights and obligations to
fill orders under a supply contract between Consumers and one of its major
customers will be purchased by Consumers and Anchor. In addition, in
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connection with a plan to simplify the corporate ownership structure of
Consumers, Anchor and their affiliates, Glenshaw may become a subsidiary of
Anchor.
The Company from time to time has engaged the law firm of Eckert Seamans
Cherin & Mellott, LLC, to represent it on a variety of matters. C. Kent May, an
executive officer and director of the Company, is a member of such law firm.
DESCRIPTION OF CAPITAL STOCK
Anchor is authorized to issue 50,000,000 shares of Common Stock, having a
par value of $.10 per share (the "Common Stock"), and 20,000,000 shares of
preferred stock, having a par value of $0.01 per share and a liquidation value
of $25.00 per share (the "Preferred Stock").
COMMON STOCK
For the period from February 5, 1997 until February 5, 2000 (the "Initial
Period"), the Common Stock is divided into three classes, Class A and Class B,
which are voting, and Class C, which is nonvoting during the Initial Period.
During the Initial Period, the number of Directors of Anchor is fixed at nine,
with the holders of the Class A Common Stock having the right to elect four
Directors and the holders of the Class B Common Stock having the right to elect
five Directors. The holders of the Class C Common Stock are not entitled to
participate in the election of Directors. Except as described in the immediately
preceding sentence with respect to election of Directors, there are no
distinctions between the rights of holders of shares of Class A Common Stock and
Class B Common Stock. The holders of Class C Common Stock have no voting rights
during the Initial Period. At the expiration of the Initial Period, the Class A
Common Stock, the Class B Common Stock and the Class C Common Stock will
automatically be consolidated into a single class of Common Stock with identical
rights.
PREFERRED STOCK
Of the 20,000,000 authorized shares of Preferred Stock, (a) 2,239,320
shares have been designated as Series A Preferred Stock, (b) 5,000,000 shares
have been designated as Series B Preferred Stock and (c) 12,760,680 shares are
without designation at this time.
Series A Preferred Stock. The Series A Preferred Stock ranks, as to
dividends and redemption and upon liquidation, prior to all other classes and
series of capital stock of the Company, including the Series B Preferred Stock
and the Common Stock. The holders of the Series A Preferred Stock are entitled
to receive, when and as declared by the Board of Directors of the Company out of
legally available funds, cumulative dividends, payable quarterly in cash, at an
annual rate of ten percent of the liquidation value. Holders of the Series A
Preferred Stock are not entitled to vote except (a) as required by law, (b) on
certain matters affecting the rights of the holders of Series A Preferred Stock
and (c) in the event that scheduled cash dividends are unpaid for twelve
consecutive quarters, at which time (i) the number of Directors will be expanded
by three and (ii) the holders of the Series A Preferred Stock will have the
right to elect all three additional Directors until all accrued and unpaid
scheduled cash dividends have been paid.
The Company is required to redeem all outstanding shares of the Series A
Preferred Stock on February 5, 2009 and, on or after February 5, 2000, may, at
its option, redeem outstanding shares of Series A Preferred Stock if the trading
price of the Common Stock equals or exceeds $6.00 per share, in each case at a
price of $25.00 per share of Series A Preferred Stock so redeemed.
Shares of Series A Preferred Stock are convertible into shares of Class A
Common Stock, at the option of the holder, at a ratio determined by dividing the
liquidation value of the Series A Preferred Stock ($25.00) by $6.00. Such ratio
is subject to adjustment from time to time to prevent dilution.
Pursuant to the Asset Purchase Agreement, prior to the consummation of a
plan of reorganization with respect to Old Anchor, the Company is obligated to
register all of the shares of Class A Common Stock and Series A Preferred Stock
under the Exchange Act and to qualify such shares for listing on a nationally
recognized United States securities exchange or on The Nasdaq Stock Market's
National Market(SM) ("Nasdaq").
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Series B Preferred Stock. The Series B Preferred Stock ranks, as to
dividends and redemption and upon liquidation, junior to the Series A Preferred
Stock but senior to all other classes and series of capital stock of Anchor,
including the Common Stock. The holders of Series B Preferred Stock are entitled
to receive cumulative dividends, payable quarterly at an annual rate of eight
percent of the liquidation value. During the period from February 5, 1997
through and including December 31, 1999, the dividend is payable in additional
shares of Series B Preferred Stock. Thereafter, the dividends will be payable in
cash when and as declared by the Board of Directors out of legally available
funds. Holders of Series B Preferred Stock are not entitled to vote except (a)
as required by law, (b) on certain matters affecting the rights of the holders
of Series B Preferred Stock and (c) in the event that scheduled cash dividends
are unpaid for twelve consecutive quarters, at which time (i) the number of
Directors will be expanded by three and (ii) the holders of Series B Preferred
Stock will have the right to elect all three additional Directors until all
accrued and unpaid scheduled cash dividends have been paid.
Shares of Series B Preferred Stock are not subject to mandatory redemption.
On or after February 5, 2000, Anchor may, at its option, redeem outstanding
shares of Series B Preferred Stock if the trading price of the Common Stock
equals or exceeds $5.50 per share, at a price of $25.00 per share of Series B
Preferred Stock so redeemed.
Shares of Series B Preferred Stock are convertible into shares of Class B
Common Stock, at the option of the holder, at a ratio determined by dividing the
liquidation value of the Series B Preferred Stock ($25.00) by $5.50. Such ratio
is subject to adjustment from time to time to prevent dilution.
DESCRIPTION OF REVOLVING CREDIT FACILITY
GENERAL
In connection with the Anchor Acquisition, the Company entered into the
Anchor Loan Facility and the Revolving Credit Facility. The $130.0 million
Anchor Loan Facility was repaid in full on April 17, 1997 from the net proceeds
of the Note Offering. The Revolving Credit Facility enables the Company to
obtain revolving credit loans for working capital purposes and the issuance of
letters of credit for its account in an aggregate amount not to exceed $110.0
million. Revolving credit loans may be borrowed, repaid and reborrowed, and
letters of credit may be issued, at any time or from time to time in an
aggregate amount not to exceed the lesser of $110.0 million and the borrowing
base then in effect, less (in each case) the aggregate amount of all undrawn
amounts and unreimbursed drawings under letters of credit then outstanding and
the aggregate amount of then outstanding revolving credit loans. The borrowing
base consists of 85% of eligible accounts receivable plus 55% of eligible
inventory less the lease reserve amount then in effect for the Company's
headquarters. The Company is required to reserve up to $10.0 million against the
borrowing base if certain obligations relating to the refinancing of the
headquarters lease are not satisfied by December 31, 1997. See
"Business -- Facilities."
Revolving credit loans bear interest at a rate based upon either, at the
Company's option, (i) the higher of the prime rate of Bankers Trust Company,
0.5% in excess of the overnight federal funds rate and 0.5% in excess of the
adjusted certificate of deposit rate (as defined in the Revolving Credit
Facility), plus (in each case) a borrowing margin of 0-1.0%, depending upon the
aggregate amount of outstandings under the facility and the Company's leverage
ratio, or (ii) the average of the offering rates of banks in the New York
interbank eurodollar market for U.S. dollar deposits plus a borrowing margin of
1.5-2.5%, depending on the aggregate amount of outstandings under the facility
and the Company's leverage ratio.
The Company is also required to pay (x) a fee on the unused portion of each
lender's commitment at a rate of 0.5% thereof per annum, (y) a fee on the
aggregate amount of all Letter of Credit Liabilities during the immediately
preceding quarter at a rate equal to 1.5-2.5% thereof per annum, depending on
the aggregate amount of outstandings under the facility and the Company's
leverage ratio and (z) a fee on the daily weighted average face amount of the
letters of credit issued by any lender at a rate of 0.25% thereof.
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The Revolving Credit Facility terminates on February 5, 2002, unless
terminated sooner upon an event of default (as defined in the Revolving Credit
Facility), including a change in control (as defined in the Revolving Credit
Facility), and all revolving credit loans and Letter of Credit Liabilities will
be payable on such termination date or on such earlier date as may be
accelerated by the lenders following the occurrence of any event of default.
Anchor's obligations under the Revolving Credit Facility are secured by a
first priority lien on substantially all of Anchor's inventory and receivables
and related collateral (the "Bank Collateral"). In addition, Anchor's
obligations under the Revolving Credit Facility are guaranteed by Consumers U.S.
CERTAIN COVENANTS
The Revolving Credit Facility contains certain covenants that restrict the
Company from taking various actions, including, subject to specified exceptions,
the incurrence of additional Indebtedness, the granting of additional liens, the
making of investments, the payment of dividends and other restricted payments,
mergers, acquisitions and other fundamental corporate changes, capital
expenditures, operating lease payments and transactions with affiliates. The
Revolving Credit Facility also contains certain financial covenants that require
the Company meet and maintain certain financial tests and minimum ratios,
including a minimum working capital ratio, a minimum consolidated net worth test
and a minimum interest coverage ratio.
EVENTS OF DEFAULT
The Revolving Credit Facility contains customary events of default,
including nonpayment of principal, interest or fees, violation of covenants,
inaccuracy of representations or warranties in any material respect, cross
acceleration to certain other Indebtedness, bankruptcy, noncompliance with
certain provisions of ERISA, material judgements, failure of the collateral
documents, the guarantee by Consumers U.S., the Technology Agreement or the
Intercompany Agreement to be in full force and effect, the taking of any action
by the creditors of Consumers International to realize or foreclose upon the
capital stock of Consumers U.S. and change of control. The occurrence of any of
such events could result in acceleration of the Company's obligations under the
Revolving Credit Facility and foreclosure on the Bank Collateral, which could
have material adverse results to the holders of the Notes.
MANDATORY REPAYMENTS
The Revolving Credit Facility requires mandatory repayments and/or
reductions of the total commitments upon the happening of certain events,
including certain sales or issuances of the Company's equity or any contribution
to its capital, the incurrence of Indebtedness by the Company (other than as a
result of the offer and sale of the Notes), certain asset sales and a change of
control.
DESCRIPTION OF THE NOTES
GENERAL
The Exchange Notes will be issued under the indenture dated as of April 17,
1997 (the "Indenture") among the Company, the Parent Guarantor, the Subsidiary
Guarantors, if any, and The Bank of New York, as Trustee (the "Trustee"),
governing the Outstanding Notes. The following summary of certain provisions of
the Indenture, the Notes and the Security Documents does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Indenture and the Security Documents, including the
definitions of certain terms therein that are not otherwise defined in this
Prospectus. A copy of the Indenture may be obtained from the Company. As used in
this "Description of the Notes," the term "Company" refers to Anchor Glass
Container Corporation only and excludes its future Subsidiaries. The definitions
of certain capitalized terms used in the following summary are set forth under
" -- Certain Definitions" below.
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The Exchange Notes will be senior secured obligations of the Company,
ranking senior in right of payment to all existing and future subordinate
Indebtedness of the Company and pari passu with all existing and future senior
Indebtedness of the Company. The Exchange Notes will be guaranteed by the Parent
Guarantor and each future Restricted Subsidiary. Each Guarantee will be a senior
secured obligation of the applicable Guarantor, ranking senior in right of
payment to all existing and future subordinate Indebtedness of such Guarantor
and pari passu with all existing and future senior Indebtedness of such
Guarantor. As of the date of this Prospectus, there are no Restricted
Subsidiaries and thus no Subsidiary Guarantors.
The Exchange Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the Trustee will act as Paying Agent and Registrar for the Exchange Notes. All
payments made by the Company under the Indenture will be made in cash in United
States dollars. The Exchange Notes may be presented for registration or transfer
and exchange at the principal corporate trust office of the Registrar. The
Company may change any Paying Agent and Registrar without notice to Holders of
the Exchange Notes, but will always maintain a Paying Agent in New York, New
York. The Company will pay principal (and premium, if any) on the Exchange Notes
at the Paying Agent's principal corporate trust office in New York, New York. At
the Company's option, principal and interest may be paid by wire transfer of
Federal funds or interest may be paid by check delivered to the Paying Agent's
principal corporate trust office or to the registered addresses of the Holders.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes are limited in aggregate principal amount to the lesser
of (i) $150.0 million and (ii) the aggregate principal amount of Outstanding
Notes tendered in the Exchange Offer, and will mature on April 1, 2005. Interest
on the Exchange Notes will accrue from and including the Exchange Date at a rate
of 11 1/4% per annum and will be payable semiannually on each April 1 and
October 1 to the persons who are registered Holders at the close of business on
the March 15 and September 15 immediately preceding the applicable interest
payment date commencing October 1, 1997. Additionally, interest on the Exchange
Notes will accrue from and including the most recent date on which interest has
been paid on the Outstanding Notes surrendered in exchange therefor or, if no
interest has been paid on the Outstanding Notes, from and including the Issue
Date, to but not including the Exchange Date. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
SINKING FUND
The Exchange Notes will not have the benefit of any sinking fund
obligations.
SECURITY
All of the obligations of the Company under the Notes and the Indenture
will be secured (subject to Permitted Liens) by (i) a first priority perfected
security interest in all of the Capital Stock of any future Restricted
Subsidiary held by the Company or of any consideration made part of the
Collateral pursuant to the "Limitation on the Sale of Assets" covenant held by
the Company, (ii) a first priority perfected security interest in substantially
all of the existing and future real property, personal property and other assets
of the Company other than the Bank Collateral, the Shared Collateral and
Purchase Money Assets, and (iii) a first priority perfected security interest in
Shared Collateral ranking pari passu with the security interest in favor of the
Revolving Credit Facility Secured Creditors (collectively, the "Note
Collateral"). The Parent Guarantee will be secured by a first priority perfected
security interest in all of the Capital Stock of the Company held by the Parent
Guarantor (the "Parent Guarantee Collateral"). Each Subsidiary Guarantee will be
secured (subject to Permitted Liens) by (i) a first priority perfected security
interest in all of the Capital Stock of any Restricted Subsidiary or of any
consideration made part of the Collateral pursuant to the "Limitation on the
Sale of Assets" covenant held by such Subsidiary Guarantor, (ii) a first
priority perfected security interest in all of the existing and future real
property, personal property and other assets of such Subsidiary Guarantor
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other than the Bank Collateral, the Shared Collateral and Purchase Money Assets,
and (iii) a first priority perfected security interest in the Shared Collateral
(if applicable) ranking pari passu with a security interest in favor of the
Revolving Credit Facility Secured Creditors (collectively, the "Subsidiary
Guarantee Collateral"). The Note Collateral and the Subsidiary Guarantee
Collateral are collectively referred to as the "Collateral." Currently, there
are no Restricted Subsidiaries and thus no Subsidiary Guarantors, and the Parent
Guarantor has no assets other than Capital Stock of the Company.
Collateral consisting of real property (the "Real Property Collateral")
will be pledged to the Trustee for the benefit of the Holders pursuant to
mortgages or similar security arrangements. Each mortgage will encumber the
Company's fee and leasehold interests in the real property and fixtures
constituting the Real Property Collateral, and all proceeds thereof and
additions, improvements, alterations, replacements and repairs thereto, whether
now owned or hereafter acquired by the Company (other than Purchase Money
Assets). Certain real property used by the Company (including certain real
property on which factories are located) is owned by third parties and leased to
the Company pursuant to long-term leases. The Collateral also includes the
Company's interest in such leases as well as permits necessary to operate the
Real Property Collateral to the extent assignable under applicable law and the
relevant leases. The Company's leased warehouses and equipment leases existing
on the Issue Date are not part of the Collateral and future leases will not be
part of the Collateral if not assignable. Upon issuance of the Outstanding
Notes, the Trustee became the beneficiary of mortgagee's title insurance
policies insuring each mortgage as a first ranking mortgage lien on the relevant
Real Property Collateral, in each case subject to standard exceptions and Liens
permitted to be prior to the Trustee's Lien pursuant to the Indenture and
Security Documents. Collateral constituting personal Property (including all
equipment and machinery owned by the Company and the Company's leasehold
interest in certain equipment and machinery leased by the Company) will be
pledged by the Company pursuant to a general security agreement (the "Security
Agreement"). The Revolving Credit Facility will be secured by a first priority
lien on the Bank Collateral, together with a license to use intellectual
property and other intangibles in connection with any realization following a
default under the Revolving Credit Facility, and a security interest over Shared
Collateral ranking pari passu with the security interest in favor of the Notes.
See " -- Intercreditor Agreement."
If the Exchange Notes become due and payable prior to the final Stated
Maturity thereof for any reason or are not paid in full at the final Stated
Maturity thereof, the Trustee has (subject, in the case of Shared Collateral, to
the rights of the Revolving Credit Facility Secured Creditors) the right to
foreclose or otherwise realize upon the Collateral in accordance with
instructions from the Holders of a majority in aggregate principal amount of the
Exchange Notes and the Outstanding Notes or, in the absence of such
instructions, in such manner as the Trustee deems appropriate in its absolute
discretion. The proceeds received by the Trustee will be applied by the Trustee
first to pay the expenses of such foreclosure or realization and fees and other
amounts then payable to the Trustee under the Indenture and the Security
Documents and, thereafter, to pay all amounts owing to the Holders under the
Indenture, the Notes and the Security Documents (with any remaining proceeds to
be payable to the Company or as may otherwise be required by law).
By its nature, some or all of the Collateral will be illiquid and may have
no readily ascertainable market value. Accordingly, there can be no assurance
that the Collateral will be able to be sold in a short period of time, if at
all. To the extent that third parties enjoy Permitted Liens, such third parties
may have rights and remedies with respect to the Property subject to such Liens
that, if exercised, could adversely affect the value of the Collateral. To the
extent that third parties lease real or personal property to the Company,
defaults by the Company under such leases may adversely effect the value of the
respective leasehold interests and may result in the loss of such leasehold
interests. In addition, the ability of the Holders to realize upon the
Collateral may be subject to certain bankruptcy law limitations in the event of
a bankruptcy. An appraisal in respect of certain of the Collateral has been
prepared by American Appraisal Associates, Inc. See "Risk Factors -- Security
for the Notes" and Summarization Letter of AAA, attached as Annex A to this
Prospectus.
The Parent Guarantor Collateral is subject to the sale by the Parent
Guarantor of the Capital Stock it holds of the Company and upon such sale will
be released from the Collateral. The proceeds of any such sales will be subject
to the provisions described below under the covenant "Change of Control" but the
proceeds of
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such sales will not be subject to the provisions described below under the
covenant "Limitation on the Sale of Assets".
INTERCREDITOR AGREEMENT
The Trustee, on behalf of the Holders, has entered into an intercreditor
agreement (the "Intercreditor Agreement") with BT Commercial Corporation, as
credit agent under the Revolving Credit Facility (in such capacity, the "Credit
Agent") and as Shared Collateral agent under the Intercreditor Agreement (in
such capacity, the "Shared Collateral Agent"). The Intercreditor Agreement
provides, among other things, for the allocation of rights between the Trustee
and the Credit Agent with respect to Shared Collateral and for enforcement
provisions with respect thereto, including provisions (i) that the Trustee and
the Credit Agent will provide prompt notices to each other with respect to the
acceleration of the Notes or the Indebtedness under the Revolving Credit
Facility, as the case may be, and the commencement of any action to enforce the
rights of the Holders, the Trustee, the Revolving Credit Facility Secured
Creditors, or the Credit Agent with respect to the Collateral or the Bank
Collateral, as the case may be, (ii) that for a specific period following the
issuance of a notice of enforcement, the Credit Agent may enter upon all or any
portion of the Company's premises, use the Collateral to the extent necessary to
complete the manufacture of inventory, collect accounts and remove, sell or
otherwise dispose of the Bank Collateral, and (iii) with respect to the Shared
Collateral, enforcement of the Liens thereon and allocation of proceeds between
the Trustee for the benefit of the Holders and the Revolving Credit Facility
Secured Creditors.
The Bank Collateral includes all the Company's existing and after-acquired
receivables and inventory, and certain related assets, as well as all proceeds
on the foregoing. The Shared Collateral includes principally contract rights,
intellectual property rights, computer programs, insurance policies and certain
related assets, as well as all proceeds of the foregoing.
The holders of a majority at any time of the sum of the aggregate principal
amount of the Notes outstanding at such time and the aggregate of all principal
amounts (advanced or committed) owing at such time under the Revolving Credit
Facility (the "Required Parties") have the right to direct any remedial action
with respect to the Shared Collateral. The agent under the Revolving Credit
Facility as Shared Collateral Agent, in accordance with the instruction of the
Required Parties, has the right to adjust settlement of any insurance insuring
or otherwise constituting the Shared Collateral.
In the event of any sale or other disposition of the Shared Collateral, the
proceeds of such sale or disposition will first be distributed to pay the fees
and expenses of the Shared Collateral Agent and then to the Trustee and the
Credit Agent on a pro rata basis until the amounts owing to the Holders and the
Revolving Credit Facility Secured Creditors are paid in full.
OPTIONAL REDEMPTION
The Exchange Notes will not be redeemable (except pursuant to the following
two paragraphs) prior to April 1, 2001. The Exchange Notes will be redeemable,
at the Company's option, in whole at any time or in part from time to time at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on April 1
of the years set forth below, plus, in each case, accrued and unpaid interest,
if any, thereon to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2001............................................................ 105.625%
2002............................................................ 103.750%
2003............................................................ 101.875%
2004 and thereafter............................................. 100.000%
</TABLE>
At any time, or from time to time, on or prior to April 1, 2000, the
Company may, at its option, use the net cash proceeds of one or more offerings
of Common Stock (not constituting Disqualified Capital Stock) of the Company to
any Person other than the Company or any of its Subsidiaries (each, an "Equity
Offering") to redeem up to 35% of the aggregate principal amount of Notes
originally issued at a redemption price equal to
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111.25% of the principal amount thereof, plus accrued and unpaid interest, if
any, thereon to the date of redemption; provided, that at least 65% of the
principal amount of Notes originally issued remain outstanding immediately after
giving effect to any such redemption. In order to effect the foregoing
redemption with the proceeds of any Equity Offering, the Company shall make such
redemption not more than 60 days after the consummation of any such Equity
Offering.
Within 90 days of the consummation of any Change of Control Offer pursuant
to which the Company has repurchased at least 90% of the Notes outstanding
immediately prior to such Change of Control Offer, the Company may, at its
option, redeem all of the remaining Notes at a redemption price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, thereon
to the date of redemption.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not then listed on a
national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part. Notice of
redemption shall be mailed by first-class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions thereof called for redemption as long
as the Company has deposited with the paying agent for the Notes funds in
satisfaction of the applicable redemption price pursuant to the Indenture. Notes
repurchased under the above provisions shall be delivered to the Trustee for
cancellation.
GUARANTEES
The Parent Guarantor, and each future Restricted Subsidiary, if any, will
unconditionally guarantee, on a senior basis, jointly and severally, to each
Holder and the Trustee, the full and prompt performance of the Company's
obligations under the Indenture and the Exchange Notes, including the payment of
principal of and interest on the Exchange Notes. As of the Issue Date, the
Company does not have any Restricted Subsidiaries. However, the Indenture will
provide that if the Company or any Restricted Subsidiary shall acquire or create
after the Issue Date any Restricted Subsidiary, the Company will cause each such
Restricted Subsidiary to execute and deliver to the Trustee a supplemental
indenture pursuant to which each such Restricted Subsidiary shall guarantee all
of the obligations of the Company with respect to the Notes on a senior basis
together with an opinion of counsel (which counsel may be an employee of the
Company) to the effect that the supplemental indenture has been duly executed
and delivered by each such Restricted Subsidiary and is in compliance in all
material respects with the terms of the Indenture.
The obligations of each Subsidiary Guarantor shall be limited to the
maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Subsidiary Guarantor under its
Guarantee or pursuant to its contribution obligations under the Indenture, will
result in the obligations of such Subsidiary Guarantor under its Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under applicable
law. Each Subsidiary Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in an amount pro rata, based on the net assets of each Subsidiary
Guarantor, determined in accordance with GAAP.
The Parent Guarantor may not consolidate with or merge into or sell all or
substantially all of its assets to any Person except as provided under
"-- Limitation on Activities of the Parent Guarantor." Each Subsidiary Guarantor
may consolidate with or merge into or sell all or substantially all its assets
to other Persons upon the terms and conditions set forth in the Indenture. See
"-- Certain Covenants -- Merger, Consolidation and Sale of Assets." In the event
all of the Capital Stock of a Subsidiary Guarantor is sold by the Company and/or
one
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or more of its Restricted Subsidiaries and the sale complies with the provisions
set forth in "-- Certain Covenants -- Limitation on the Sale of Assets," such
Subsidiary Guarantor's Guarantee will be released.
The Parent Guarantee and each Subsidiary Guarantee will be secured as set
forth in "Security".
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control, the
Company will be required to offer to repurchase (the "Change of Control Offer")
all of the Notes pursuant to the offer described below, at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase.
Within 30 days following the date upon which the Change of Control
occurred, unless the Company already mailed a notice of redemption to redeem all
of the Notes pursuant to the provisions of the section entitled "Optional
Redemption," the Company must send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer. Such notice will state, among other things, the
purchase date, which must be no earlier than 30 days nor later than 60 days from
the date such notice is mailed, other than as may be required by law (the
"Change of Control Payment Date") and the procedure which the Holder must follow
to exercise such right. The Change of Control Offer is required to remain open
for at least 20 Business Days and until the close of business on the Change of
Control Payment Date.
Under the Company's Revolving Credit Facility, a Change of Control under
the Indenture would constitute an event of default permitting holders of any
Indebtedness thereunder to exercise remedies, including the right to seek
immediate payment of amounts then owing under such instrument.
If a Change of Control were to occur, there can be no assurance that the
Company would have sufficient funds to pay the repurchase price for all Notes
that the Company is required to repurchase. In the event that the Company were
required to repurchase outstanding Notes pursuant to a Change of Control Offer,
the Company expects that it would need to seek third-party financing to the
extent it does not have available funds to meet its repurchase obligations.
However, there can be no assurance that the Company would be able to obtain such
financing. Any failure of the Company to pay the purchase price with respect to
such Change of Control Offer when due will give the Trustee and the Holders of
the Notes the rights described under "-- Events of Default". Neither the Company
nor the Trustee may waive the obligation to make an offer to repurchase the
Notes upon the occurrence of a Change of Control.
The meaning of the phrase "all or substantially all" as used in the
definition of "Change of Control" with respect to a conveyance, transfer or
lease of assets varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under relevant law and is
subject to judicial interpretation. Accordingly, in certain circumstances, there
may be a degree of uncertainty in ascertaining whether a particular transaction
would involve a disposition of "all or substantially all" of the assets of the
Company, and therefore it may be unclear whether a Change of Control has
occurred and whether the Notes are subject to a Change of Control Offer.
The provisions of the Indenture relating to a Change of Control in and of
themselves may not afford Holders of the Notes protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect Holders of the
Notes, if such transaction is not the type of transaction included within the
definition of a Change of Control. See "-- Certain Definitions" for the
definition of "Change of Control". A transaction involving the Company's
management or its affiliates, or a transaction involving a recapitalization of
the Company, will result in a Change of Control only if it is the type of
transaction specified by such definition. The existence of the foregoing
provisions relating to a Change of Control may or may not deter a third party
from acquiring the Company in a transaction which constitutes a Change of
Control.
The Company will comply with the requirements of Section 14(e) of the
Exchange Act, if applicable, the provisions of Rule 13e-4 and Rule 14e-1, if
applicable, and any other tender offer rules under the Exchange Act or other
relevant United States Federal and state securities legislation which may then
be applicable and
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will file Schedule 13E-4 or Schedule 13E-4F or any other schedule required
thereunder in connection with any offer by the Company to repurchase Notes upon
a Change of Control. Notes repurchased pursuant to a Change of Control Offer
shall be delivered to the Trustee for cancellation.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness: (a) Neither the Company nor any of its
Restricted Subsidiaries will, directly or indirectly, Incur any Indebtedness
(including, without limitation, any Acquired Indebtedness) other than Permitted
Indebtedness; provided, however, the Company or any Restricted Subsidiary may
Incur Indebtedness (including, without limitation, Acquired Indebtedness), if
(i) no Default or Event of Default shall have occurred and be continuing on the
date of the proposed Incurrence thereof or would result as a consequence of such
proposed Incurrence and (ii) immediately before and immediately after giving
effect to such proposed Incurrence, the Consolidated Interest Coverage Ratio of
the Company and its Restricted Subsidiaries is at least equal to 2.5 to 1.0.
(b) Neither the Company nor any of its Restricted Subsidiaries will,
directly or indirectly, Incur Capitalized Lease Obligations, except pursuant to
clause (vi) of the definition of Permitted Indebtedness.
(c) Neither the Company nor any Restricted Subsidiary may, directly or
indirectly, in any event Incur any Indebtedness which by its terms (or by the
terms of any agreement governing such Indebtedness) is expressly subordinated to
any other Indebtedness of the Company or such Restricted Subsidiary, as the case
may be, unless such Indebtedness is also by its terms (or by the terms of any
agreement governing such Indebtedness) made expressly subordinate to the Notes
to the same extent and in the same manner, and so long as, such Indebtedness is
subordinated pursuant to subordination provisions that are no more favorable to
the holders of any other Indebtedness of the Company or such Restricted
Subsidiary, as the case may be.
Limitation on Restricted Payments. Neither the Company nor any of its
Restricted Subsidiaries will, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
solely in Qualified Capital Stock of the Company) to holders of the Company's
Capital Stock other than dividends or distributions paid to the Company or any
Restricted Subsidiary, (b) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or any warrants, rights or options to
acquire shares of any class of such Capital Stock (other than Capital Stock,
warrants, rights or options held by the Company or any Restricted Subsidiary),
other than through the exchange therefor solely of Qualified Capital Stock of
the Company, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Subordinated Obligation (other than the purchase, repurchase or other
acquisition of any Subordinated Obligation in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of such purchase, repurchase or other
acquisition, provided that any such purchase, repurchase or other acquisition is
done solely with the proceeds from any Refinancing Indebtedness), (d) make any
Investment (other than Permitted Investments) in any Person or (e) make any
payments to any Affiliate of the Company (other than the Company and its
Restricted Subsidiaries) as compensation for management services, except through
the issuance of Common Stock of the Company that is Qualified Capital Stock
(each of the foregoing prohibited actions set forth in clauses (a), (b), (c),
(d) and (e) being referred to as a "Restricted Payment"), unless such proposed
Restricted Payment is made after the earlier of (x) the date upon which the
independent auditors of the Company have completed and delivered to the Company
a limited review of the Company's financial statement for the third quarter of
1997 in accordance with the procedures specified by the American Institute of
Certified Public Accountants, SAS No. 71, Interim Financial Information and (y)
the date upon which the Company has filed with the Commission its audited
financial statements for the fiscal year ended December 31, 1997 and at the time
of such proposed Restricted Payment or immediately after giving effect thereto
(i) no Default or Event of Default has occurred and is continuing or would
result therefrom, (ii) the Company could incur at least $1.00 of additional
Indebtedness in accordance with the Consolidated Interest Coverage Ratio test of
paragraph (a) of the "Limitation on Indebtedness" covenant and (iii) the
aggregate
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amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the Fair Market Value of the relevant Property) does not
exceed or would not exceed the sum of: (A) 50% of the cumulative Consolidated
Net Income (or, if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) of the Company during the period (treating such period as a
single accounting period) from April 1, 1997 to the last day of the last full
fiscal quarter preceding the date of the proposed Restricted Payment; (B) 100%
of the aggregate Net Equity Proceeds received by the Company from any Person
(other than from a Restricted Subsidiary) from the issuance and sale subsequent
to the Issue Date of Qualified Capital Stock of the Company (excluding any
Qualified Capital Stock of the Company with respect to which the purchase price
thereof has been financed directly or indirectly using funds (i) borrowed from
the Company or from any of its Subsidiaries, unless and until and to the extent
such borrowing is repaid or (ii) contributed, extended, Guaranteed or advanced
by the Company or by any of its Subsidiaries (including, without limitation, in
respect of any employee stock ownership or benefit plan, unless and until and to
the extent such borrowing is repaid) and (C) an amount equal to the net
reduction in any Investment made by the Company and its Restricted Subsidiaries
subsequent to the Issue Date in any Person (including if such reduction occurs
by reason of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary) resulting from (x) net cash proceeds (or the Fair Market Value of
property other than cash or Cash Equivalents, provided that such property
represents a return of capital in respect of any such Investment that was made
in the form of other property other than cash or Cash Equivalents) received by
the Company or its Restricted Subsidiaries as repayment of any loan or advance
or a return of capital in respect, or as consideration for the sale, of such
Investment (but only to the extent the Company elects to exclude such amounts
from the calculation of Consolidated Net Income for the purposes of clause (A)
above) or (y) the release or cancellation of a Guarantee constituting such
Investment, in each case, with respect to any such Investment, not to exceed the
amount of such Investment previously made by the Company or any Restricted
Subsidiary, that was treated as a Restricted Payment pursuant to this paragraph.
Notwithstanding the foregoing, these provisions do not prohibit: (1) the
payment of any dividend or making of any distribution within 60 days after the
date of its declaration if the dividend or distribution would have been
permitted on the date of declaration; (2) the repurchase, redemption, retirement
or acquisition of Capital Stock of the Company or Subordinated Obligations of
the Company, or warrants, rights or options to acquire Capital Stock of the
Company, solely in exchange for shares of Qualified Capital Stock of the
Company; (3) any purchase or redemption of Subordinated Obligations made in
exchange for, or out of the proceeds of the substantially concurrent sale of
Refinancing Indebtedness or Indebtedness of the Company which is permitted to be
Incurred pursuant to the Consolidated Interest Coverage Ratio test of paragraph
(a) of the "Limitation on Indebtedness" covenant; (4) the payment of management
fees to G&G Investments under the Management Agreement of up to $1.5 million in
any calendar year; (5) the repurchase of Capital Stock of the Company from
current or former employees or directors of the Company or any of its
Subsidiaries pursuant to the terms of agreements (including employment
agreements) or plans approved by the Board of Directors under which such persons
purchase or sell or are granted the option to purchase or sell such shares of
Capital Stock to the extent such payments do not exceed $500,000 in any fiscal
year which, to the extent not used in any fiscal year, may be carried forward to
the next succeeding fiscal year, provided that the aggregate amount of all such
payments that may be made pursuant to this clause (5) may not exceed $2.5
million; (6) dividends or other Restricted Payments to make payments permitted
by clauses (vii) and (viii) of paragraph (b) under the "Limitation on
Transaction with Affiliates" covenant; (7) dividends payable on the Series A
Preferred Stock pursuant to the terms thereof in an aggregate amount not to
exceed $3 million; (8) Investments in Unrestricted Subsidiaries, partnerships or
joint ventures involving the Company or its Restricted Subsidiaries, in each
case primarily engaged in a Related Business if the aggregate amount of such
Investments made pursuant to this clause (8) (less an amount equal to the net
reduction in any such Investment (including if such reduction occurs by reason
of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary)
made subsequent to the Issue Date resulting from (x) net cash proceeds (or the
Fair Market Value of tangible property, provided that such tangible property
represents a return of capital in respect of an Investment that was made in the
form of other tangible property and not an Investment that was made in the form
of cash) received by the Company or its Restricted Subsidiaries as repayment of
any loan or advance or a return of capital in respect, or as consideration
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for the sale, of such Investment or (y) any release or cancellation of a
Guarantee constituting such Investment (but only to the extent the Company
elects to exclude such amounts from the calculation of Consolidated Net Income
for the purpose of clause (A) of the preceding paragraph), in each case, with
regard to any Investment, not to exceed the amount of such Investment previously
made by the Company or any Restricted Subsidiary pursuant to this clause (8)
does not exceed $10 million; (9) the purchase or redemption of any Indebtedness,
to the extent required by the terms of such Indebtedness following a Change of
Control after the Company shall have complied with the provisions under
"-- Change of Control" above, including payment of the applicable Change of
Control purchase price; and (10) Investments in Unrestricted Subsidiaries,
partnerships or joint ventures organized and operating principally in the United
States involving the Company or its Restricted Subsidiaries, in each case
primarily engaged in a Related Business, made in the form of contributions to
such Unrestricted Subsidiaries, partnerships or joint ventures of assets of
Discontinued Plants; provided, however, that, in the case of clauses (2), (3),
(4), (5), (6), (7), (8), (9), and (10) of this paragraph, no Default or Event of
Default shall have occurred or be continuing at the time of such payment or as a
result thereof. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, amounts expended pursuant to clauses (1), (5), (7)
and (9) shall, in each case, be included in such calculation. No payment or
other transfer to the Company or a Restricted Subsidiary shall, in any event,
constitute a Restricted Payment except for a contribution, transfer or other
disposition of Collateral in excess of $1 million in the aggregate in any fiscal
year by the Company to any of its Restricted Subsidiaries.
Limitation on the Sale of Assets. (a) Neither the Company nor any of its
Restricted Subsidiaries will consummate or permit, directly or indirectly, any
Asset Sale, unless (i) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of each such Asset Sale at least
equal to the Fair Market Value of the Property subject to such Asset Sale, (ii)
(x) at least 75% of the consideration received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents, (or, in the case of an
Asset Sale of Discontinued Plants, at least 50% of such consideration is in such
form,); provided that this requirement with respect to cash or Cash Equivalents
shall not apply with respect to Investments made pursuant to clause (10) of the
second paragraph of the "Restricted Payments" covenant, and provided further
that the aggregate Fair Market Value of the consideration other than in the form
of cash or Cash Equivalents that may be received pursuant to clause (x) shall
not exceed $5.0 million in the aggregate held (including the amount of any such
consideration not collected or written off by the Company or any of its
Restricted Subsidiaries but excluding any such consideration received in
consideration for Discontinued Plants) by the Company and its Restricted
Subsidiaries and (y) any such consideration shall not consist of inventory or
accounts receivable or other Bank Collateral, (iii) such Asset Sale is not made
by the Company to any of its Restricted Subsidiaries, (iv) the Company shall
cause the Net Cash Proceeds received in respect thereof to be deposited in the
Collateral Account and the other consideration received to become Collateral as
and when received by the Company or by any Restricted Subsidiary, (v) no Default
or Event of Default shall have occurred and be continuing on the date of such
proposed Asset Sale or would result as a consequence of such Asset Sale and (vi)
such Asset Sale will not materially adversely affect or materially impair the
value of the remaining Collateral or materially interfere with the Trustee's
ability to realize such value and will not materially impair the maintenance and
operation of the remaining Collateral.
(b) The Company shall apply or cause such Restricted Subsidiary to apply,
the Net Cash Proceeds of such Asset Sale and any Insurance Proceeds or
Condemnation Proceeds, as the case may be, resulting from a Loss Event within
270 days of consummation of such Asset Sale or the collection of such Insurance
Proceeds or Condemnation Proceeds, as the case may be, for the following
purposes, individually or in combination:
(1) (i) to purchase or otherwise invest in Related Business
Investments which shall constitute additional Collateral under the relevant
Security Documents and which shall be subject to a first priority Lien in
favor of the Trustee for the benefit of the Holders, subject to Liens
permitted under the Security Documents in respect of the relevant item of
Collateral; provided, that (x) any Property constituting a Related Business
Investment shall not consist of inventory or accounts receivable or other
Bank Collateral and (y) such purchase or Investment shall be made by the
Company or such Restricted Subsidiary, or (ii) to purchase Notes in
open-market transactions; provided, that the Company shall be deemed to
have applied such Net Cash Proceeds, Insurance Proceeds or Condemnation
Proceeds
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pursuant to this clause (ii) in satisfaction of the requirements of this
covenant in an amount equal to the lesser of (x) the purchase price paid in
such open-market transactions and (y) 100% of the principal amount of the
Notes repurchased; provided, further that the aggregate amount of Net Cash
Proceeds, Insurance Proceeds or Condemnation Proceeds that may be deemed to
be applied pursuant to this clause (ii) shall not exceed $5.0 million in
the aggregate from the Issue Date;
(2) with respect to any Net Cash Proceeds, Insurance Proceeds or
Condemnation Proceeds remaining after application pursuant to the preceding
paragraph (a) (the "Excess Proceeds Amount"), the Company shall make an
Asset Sale Offer for up to a maximum principal amount (expressed as an
integral multiple of $1,000) of Notes equal to the Excess Proceeds Amount
at a purchase price equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of purchase in
accordance with the procedures set forth in the Indenture. The Company may
defer the Asset Sale Offer until the aggregate unutilized Excess Proceeds
Amount equals or exceeds $10.0 million resulting from one or more Asset
Sales (at which time, the entire unutilized Excess Proceeds Amount, and not
just the amount in excess of $10.0 million, shall be applied as required
pursuant to this paragraph). All amounts remaining after the consummation
of any Asset Sale Offer pursuant to this paragraph shall remain subject to
the Lien of the Security Documents and may be used by the Company only to
purchase or otherwise invest in Related Business Investments (which shall
constitute additional Collateral under the Security Documents) other than
inventory or accounts receivables or other Bank Collateral or to purchase
Notes in open market transactions.
All Net Cash Proceeds, Insurance Proceeds and Condemnation Proceeds from
Loss Events and non-cash consideration from Asset Sales, including all Excess
Proceeds Amounts, shall, to the extent permitted by law, be subject to the
perfected first priority Lien in favor of the Trustee subject to Liens permitted
under the Security Documents in respect of the relevant item of Collateral. To
the extent not applied as set forth above, such Excess Proceeds Amounts shall
constitute Collateral and shall be delivered by the Company to the Trustee and
shall be deposited in the Collateral Account in accordance with the Indenture
and the Security Documents. Net Cash Proceeds of Asset Sales of Shared
Collateral will be held by the Credit Agent for the benefit of the Holders and
the Revolving Credit Facility Secured Creditors.
Notwithstanding the foregoing, any disposition of Collateral that is
governed under and complies with the "Merger, Consolidation and Sale of Assets"
covenant shall not be deemed to be an Asset Sale, as the case may be, except
that in the event of the transfer of substantially all (but not all) of the
Property of the Company and its Subsidiaries to a Person in a transaction
permitted under "-- Merger, Consolidation and Sale of Assets," the successor
corporation shall be deemed to have sold the Collateral not so transferred for
purposes of this covenant, and shall comply with the provisions of this covenant
with respect to such deemed sale as if it were an Asset Sale. In addition, the
Fair Market Value of such Property of the Company or its Subsidiaries deemed to
be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.
Notice of an Asset Sale Offer will be mailed to the Holders as shown on the
register of Holders not less than 30 days nor more than 60 days before the
payment date for the Asset Sale Offer, with a copy to the Trustee, and shall
comply with the procedures set forth in the Indenture. Upon receiving notice of
the Asset Sale Offer, Holders may elect to tender their Notes in whole or in
part in integral multiples of $1,000 principal amount in exchange for cash. To
the extent Holders properly tender Notes in an amount exceeding the Excess
Proceeds Amount, Notes of tendering Holders will be repurchased on a pro rata
basis (based on amounts tendered). An Asset Sale Offer is required to remain
open for at least 20 Business Days and until the close of business on the
payment date for the Asset Sale Offer, or such longer period as may be required
by law.
If an offer is made to repurchase the Notes pursuant to an Asset Sale
Offer, the Company will comply with the requirements of Section 14(e) of the
Exchange Act, if applicable, the provisions of Rule 13e-4 and Rule 14e-1, if
applicable, and any other tender offer rules under the Exchange Act or other
relevant United States Federal and state securities legislation which may then
be applicable and will file Schedule 13E-4 or Schedule 13E-4F or any other
schedule required thereunder in connection with any offer by the Company to
purchase Notes pursuant to an Asset Sale Offer. Notes repurchased pursuant to
the "Limitation on the Sale of Assets" covenant shall be delivered to the
Trustee for cancellation.
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Limitation on Dividend and other Payment Restrictions Affecting
Subsidiaries. Neither the Company nor any of its Subsidiaries will, directly or
indirectly, create or otherwise cause or permit or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions to the Company
or to any Restricted Subsidiary (i) on its Capital Stock or (ii) with respect to
any other interest or participation in, or measured by, its profits; (b) make
loans or advances or pay any Indebtedness or other obligation owed to the
Company or to any Restricted Subsidiary; or (c) sell, lease or transfer any of
its Property to the Company or to any Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable law;
(2) the Indenture and the Security Documents; (3) customary nonassignment
provisions of any contract or any lease governing a leasehold interest of the
Company or any Restricted Subsidiary; (4) any instrument governing Indebtedness
Incurred in accordance with and pursuant to clause (x) of the definition of
Permitted Indebtedness; provided, that, such encumbrance or restriction is not,
and will not be, applicable to any Person, or the Property of any Person, other
than the Person, or the Property of the Person, becoming a Restricted
Subsidiary; (5) restrictions imposed by Liens granted pursuant to clauses (vi),
(viii) and (ix) of the definition of Permitted Liens solely to the extent such
Liens encumber the transfer or other disposition of the assets subject to such
Liens; (6) any restriction or encumbrance contained in contracts for the sale of
assets to be consummated in accordance with the Indenture solely in respect of
the assets to be sold pursuant to such contract; (7) any encumbrance or
restriction contained in Refinancing Indebtedness Incurred to Refinance the
Indebtedness issued, assumed or Incurred pursuant to an agreement referred to in
clause (2), (4) or (5) above or clause (8) or (9) below; provided, that, the
provisions relating to such encumbrance or restriction contained in any such
Refinancing Indebtedness are no less favorable to the Company or such Restricted
Subsidiary or to the Holders in any material respect in the reasonable and good
faith judgment of the Board of Directors of the Company than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (4), (5), (8) or (9) as the case may be; (8) any agreement
in effect on the Issue Date; and (9) the Revolving Credit Facility.
Limitation on Issuance and Sale of Capital Stock of Restricted
Subsidiaries. The Company will not permit (i) any Restricted Subsidiary to
issue any Capital Stock other than to the Company or a Restricted Subsidiary; or
(ii) any Person (other than the Company or a Restricted Subsidiary) to, directly
or indirectly, own or control any Capital Stock of any Restricted Subsidiary
(other than directors' qualifying shares); provided, however, that clauses (i)
and (ii) will not prohibit any sale of 100% of the shares of the Capital Stock
of any Restricted Subsidiary owned by the Company or any Restricted Subsidiary
effected in accordance with the "Limitation on the Sale of Assets" covenant or
the "Merger, Consolidation and Sale of Assets" covenant.
Limitation on Liens. The Company will not, and will not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist or remain in effect any Liens upon any
Property of the Company or of any of its Restricted Subsidiaries, whether owned
on the Issue Date or acquired after the Issue Date, or on any income or profits
therefrom, or assign or otherwise convey any right to receive income or profits
thereon other than Permitted Liens.
Merger, Consolidation and Sale of Assets. The Company will not, and will
not permit any Restricted Subsidiary to, in a single transaction or series of
related transactions, consolidate or merge with or into any Person (other than
the consolidation, merger or amalgamation of a Wholly-Owned Subsidiary with
another Wholly-Owned Subsidiary or into the Company), or sell, assign, transfer,
lease, convey or otherwise dispose of (or cause or permit any Subsidiary of the
Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or
substantially all of the Company's assets (determined on a consolidated basis
for the Company and the Company's Subsidiaries) unless: (i) either (1) the
Company, in the case of a transaction involving the Company, or such Restricted
Subsidiary, in the case of a transaction involving any Restricted Subsidiary,
shall be the surviving or continuing corporation or (2) the Person (if other
than the Company or such Restricted Subsidiary) formed by such consolidation or
into which the Company or such Restricted Subsidiary is merged or the Person
which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Subsidiaries (the "Surviving Entity") (x) shall be a corporation organized and
validly existing under the laws of the United States or any State thereof or the
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District of Columbia and (y) shall expressly assume, by supplemental indenture
(in form and substance satisfactory to the Trustee), executed and delivered to
the Trustee, the due and punctual payment of the principal of, and premium, if
any, and interest on all of the Notes and the performance of every covenant of
the Notes, the Indenture and the Security Documents on the part of the Company
to be performed or observed, in the case of a transaction involving the Company,
or the performance of every covenant of the Subsidiary Guarantee, the Indenture
and the Security Documents on the part of such Restricted Subsidiary to be
performed or observed, in the case of a transaction involving a Restricted
Subsidiary, and in each such case, the Company shall have taken all steps
necessary or reasonably requested by the Trustee to protect and perfect the
security interests granted or purported to be granted under the Security
Documents; (ii) in the case of a transaction involving the Company immediately
after giving effect to such transaction and the assumption contemplated by
clause (i)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness Incurred or anticipated to be Incurred in
connection with or in respect of such transaction), the Company or such
Surviving Entity, as the case may be, shall be able to Incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio
test of paragraph (a) of the "Limitation on Indebtedness" covenant; provided,
that, in determining the "Consolidated Interest Coverage Ratio" of the resulting
transferee or Surviving Entity, such ratio shall be calculated as if the
transaction (including the Incurrence of any Indebtedness or Acquired
Indebtedness) took place on the first day of the applicable Four Quarter Period;
(iii) immediately before and immediately after giving effect to such transaction
and the assumption contemplated by clause (i)(2)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness Incurred
or anticipated to be Incurred and any Lien granted in connection with or in
respect of the transaction) no Default and no Event of Default shall have
occurred or be continuing; (iv) in the case of a transaction involving the
Company, immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness Incurred or anticipated to
be Incurred in connection with or in respect of such transaction), the Company
or such Surviving Entity, as the case may be, shall have a Consolidated Net
Worth which is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction or series of transactions; (v) in the case
of a sale, assignment, transfer, lease, conveyance or other disposition of all
or substantially all of the Company's assets, the Surviving Entity shall have
received the Company's assets as an entirety or virtually as an entirety; and
(vi) the Company or the Surviving Entity shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
of the Indenture and that all conditions precedent in the Indenture relating to
such transaction have been satisfied.
For purposes of the foregoing, the transfer (by sale, assignment, transfer,
lease, conveyance or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Upon any such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition in accordance with the foregoing, the successor
Person formed by such consolidation or into which the Company is merged or to
which such sale, assignment, transfer , lease, conveyance or other disposition
is consolidated or made will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture with the same
effect as if such successor had been named as the Company therein, and
thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under the Indenture, the Notes and the
Security Documents.
The Parent Guarantor will not consolidate with or merge into or sell all or
substantially all of its assets to any Person except as permitted under
"Limitation on Activities of the Parent Guarantor."
Impairment of Security Interest. Neither the Company nor any of its
Subsidiaries will take or omit to take any action which action or omission could
reasonably be expected to have the result of materially and
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adversely affecting or materially impairing the security interests in favor of
the Trustee, on behalf of itself and the Holders, with respect to the
Collateral. Neither the Company nor any of its Subsidiaries will enter into any
agreement or instrument that by its terms requires the proceeds received from
any sale of Collateral (except, in the case of Shared Collateral, the Revolving
Credit Facility and the Intercreditor Agreement) to be applied to repay, redeem,
defease or otherwise acquire or retire any Indebtedness of any Person prior to
the repayment in full of the Notes or clause (viii) of the definition of
Permitted Liens.
Limitation on Transactions with Affiliates. (a) Neither the Company nor
any Restricted Subsidiary will, directly or indirectly, conduct any business or
enter into or permit to exist any transaction or series of related transactions
(including, but not limited to, the purchase, sale, conveyance, transfer,
disposition, exchange or lease of Property, the making of any payment, the
making of any Investment, the giving of any Guarantee, the rendering of services
or the paying of any commission) with, or for the benefit of, any of their
Affiliates (each an "Affiliate Transaction"), except under an agreement set
forth in writing which is on terms that are no less favorable to the Company or
such Restricted Subsidiary, as the case may be, than those that could have been
obtained in a comparable transaction on an arms' length basis from a Person not
an Affiliate of the Company or such Restricted Subsidiary and if it involves a
purchase, such purchase is reasonably necessary in light of the operating
requirements of the Company and its Subsidiaries. If the Company or any
Restricted Subsidiary enters into an Affiliate Transaction (or a series of
related Affiliate Transactions) involving aggregate payments or other Property
with a Fair Market Value in excess of (i) $1.0 million, the Company or such
Restricted Subsidiary shall, prior to the consummation thereof, deliver to the
Trustee an Officers' Certificate certifying that such transaction or series of
related transactions complies with the foregoing provisions, (ii) $2.5 million,
the Company or such Restricted Subsidiary shall, prior to the consummation
thereof, deliver to the Trustee the Officers' Certificate specified in clause
(i) above and an approval by the Board of Directors of the Company (including a
majority of the independent directors thereof), such approval to be evidenced by
a Board Resolution stating that such Board of Directors has determined that such
transaction or series of related transactions complies with the foregoing
provisions and (iii) $5.0 million, the Company or such Restricted Subsidiary
shall, prior to the consummation thereof, deliver to the Trustee the Officers'
Certificate specified in clause (i) above, the Board Resolution specified in
clause (ii) above and a favorable opinion as to the fairness of such transaction
or series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor addressed to the Trustee.
(b) The foregoing restriction shall not apply to the following
transactions: (i) any transaction exclusively between the Company and any of its
Wholly-Owned Subsidiaries or exclusively between any Wholly-Owned Subsidiaries,
(ii) reasonable and customary fees paid to members of the Board of Directors of
the Company and of its Subsidiaries, (iii) loans and advances to employees,
officers and directors in the ordinary course of business in an aggregate
principal amount not to exceed $1.0 million at any one time outstanding and
advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business, (iv)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of the Company or any of its
Subsidiaries, as determined by the Board of Directors of the Company or any such
Restricted Subsidiary or the senior management thereof in good faith, including,
without limitation, issuances of stock, payment of bonuses and other
transactions pursuant to employment or compensation agreements, stock option
agreements, indemnification agreements and other arrangements in effect on the
Issue Date or substantially similar thereto, (v) the payment of the management
fees to G&G Investments under the Management Agreement of up to $3.0 million in
any calendar year, (vi) other Restricted Payments made pursuant to the first
paragraph of the "Restricted Payments" covenant, (vii) payments or other
transactions pursuant to any tax sharing arrangement between the Company and any
other Person with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax purposes but only to
the extent that amounts payable from time to time by the Company under any such
agreement do not exceed the corresponding tax payments that the Company would
have been required to make to any relevant taxing authority had the Company not
joined in such consolidated or combined return, but instead had filed returns
including only the Company and (viii) transactions pursuant to the Intercompany
Agreement. The Company will not amend the Intercompany Agreement unless such
amendment is in writing and the Company determines that it contains
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terms no less favorable to the Company than could have been obtained in
comparable transactions on an arm's length basis from a Person not an Affiliate
of the Company, such determination to be evidenced by an Officers' Certificate
and a Board Resolution stating that a majority of the Board of Directors
(including a majority of the independent directors thereof) have determined that
such amendment complies with the foregoing provisions.
Limitations on Activities of the Parent Guarantor. The Parent Guarantor
will not (a) Incur any Indebtedness other than (i) the Guarantee or (ii) a
guarantee of the Indebtedness permitted under clause (ii) of the definition of
Permitted Indebtedness, (b) make any Investments other than in the Company, (c)
grant or suffer to exist a Lien in respect of any Capital Stock of the Company
held by it other than the security interest granted to secure the Notes or sell
or transfer any of such Capital Stock to any Affiliate other than in a
transaction pursuant to clause (e), (d) carry on any business other than the
holding of Capital Stock of the Company or (e) merge or consolidate with or
into, or sell substantially all of its assets to, any Person other than a U.S.
corporation that succeeds to the Parent Guarantor's obligations under the
Indenture, the Parent Guarantee and any Security Document and is in compliance
with and becomes subject to this covenant except for a merger or consolidation
in which the Parent Guarantor is the surviving corporation and following such
merger or consolidation is in compliance with this covenant.
RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors of the Company may designate or redesignate any
Subsidiary to be an Unrestricted Subsidiary if (i) the Subsidiary to be so
designated does not, directly or indirectly, own any Capital Stock or
Indebtedness of, or own or hold any Lien on any property or assets of, the
Company or any other Restricted Subsidiary, (ii) the Subsidiary to be so
designated is not obligated by any Indebtedness or Lien that, if in default,
would result (with the passage of time or notice or otherwise) in a default on
any Indebtedness of the Company or any Restricted Subsidiary, and (iii) either
(a) the Subsidiary to be so designated has total assets of $1,000 or less or (b)
such designation is effective immediately upon such Person becoming a Subsidiary
of the Company or of a Restricted Subsidiary and the amount of the Investment by
the Company or any of its Restricted Subsidiaries in such Subsidiary would be
permitted under "Certain Covenants -- Limitation on Restricted Payments." Unless
so designated as an Unrestricted Subsidiary, any Person that becomes a
Subsidiary of the Company or any Restricted Subsidiary will be classified as a
Restricted Subsidiary. Except as provided in the first sentence of this
paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted
Subsidiary. Subject to the next paragraph, an Unrestricted Subsidiary may not be
redesignated as a Restricted Subsidiary.
The Company will not, and will not permit any Restricted Subsidiary to,
take any action or enter into any transaction or series of transactions that
would result in a Person becoming a Restricted Subsidiary (whether through an
acquisition, the redesignation of an Unrestricted Subsidiary or otherwise)
unless after giving effect to such action, transaction or series of
transactions, on a pro forma basis, (i) the Company could Incur at least $1.00
of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio
test of paragraph (a) of the "Limitation on Indebtedness" covenant, (ii) such
Restricted Subsidiary could then Incur under "-- Limitation on Indebtedness" all
Indebtedness as to which it is obligated at such time, (iii) no Default or Event
of Default would occur or be continuing, and (iv) there exist no Liens with
respect to the property or assets of such Restricted Subsidiary other than
Permitted Liens.
Any such designation by the Board of Directors of the Company will be
evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of such board giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
provisions.
As of the Issue Date, there are no Restricted Subsidiaries and no
Unrestricted Subsidiaries.
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EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of
Default":
(i) the failure to pay interest on any Note for a period of 30 days or
more after such interest becomes due and payable; or
(ii) the failure to (x) pay the principal of or premium, if any, on
any Note, when such principal becomes due and payable, at maturity, upon
repurchase (including, without limitation, pursuant to a Change of Control
Offer or an Asset Sale Offer), upon acceleration, upon redemption or
otherwise or (y) make a Change of Control Offer or an Asset Sale Offer
within the required period; or
(iii) a default in the observance or performance of any of the
agreements or covenants contained under "Merger, Consolidation and Sale of
Assets" or clause (e) of the "Limitation on Activities of Parent Guarantor"
covenant or the granting by the Company, any Restricted Subsidiary or the
Parent Guarantor of any Lien to secure Indebtedness in excess of $100,000
(other than a Permitted Lien);
(iv) a default in the observance or performance of any of the
agreements or covenants contained in the Indenture which default continues
for a period of 30 days after the Company receives written notice
specifying the default from the Trustee or from Holders of at least 25% in
principal amount of the outstanding Notes; or
(v) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or of any Specified Subsidiary of the Company,
whether such Indebtedness now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay at final
maturity the principal of or premium, if any, on such Indebtedness after
any applicable grace period provided in such Indebtedness on the date of
such default (a "Principal Payment Default"), or (b) results in the
acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been
a Principal Payment Default or the maturity of which has been so
accelerated, is of at least $10.0 million in the aggregate; or
(vi) one or more judgments in an aggregate amount in excess of $10.0
million (which are not covered by third-party insurance as to which the
insurer is solvent and has not disclaimed coverage) being rendered against
the Company or any Specified Subsidiary of the Company and such judgments
remain undischarged, or unstayed or unsatisfied for a period of 60 days
after such judgment or judgments become final and non-appealable; or
(vii) certain events of bankruptcy, insolvency, wind-up or
reorganization affecting the Company or any of its Specified Subsidiaries
or the Parent Guarantor; or
(viii) (a) a default in the observance or performance of any covenant
or agreement contained in any Security Document which default continues for
15 days after notice has been given to the Company by the Trustee or the
holders of at least 25% in principal amount of the outstanding Notes, or
(b) for any reason other than the satisfaction in full and discharge of all
obligations secured thereby, any of the Security Documents cease to be in
full force and effect (other than in accordance with their respective
terms), or any of the Security Documents cease to give the Trustee the
Liens, rights, powers and privileges purported to be created thereby, or
any Security Document is declared null and void, or the Company or any of
its Restricted Subsidiaries denies any of its obligations under any
Security Document, in each case with respect to Collateral the aggregate
value of which is in excess of $5.0 million or the Collateral becomes
subject to one or more Liens other than Permitted Liens securing one or
more obligations in excess of $5.0 million in the aggregate; or
(ix) any Guarantee of a Specified Subsidiary or the Parent Guarantor
is declared null and void or ceases to be in full force and effect (except
as permitted under the Indenture) or any Guarantor shall deny or disaffirm
its obligations under its Guarantee.
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If an Event of Default (other than an Event of Default specified in clause
(vii) above with respect to the Company or the Parent Guarantor) occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the then outstanding Notes may declare
the unpaid principal of, premium, if any, and accrued and unpaid interest on,
all the Notes then outstanding to be due and payable, by a notice in writing to
the Company (and to the Trustee, if given by Holders) and upon such declaration
such principal amount, premium, if any, and accrued and unpaid interest will
become immediately due and payable. If an Event of Default specified in clause
(vii) above occurs with respect to the Company or the Parent Guarantor, all
unpaid principal of, and premium, if any, and accrued and unpaid interest on,
the Notes then outstanding will automatically become due and payable without any
declaration or other act on the part of the Trustee or any Holder.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of any Default or Event of Default (the term "Default" to include the
events specified above without grace or notice) known to it, give to the Holders
notice of such Default; provided, that, except in the case of a Default or an
Event of Default in the payment of principal of, or interest on, any Note, the
Trustee shall be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interest of the
Holders.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may rescind an acceleration and its
consequences if all existing Events of Default (other than the nonpayment of
principal of and premium, if any, and interest on the Notes which has become due
solely by virtue of such acceleration) have been cured or waived and if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its consequences,
except a Default in the payment of the principal of or interest on any Notes or
a Default in respect of any term or provision of the Notes or the Indenture that
cannot be modified or amended without the consent of all Holders.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the Trust Indenture Act. Subject to the
provisions of the Indenture relating to the duties of the Trustee, the Trustee
is under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Holders, unless such
Holders have offered to the Trustee reasonable indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a majority in
aggregate principal amount of the then outstanding Notes have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.
Under the Indenture, the Company is required to provide an Officers'
Certificate to the Trustee promptly upon the Company obtaining knowledge of any
Default or Event of Default that has occurred and describe such Default or Event
of Default and the status thereof. In addition, the Company shall provide an
annual Officers' Certificate within 120 days after the end of each fiscal year
as to whether or not they know of any Default or Event of Default.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Notes, except for (i) the rights of Holders of the Notes to receive payments in
respect of the principal of, premium, if any, and interest on the Notes when
such payments are due, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes and the maintenance of an office or agency for payments,
(iii) the rights, powers, trust, duties and immunities of the Trustee and the
Company's obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company released with respect to
certain covenants that are described in the Indenture and the Security Documents
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not
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constitute a Default or Event of Default with respect to the Notes. In the event
Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, reorganization and insolvency events of the Company)
described under "Description of the Notes -- Events of Default" will no longer
constitute an Event of Default with respect to the Notes. In addition, the
Collateral will be released upon Legal Defeasance or Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes cash in U.S. dollars, non-callable U.S. government
obligations, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the Notes on the
stated date for payment thereof or on the applicable redemption date, as the
case may be; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee (a)(1) an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred, or (2) a ruling to such effect
from, or published by, the Internal Revenue Service and (B) an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that the resulting trust will not be an "Investment Company" within the meaning
of the Investment Company Act of 1940 unless such trust is qualified thereunder
or exempt from regulation thereunder; (iii) in the case of Covenant Defeasance,
the Company shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that the holders
of the Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred, and that
the resulting trust will not be an "Investment Company" within the meaning of
the Investment Company Act of 1940 unless such trust is qualified thereunder or
exempt from regulation thereunder; (iv) no Default or Event of Default shall
have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default with respect to the Indenture resulting from the
Incurrence of Indebtedness, all or a portion of which will be used to defease
the Notes concurrently with such Incurrence) or insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance shall not result in a breach or violation of, or constitute
a default under the Indenture or any other material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound; (vi) the Company shall have delivered to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Company or others; (vii) the Company shall have delivered
to the Trustee an Officers' Certificate and an opinion of counsel, each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; (viii) the Company shall
have delivered to the Trustee an opinion of counsel to the effect that (A) the
trust funds will not be subject to any rights of holders of Indebtedness of the
Company other than the Notes and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the deposit and
that no Holder of the Notes is an insider of the Company, after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and (ix) certain other customary conditions
precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture (and all Liens on Collateral granted in connection with the
issuance of the Notes) will be discharged and will cease to be of further effect
(except as to surviving rights, or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the
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Trustee for cancellation have become due and payable and the Company thereafter
has irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof; (ii) the Company has paid or caused to be paid all
other sums then due under the Indenture and under the Notes; and (iii) the
Company has delivered to the Trustee an Officers' Certificate and an opinion of
counsel stating that all conditions precedent under the Indenture relating to
the satisfaction and discharge of the Indenture have been complied with.
POSSESSION, USE AND RELEASE OF COLLATERAL
Unless an Event of Default shall have occurred and be continuing, but
subject to the Indenture, the Company will have the right to remain in
possession and retain exclusive control of the Collateral securing the Notes
(other than amounts on deposit in the Collateral Account), to freely operate the
Collateral and to collect, invest and dispose of any income thereon.
Release of Collateral and Disposition of Collateral Without Release. Upon
delivery of an Officers' Certificate indicating compliance with the "Limitation
on the Sale of Assets" covenant, the Company may obtain a release from the Lien
of the Indenture and the Security Documents of Collateral subject to an Asset
Sale. So long as no Event of Default shall have occurred and be continuing, the
Company may, without any release or consent by the Trustee, conduct any number
of ordinary course activities in respect of the Collateral, including
dispositions of Collateral, upon satisfaction of certain conditions which shall
result in release of such Collateral. For example, among other things, subject
to dollar limitations and/or other conditions, the Company would be permitted to
sell or otherwise dispose of any Collateral pursuant to clause (d) of the
definition of Asset Sale; abandon, terminate, cancel, release or make
alterations in or substitutions of any leases or contracts subject to the Lien
of the Indenture or any of the Security Documents; surrender or modify any
franchise, license or permit subject to the Lien of the Indenture or any of the
Security Documents which it may own or under which it may be operating; alter,
repair, replace, change the location or position of and add to its structures,
machinery, systems, equipment, fixtures and appurtenances; demolish, dismantle,
tear down or scrap any Collateral or abandon any thereof; grant a nonexclusive
license of any intellectual property; abandon intellectual property under
certain circumstances; and grant leases in respect of real property under
certain circumstances.
THE COLLATERAL ACCOUNT
All amounts on deposit in the Collateral Account (including, without
limitation, Insurance Proceeds and Condemnation Proceeds from Loss Events
(subject to certain minimum thresholds), Partial Losses and Net Cash Proceeds
from Asset Sales) shall be held by the Trustee as a part of the Collateral
securing the Notes and, so long as no Event of Default shall have occurred and
be continuing, may either (i) be released in order to purchase Notes pursuant to
an Asset Sale Offer in accordance with the "Limitation on the Sale of Assets"
covenant or (ii) at the direction of the Company be applied by the Trustee from
time to time to the (x) payment of the principal of and interest on any Notes at
maturity if repayment is made in full or upon redemption in full or (y) to the
extent permitted under the "Limitation on the Sale of Assets" covenant, for the
repurchase of Notes in open market transactions or the purchase or other
investment in Related Business Investments. The Company may also withdraw
amounts on deposit in the Collateral Account constituting (a) Insurance Proceeds
or Condemnation Proceeds from a Partial Loss to reimburse the Company for repair
or replacement of such Collateral, subject to certain conditions or (b)
indemnity payments relating to the Collateral in order to satisfy
indemnification obligations relating to such Collateral or to repair or restore
the Collateral.
Amounts on deposit in the Collateral Account shall be invested in Cash
Equivalents pursuant to the instructions of the Company and, so long as no Event
of Default shall have occurred and be continuing, the Company shall be entitled
to any interest or dividends accrued, earned or paid on such Cash Equivalents.
The
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Trustee shall be entitled to apply any amounts on deposit in the Collateral
Account to the cure of any Default or Event of Default under the Indenture.
REPORTS TO HOLDERS
The Company will deliver to the Trustee and the Holders within 15 days
after the filing of the same with the Commission, copies of the quarterly and
annual reports and of the information, documents and other reports, if any,
which the Company is required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company on or after January 1, 1998 will file with the Commission, to
the extent permitted, and provide the Trustee and Holders with such quarterly
and annual reports and such information that would be required to be contained
in a filing with the Commission if the Company were required to file such
reports under Sections 13 and 15(d) of the Exchange Act within the time periods
provided therein. Prior to January 1, 1998, if the Company is not required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act,
the Company will (a) prepare and deliver to the Trustee and the Holders
quarterly reports required by a company subject to the reporting requirements of
Sections 13 and 15(d) within the time periods specified therein and (b) issue a
press release within 45 days after the end of each fiscal quarter, including
summary operating results for the Company. In addition, the Company has agreed
that, for so long as any Notes remain outstanding, it will furnish to Holders
and securities analysts and prospective investors, upon their request, the
information specified in Rule 144(A)(d)(4) under the Securities Act. The Company
will also comply with the other provisions of 314(a) of the Trust Indenture Act.
MODIFICATION OF THE INDENTURE
From time to time, the Company and the Trustee, without the consent of the
Holders, may amend the Indenture for certain specified purposes, including
curing ambiguities, defects or inconsistencies or making any change to comply
with any requirement under the Trust Indenture Act, so long as such change does
not adversely affect the rights of any of the Holders. Other modifications and
amendments of the Indenture may be made with the consent of the Holders of a
majority in principal amount of the then outstanding Notes issued under the
Indenture, except that, without the consent of each Holder of the Notes affected
thereby, no amendment may, directly or indirectly: (i) reduce the amount of
Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change the time for payment of interest, including defaulted interest, on any
Notes; (iii) reduce the principal of or change the fixed maturity of any Notes,
or change the date on which any Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor; (iv) make any
Notes payable in money other than that stated in the Notes; (v) make any change
in provisions of the Indenture protecting the right of each Holder to receive
payment of principal of and interest on such Note on or after the due date
thereof or to bring suit to enforce such payment, or permitting Holders of a
majority in principal amount of the Notes to waive Defaults or Events of
Default; (vi) amend, modify or change the obligation of the Company to make or
consummate a Change of Control Offer (including amending, modifying or changing
the definition of Change of Control), or, after the Company's obligation to
purchase the Notes arises thereunder, an Asset Sale Offer or waive any default
in the provisions thereof or modify any of the provisions or definitions with
respect to any Asset Sale Offer; (vii) adversely affect the ranking of Notes or
any Guarantee; or (viii) permit the creation of any Lien on the Collateral or
any part thereof (other than the Lien of the Indenture and the Security
Documents and any other Liens expressly permitted by the Security Documents), or
terminate the Lien of the Indenture and the Security Documents as to the
Collateral or any part thereof or deprive the Holders of the Notes of the
security afforded by the Lien of the Indenture and the Security Documents or any
part thereof, except as set forth under the "Limitation on Liens" covenant and
"Description of the Notes -- Possession, Use and Release of Collateral."
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of
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Default, the Trustee will exercise such rights and powers vested in it by the
Indenture, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" of any Person means Indebtedness of another Person
and any of its Subsidiaries existing at the time such other Person becomes a
Subsidiary (Restricted Subsidiary in the case of the Company) of the referent
Person or at the time it merges or consolidates with the referent Person or any
of the referent Person's Subsidiaries (Restricted Subsidiaries in the case of
the Company) or assumed by the referent Person or any Subsidiary (Restricted
Subsidiary in the case of the Company) of the referent Person in connection with
the acquisition of assets from such other Person and in each case not Incurred
by such other Person or its Subsidiaries in connection with, or in anticipation
or contemplation of, such other Person becoming a Subsidiary (Restricted
Subsidiary in the case of the Company) of the referent Person or such
acquisition, merger or consolidation.
"Affiliate" means, when used with reference to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, the referent Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct or cause the direction of management or policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise (and the terms "controlling" and "controlled" have meanings
correlative of the foregoing) or the ownership of more than 10% of the Voting
Stock of such Person; provided that Bankers Trust Company and The
Toronto-Dominion Bank and each of their Affiliates will not be deemed to be
affiliates of the Company and for purposes of payment of employee compensation,
a person shall not be deemed to be an Affiliate of the Company by virtue of his
or her status as an officer or director of the Company absent other elements of
control.
"Affiliate Transaction" has the meaning set forth in "-- Certain
Covenants -- Limitation on Transactions with Affiliates".
"Anchor Acquisition" means the acquisition on February 5, 1997 by the
Company of certain assets and certain liabilities of Old Anchor pursuant to the
Asset Purchase Agreement dated December 18, 1996 among Consumers Packaging, Old
Anchor, Owens-Brockway Glass Container, Inc. (the rights and obligations of
Consumers Packaging thereunder having been assigned to the Company).
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with the Company or any
Restricted Subsidiary or (ii) the acquisition by the Company or any Restricted
Subsidiary of assets of any Person comprising a division or line of business of
such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease, assignment or other disposition or series of related sales,
issuances, conveyances, transfers, leases, assignments or other dispositions
(including, without limitation, by merger or consolidation, and whether by
operation of law or otherwise) for value by the Company or by any of its
Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any
Person (other than by a Restricted Subsidiary to the Company or another
Restricted Subsidiary) of (i) any Capital Stock of a Restricted Subsidiary held
or beneficially owned by the Company or any Restricted Subsidiary, (ii) any
other Property (excluding Capital Stock not covered in (i) or (iii)) of the
Company or of any Restricted Subsidiary or (iii) non-cash consideration received
by the Company or any Restricted Subsidiary pursuant to the "Limitation on Asset
Sales" covenant. Notwithstanding the foregoing, Asset Sales shall not include
(a) the creation of any Permitted Lien, (b) any disposition of Bank Collateral,
(c) the sale or other disposition of inventory in the ordinary course of
business, (d) the sale or other disposition of and any item of machinery,
equipment, furniture, apparatus, tools, implements or other similar
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Property, the Fair Market Value of which does not exceed $500,000 in a single or
series of related transactions or $2.5 million in the aggregate in any fiscal
year, or (e) the sale of receivables pursuant to a receivables securitization or
similar program.
"Asset Sale Offer" has the meaning set forth in "-- Certain
Covenants -- Limitation on the Sale of Assets".
"Attributable Indebtedness" means, in respect of a Sale and Leaseback
Transaction at the time of determination thereof the capitalized amount of
Indebtedness in respect of such transaction that would appear on the face of a
balance sheet of the lessee thereunder in accordance with GAAP.
"Authority"means any Federal, state, municipal or local government or
quasi-governmental agency or authority.
"Bank Collateral" has the meaning attributed to such term in the
Intercreditor Agreement in its form on the Issue Date.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each day which is not a Saturday, a Sunday or any day
on which banking institutions are not required to open in the City of New York.
"Capital Stock" means (i) with respect to any person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person, and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease that are required to be
classified and accounted for as a capital lease obligations under GAAP and, for
purposes of this definition, the amount of such obligations at any date shall be
the capitalized amount of such obligations at such date, determined in
accordance with GAAP. Each Capitalized Lease Obligation shall be deemed to be
secured by a Lien on the property subject to the lease.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or Canadian Government or issued
by any agency thereof and backed by the full faith and credit of the United
States or Canada, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having at least the second
highest rating obtainable from either Standard & Poor's Rating Group ("S&P") or
Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having at least the second highest rating obtainable from either
S&P's or Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $500,000,000; (v) shares of any money market mutual fund that (a) has
its assets invested continuously in the types of investments referred to in
clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000,
and (c) has at least the second highest rating obtainable from either S&P or
Moody's; and (vi) repurchase agreements with respect to, and which are fully
secured by a perfected security interest in, obligations of a type described in
clause (i) or clause (ii) above and are with any commercial bank described in
clause (iv) above.
"Casualty" with respect to any Collateral, means loss of, damage to or
destruction of all or any part of such Collateral.
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"Change of Control" means an event or series of events by which (a) (i) the
Permitted Holders shall cease to be the beneficial owner (including, without
limitation, economic interest and voting power), directly or indirectly, of at
least 40% (or after a Qualified Public Offering, 25%) of the Fully-Diluted
Voting Stock of Consumers Packaging, the Parent Guarantor or the Company, (ii)
the Parent Guarantor shall cease to be the owner (including, without limitation,
economic interest and voting power) directly of at least 40% (or after a
Qualified Public Offering, 25%) of the Fully-Diluted Voting Stock of the Company
or (iii) any Person or group (as defined under Rule 13d-3 under the Exchange
Act) other than one or more of the Permitted Holders or, in the case of the
Company, Smith Barney in its capacity as Escrow Agent for the creditors of Old
Anchor in connection with its Chapter 11 proceedings under the United States
Bankruptcy Code so long as it does not in fact exercise control over the
Company, becomes the beneficial owner (as defined under Rule 13d-3 under the
Exchange Act), directly or indirectly, of more of the Fully-Diluted Voting Stock
of Consumers Packaging, the Parent Guarantor or the Company, as the case may be,
than is then beneficially owned, directly or indirectly, by one or more of the
Permitted Holders; (b) during any period of two consecutive years or in the case
this event occurs within the first two years after Issue Date, such shorter
period as shall have begun on the Issue Date, individuals who at the beginning
of such period constituted the Board of Directors of the Company or Consumer
Packaging, as the case may be, on the Issue Date (together with any new or
replacement directors whose proposal for election by the shareholders of the
Company, Consumer Packaging or the Parent Guarantor, as the case may be, or by
the other directors was approved by a vote of 66 2/3% of the directors of the
Company or Consumers Packaging or the Parent Guarantor, as the case may be, then
still in office who were either directors on the Issue Date or whose election or
nomination for election was previously so approved) shall cease for any reason
to constitute a majority of the members of the Board of Directors of the Company
or Consumers Packaging or the Parent Guarantor, as the case may be, then still
in office; provided that if any Person or group other than the applicable
Permitted Holders is able to elect a majority of the Board of Directors of
Consumers Packaging or the Company or the Parent Guarantor, as the case may be,
pursuant to an agreement with one or more Persons, a Change of Control shall be
deemed to have occurred; (c) the Company or Consumers Packaging or the Parent
Guarantor, as the case may be, consolidates with or merges with or into another
Person or any Person consolidates with, or merges with or into, the Company,
Consumers Packaging or the Parent Guarantor, as the case may be (in each case,
whether or not in compliance with the terms of the Indenture), in any such event
pursuant to a transaction in which immediately after the consummation thereof
Persons owning a majority of the Voting Stock of the Company or Consumers
Packaging or the Parent Guarantor, as the case may be, immediately prior to such
consummation shall cease to own a majority of the Voting Stock of the Company or
Consumers Packaging or the Parent Guarantor, as the case may be, or the
surviving entity if other than the Company or Consumers Packaging or the Parent
Guarantor, as the case may be; or (d) the Company or Consumers Packaging
conveys, transfers or leases all or substantially all of its assets.
"Change of Control Offer" has the meaning set forth in "-- Change of
Control."
"Collateral" has the meaning set forth in "-- Security."
"Collateral Account" means the collateral account established by the
Trustee pursuant to the Indenture.
"Commission" means the Securities and Exchange Commission.
"Commodity Agreement" of any Person means any forward contract, commodity
swap, commodity option or other similar financial agreement or arrangement
relating to, or the value of which is dependent upon, fluctuations in commodity
prices.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Condemnation" means any taking of the Collateral or any part thereof, in
or by condemnation, expropriation or similar proceeding, eminent domain
proceedings, seizure or forfeiture, pursuant to any law,
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general or special, or by reason of the temporary requisition of the use or
occupancy of the Collateral, or any part thereof, by any Authority.
"Condemnation Proceeds" means any awards, proceeds, payment or other
compensation arising out of a Condemnation.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income plus (ii) to the
extent that any of the following shall have been taken into account in
determining Consolidated Net Income, (A) all net income taxes of such Person and
its Subsidiaries (Restricted Subsidiaries in the case of the Company) paid or
accrued in accordance with GAAP for such period (without including or taking
into account income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions of assets outside
the ordinary course of business), Consolidated Interest Expense, amortization
expense and depreciation expense (including depreciation or amortization expense
included in cost of goods sold), and (B) other noncash items (other than noncash
interest) reducing Consolidated Net Income, other than any noncash item which
requires the accrual of or a reserve for cash charges for any future period,
less other noncash items increasing Consolidated Net Income, all as determined
on a consolidated basis for such Person and its Subsidiaries (Restricted
Subsidiaries in the case of the Company) in conformity with GAAP.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all cash dividend payments on any series
of Preferred Stock or Disqualified Capital Stock of such Person and of its
Subsidiaries (Restricted Subsidiaries in the case of the Company) paid, accrued
or scheduled to be paid or accreted during such period times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Coverage Ratio" means, with respect to any Person,
the ratio of Consolidated EBITDA of such Person during the Four Quarter Period
ending on or prior to the date of the transaction or event giving rise to the
need to calculate the Consolidated Interest Coverage Ratio (the "Transaction
Date") to Consolidated Fixed Charges of such Person for the Four Quarter Period.
In addition to and without limitation of the foregoing, for purposes of this
definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the Incurrence or repayment of any Indebtedness of such
Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the
Company) (and the application of the proceeds thereof) giving rise to the need
to make such calculation and any Incurrence of other Indebtedness (and the
application of the proceeds thereof), other than the Incurrence or repayment
(not resulting in a permanent reduction of available borrowings) of Indebtedness
in the ordinary course of business pursuant to working capital facilities
(including the Revolving Credit Facility), at any time subsequent to the first
day of the Four Quarter Period and on or prior to the Transaction Date, as if
such Incurrence or repayment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four Quarter Period, (ii)
any Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of such
Person or one of its Subsidiaries (Restricted Subsidiaries in the case of the
Company) (including any Person who becomes a Subsidiary (Restricted Subsidiary
in the case of the Company) as a result of any such Asset Acquisition) Incurring
Acquired Indebtedness at any time subsequent to the to the first day of the Four
Quarter Period and on or prior to the Transaction Date), as if such Asset Sale
or Asset Acquisition (including the Incurrence of any such Indebtedness or
Acquired Indebtedness and also including or deducting any Consolidated EBITDA
associated with such Asset Acquisition or Asset Sale, respectively) occurred on
the first day of the Four Quarter Period; provided that the Consolidated EBITDA
of any Person acquired shall be included only to the extent includable pursuant
to the definition of "Consolidated Net Income". For purposes of this definition,
(x) whenever pro forma effect is to be given to any of the foregoing
transactions, the pro forma calculations will be determined in accordance with
Regulation S-X promulgated by the Commission and (y) the Company's Consolidated
EBITDA, Consolidated Fixed Charges, Consolidated Interest Expense and
Consolidated Net Income for the second, third and fourth quarters of 1996 shall
be Pro Forma. Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated Interest Coverage Ratio",
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(1) interest on Indebtedness determined on a fluctuating basis as of the
Transaction Date (including Indebtedness actually Incurred on the Transaction
Date) and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) notwithstanding clause (1)
above, interest on Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Swap Obligations,
shall be deemed to accrue at the rate per annum resulting after giving effect to
the operation of such agreements; and (3) interest on Indebtedness Incurred in
the ordinary course of business pursuant to working capital facilities
(including the Revolving Credit Facility) shall be determined as if the average
amount of borrowings outstanding thereunder during the Four Quarter Period shall
have been outstanding on every day of such Four Quarter Period and interest had
accrued at the rate determined pursuant to the preceding clauses (1) or (2)
(whether or not such Indebtedness shall have been outstanding on the Transaction
Date).
"Consolidated Interest Expense" means, with respect to any Person for any
period, the aggregate of the interest expense (without deduction of interest
income) of such Person and its Subsidiaries (Restricted Subsidiaries in the case
of the Company) for such period, on a consolidated basis, as determined in
accordance with GAAP and including, without duplication, (a) all amortization of
original issue discount; (b) the interest component of Capitalized Lease
Obligations paid or accrued by such Person and its Subsidiaries (Restricted
Subsidiaries in the case of the Company) during such period; (c) net cash costs
under all Interest Swap Obligations (including amortization of fees); (d) all
capitalized interest; (e) to the extent that such Person or any of its
Subsidiaries (Restricted Subsidiaries in the case of the Company) guarantees
interest on any debt of any borrower, interest paid by such borrower during such
period on such debt but only to the extent of the amount of the interest
Guaranteed; (f) all amortization or write off of deferred financing costs of
such Person and its consolidated Subsidiaries (Restricted Subsidiaries in the
case of the Company) during such period (other than the write-off of financing
fees related to the Company's Senior Credit Agreement dated February 5, 1997 and
any premium or penalty paid in connection with redeeming or retiring
Indebtedness of such Person and its consolidated Subsidiaries (Restricted
Subsidiaries in the case of the Company) prior to the Stated Maturity thereof;
and (g) the interest portion of any deferred payment obligations for such
period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
(Restricted Subsidiaries in the case of the Company) for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom (a) after-tax gains from Asset Sales or abandonments
or reserves relating thereto, (b) after-tax items classified as extraordinary or
nonrecurring gains or losses, (c) the net income of any Person acquired in a
"pooling of interests" transaction accrued prior to the date it becomes a
Subsidiary (Restricted Subsidiary in the case of the Company) of the referent
Person or is merged or consolidated with the referent Person or any Subsidiary
of the referent Person, (d) the net income (but not loss) of any Subsidiary
(Restricted Subsidiary in the case of the Company) of the referent Person to the
extent that the declaration of dividends or similar distributions by that
Subsidiary of that income is restricted by a contract, operation of law or
otherwise, except to the extent of dividends or distributions paid in the form
of cash or Cash Equivalents to the referent Person or to a Subsidiary
(Restricted Subsidiaries in the case of the Company) of the referent Person by
such Person, (e) the net income of any Person, other than a Subsidiary
(Restricted Subsidiary in the case of the Company) of the referent Person,
except to the extent of dividends or distributions paid in the form of cash or
Cash Equivalents to the referent Person or to a Subsidiary (Restricted
Subsidiaries in the case of the Company) of the referent Person by such Person,
(f) any restoration to income of any contingency reserve except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earning of the successor corporation prior to such consolidation, merger or
transfer of assets.
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"Consolidated Net Worth" of any Person means the total of the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Currency Agreements" means, in respect of a Person, any foreign exchange
currency futures or options, currency swap agreements, forward exchange rate
agreements, exchange rate collar agreements, exchange rate insurance or other
agreements or arrangements, or combination thereof, as to which such Person is a
party or a beneficiary.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Discontinued Plant" means plants of the Company closed prior to the Issue
Date including, without limitation, those located in Dayville, Connecticut and
Houston, Texas, and one plant closed by the Company after the Issue Date which
is specified as such in an Officers' Certificate.
"Discontinued Plant Asset Sale" means an Asset Sale of a Discontinued
Plant.
"Discontinued Plant Closing Costs" means cash expenses incurred by the
Company and its Restricted Subsidiaries as a result of the closing of a
Discontinued Plant no later than 270 days after a Discontinued Plant Asset Sale.
"Disqualified Capital Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
first anniversary date on which the Notes mature; provided, however, that any
Capital Stock that would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require the Company to repurchase or
redeem such Capital Stock upon the occurrence of a Change of Control occurring
on or prior to the first anniversary date on which the Notes mature shall not
constitute Disqualified Stock if (i) the change of control provisions applicable
to such Capital Stock are no more favorable to the holders of such Capital Stock
than the provisions applicable to the Notes contained in the covenant described
under Change of Control" and (ii) such Capital Stock specifically provides that
the Company will not repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such Notes as are required to be
repurchased pursuant to the covenant described under "Change of Control."
"Equity Offerings" has the meaning set forth in "-- Optional Redemption.
"Events of Default" has the meaning set forth in "-- Events of Default".
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Excess Proceeds Amount" has the meaning set forth under "Limitation on the
Sale of Assets."
"Fair Market Value" or "Fair Value" means, with respect to any Property,
the price which could be negotiated in an arm's-length transaction, for cash,
between an informed, willing and able seller and an informed and willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction. Fair Market Value shall be determined by the Company acting
reasonably and in good faith; provided, however, that if the value of the
aggregate consideration to be received by the Company or any of its Subsidiaries
from any Asset Sale could reasonably be expected to exceed (i) $5.0 million,
Fair Market Value shall be determined by the Board of Directors of the Company
as evidenced by a Board Resolution delivered to the Trustee or (ii) $10.0
million, Fair Market Value shall also be determined by an Independent Financial
Advisor in a written opinion addressed to the Trustee.
"Financial Advisor" means an accounting, appraisal or investment banking
firm of nationally recognized standing in the United States that is, in the
reasonable and good faith judgment of the Board of Directors of the Company,
qualified to perform the task for which such firm has been engaged.
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"Four Quarter Period" means, in respect of any Person at any time, the most
recently completed four consecutive full fiscal quarters; provided, that, in the
case of the Company, the first fiscal quarter of 1997 shall be the period from
February 5, 1997 through March 31, 1997.
"Fully-Diluted Voting Stock" means, in respect of any Person at any time,
the Voting Stock of such Person assuming that all outstanding options, warrants
or other rights to acquire such Voting Stock have been exercised and all
outstanding securities convertible into or exchangeable for such Voting Stock
have been converted or exchanged at such time, in each case in accordance with
their terms in effect at such time.
"G&G Investments" means G&G Investments, Inc., a Delaware corporation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are applicable as of the date of
determination.
"Guarantee" means any obligation, contingent or otherwise, of any Person,
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay for (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, that, the term "Guarantee"
will not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means (a) each Restricted Subsidiary and (b) Consumers U.S.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, that (A) any Indebtedness of a Person
existing at the time such Person becomes (after the Issue Date) a Restricted
Subsidiary (whether by merger, consolidation, acquisition or otherwise) of the
Company shall be deemed to be Incurred by such Subsidiary at the time it becomes
a Restricted Subsidiary and (B) any amendment, modification or waiver of any
document pursuant to which Indebtedness was previously Incurred shall be deemed
(without duplication), as of the date of and after giving effect to, such
amendment, modification or waiver, to be an Incurrence of additional
Indebtedness unless such amendment, modification or waiver does not (i) increase
the principal or premium thereof or interest rate thereon (including by way of
original issue discount) or (ii) change to an earlier date the Stated Maturity
thereof or the date of any scheduled or required principal payment thereon or
the time or circumstances under which such Indebtedness shall be redeemed;
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time becoming Indebtedness will not be deemed an
Incurrence of such Indebtedness.
"Indebtedness" means with respect to any Person, without duplication, (i)
the principal of and premium (if any) in respect of indebtedness of such Person
for borrowed money, (ii) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
including, without limitation, Attributable Indebtedness, (iv) all obligations
of such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable in the ordinary course of
business that are not overdue by 90 days or more or are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted),
(v) all reimbursement obligations of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) all Indebtedness of
others (including all dividends of other Persons for the payment of which
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is) Guaranteed, directly or indirectly, by such Person or that is otherwise its
legal liability or which such Person has agreed to purchase or repurchase or in
respect of which such Person has agreed contingently to supply or advance funds,
(vii) net liabilities of such Person under Interest Swap Obligations, Commodity
Agreements and Currency Agreements, (viii) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on any Property (including, without
limitation, leasehold interests and any other tangible or intangible property)
of such Person, whether or not such Indebtedness is assumed by such Person or is
not otherwise such Person's legal liability; provided that if the obligations so
secured have not been assumed by such Person or are otherwise not such Person's
legal liability, the amount of such Indebtedness for the purposes of this
definition shall be limited to the lesser of the amount of such Indebtedness
secured by such Lien or the Fair Market Value of the Property subject to such
Lien and (ix) all Disqualified Capital Stock issued by such Person, with the
amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends if any. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, provided, that,
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the full amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP. Notwithstanding the foregoing, (x)
Indebtedness shall not include any endorsements for collection or deposit in the
ordinary course of business or any Indebtedness that has been defeased or
satisfied in accordance with the terms of the documents governing such
Indebtedness and is no longer considered Indebtedness under GAAP and (y) any
realization of a Permitted Lien on Bank Collateral shall not constitute the
Incurrence of Indebtedness.
"Independent" when used with respect to any specified Person means a Person
who (a) is in fact independent, (b) does not have any direct financial interest
or any material indirect financial interest in the Company or any of its
Subsidiaries, or in any Affiliate of the Company or any of its Subsidiaries and
(c) is not an officer, employee, promoter, trustee, partner, director or person
performing similar functions for the Company or any of its Subsidiaries.
Whenever it is provided in the Indenture that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such Person shall be appointed
by the Company in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof.
"Independent Financial Advisor" means a Financial Advisor that is
Independent.
"Insurance Proceeds" mean any payment, proceeds or other amounts received
at any time under any insurance policy as compensation in respect of a Casualty
provided that, business interruption insurance proceeds shall not constitute
Insurance Proceeds.
"Intercompany Agreement" means the Intercompany Agreement dated as of the
Issue Date, by and between the Company, G&G Investments, Inc., Glenshaw Glass
Company, Hillsboro Glass Company I.M.T.E.C. Enterprises, Inc., Consumers
Packaging Inc., Consumers International Inc., Consumers U.S., Inc., BT
Commercial Corporation, the Trustee and the trustee for the 10 1/4% Senior
Secured Notes due 2005 of Consumers International.
"Intercompany Indebtedness" means any Indebtedness of the Company or any
Restricted Subsidiary which, in the case of the Company, is owing to any
Restricted Subsidiary and which, in the case of any such Restricted Subsidiary,
is owing to the Company or any Restricted Subsidiary; provided, that if as of
any date any Person other than the Company or a Restricted Subsidiary owns or
holds such Indebtedness, or holds any Lien in respect thereof, such Indebtedness
shall no longer be Intercompany Indebtedness permitted to be Incurred pursuant
to "-- Limitation on Indebtedness".
"Intercreditor Agreement" means the Intercreditor Agreement described under
"-- Intercreditor Agreement".
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"Interest Swap Obligations" means the obligations of any Person under any
interest rate swap agreement, interest rate cap, collar or floor agreement or
other similar financial agreement or other interest rate hedge or arrangement
designed to protect the Company or any of its Subsidiaries against or manage
exposure to fluctuations in interest rates.
"Investment" by any Person means any direct or indirect (i) loan, advance
or other extension of credit or capital contribution (by means of transfers of
cash or other Property (valued at the Fair Market Value thereof as of the date
of transfer) to others or payments for Property or services for the account or
use of others, or otherwise); (ii) purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidences of equity ownership or
Indebtedness issued by any other Person (whether by merger, consolidation,
amalgamation or otherwise (but excluding any merger, consolidation or
amalgamation subject to the "Merger, Consolidation and Sale of Assets" covenant)
and whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness); (iii) Guarantee or assumption of any Indebtedness or
any other obligation of any other Person; (iv) all other items that would be
classified as investments (including, without limitation, purchases of assets
outside the ordinary course of business) on a balance sheet of such Person
prepared in accordance with GAAP, and (v) any payment made by such Person to any
other Person in order to obtain a commitment from such other Person to purchase
products or services from such Person, but excluding the purchase of assets
(which for this purpose shall not include any equity or debt securities) used in
a Related Business and excluding any trade accounts receivable in the ordinary
course of business and notes receivable from employees received solely in
exchange for the issuance by the Company to such employees of Qualified Capital
Stock. The amount of any Investment shall not be adjusted for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"Issue Date" means the date of original issuance of the Notes.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge easement, restriction, covenant, right of way, adverse claim affecting
title to real or personal property, or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any option, trust
or other preferential arrangement having the practical effect of any of the
foregoing.
"Loss Event" means a Condemnation or Casualty involving an actual or
constructive total loss or agreed or compromised actual or constructive total
loss of all or substantially all of any Collateral Property, except where the
Company reasonably concludes that Restoration of such Collateral Property can be
made in accordance with this Indenture and elects to do so in an Officers'
Certificate delivered to the Trustee within 90 days of the relevant Condemnation
or Casualty.
"Management Agreement" means the Management Agreement between G&G
Investments and the Company as in effect on the Issue Date.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, cash proceeds of
such Asset Sale (including Cash Equivalents) net of reasonable transaction costs
of sale including, but not limited to, (i) income taxes reasonably estimated to
be payable as a result of such Asset Sale, (ii) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on, any
Indebtedness that is secured by a Permitted Lien on the property or assets in
question and that is required to be repaid under the terms thereof as a result
of such Asset Sale, (iii) any underwriting, brokerage or other customary selling
commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses and reasonable expenses incurred for
preparing such assets for sale, associated therewith, and (iv) payments of
unassumed liabilities (not constituting Indebtedness) relating to the assets
sold at the time of, or within 30 days after, the date of such sale; provided
that the Net Cash Proceeds in the case of any Discontinued Plant Asset Sale will
be deemed to have been applied in accordance with the "Limitation on Sales of
Assets" covenant if used to pay Discontinued Plant Closing Costs attributable to
such Discontinued Plant subject to a limit of up to $5 million per Discontinued
Plant and up to $20.0 million in the aggregate for all Discontinued Plant Asset
Sales from the Issue Date.
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"Net Equity Proceeds" means (a) in the case of any sale by the Company of
Qualified Capital Stock of the Company, the aggregate net cash proceeds received
by the Company, after payment of expenses, commissions and the like (including,
without limitation, brokerage, legal, accounting and investment banking fees and
commissions) incurred in connection therewith, and (b) in the case of any
exchange, exercise, conversion or surrender of any outstanding Indebtedness of
the Company or any Restricted Subsidiary for or into shares of Qualified Capital
Stock of the Company, the amount of such Indebtedness (or, if such Indebtedness
was issued at an amount less than the stated principal amount thereof, the
accrued amount thereof as determined in accordance with GAAP) as reflected in
the consolidated financial statements of the Company prepared in accordance with
GAAP as of the most recent date next preceding the date of such exchange,
exercise, conversion or surrender (plus any additional amount required to be
paid in cash by the holder of such Indebtedness to the Company or to any
Restricted Subsidiary upon such exchange, exercise, conversion or surrender and
less any and all payments made to the holders of such Indebtedness, and all
other expenses incurred by the Company in connection therewith), in each case
(a) and (b) to the extent consummated after the Issue Date; provided that the
exchange, exercise, conversion or surrender of any Subordinated Obligations
shall not be or be deemed to be included in Net Equity Proceeds unless such
Subordinated Obligation was issued after the Issue Date.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other amounts
payable under the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by two officers of the
Company.
"Old Anchor" means Anchor Resolution Corp., a Delaware corporation
(formerly Anchor Glass Container Corporation).
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee.
"Parent Guarantee" means the Guarantee of the Notes made by the Parent
Guarantor.
"Parent Guarantor" means (i) Consumers U.S. or (ii) any Person that becomes
a Parent Guarantor pursuant to the "Limitations on Activities of the Parent
Guarantor" covenant.
"Permitted Holders" means (a) in the case of Consumers Packaging, (i) John
J. Ghaznavi; (ii) the spouse, parents, siblings, descendants (including children
or grandchildren by adoption) of John J. Ghaznavi or of such spouse or siblings;
(iii) in the event of the incompetence or death of any of John J. Ghaznavi or
any of the Persons described in clause (ii), such Person's estate, executor,
administrator, committee or other personal representative in each case who at
any particular date shall beneficially own or have the right to acquire,
directly or indirectly, Voting Stock of Consumers Packaging; (iv) any trusts
created for the sole benefit of John J. Ghaznavi or the Persons described in
clauses (ii) or (iii) or any trust for the benefit of such trust; or (v) any
Person of which John J. Ghaznavi or any of the Persons described in clauses (ii)
or (iii) (x) "beneficially owns" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) on a fully-diluted basis all of the Voting Stock of such Person or
(y) is the sole trustee or general partner, or otherwise has the sole power to
manage the business and affairs, of such Person and (b) in the case of the
Company and the Parent Guarantor, Consumers Packaging and its Wholly-Owned
Subsidiaries.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes and the Indenture, including
Indebtedness in respect of obligations of the Company to the Trustee;
(ii) Indebtedness outstanding from time to time pursuant to the
Revolving Credit Facility in an amount not to exceed the greater of (a)
$125.0 million and (b) the sum of 90% of the gross book value of the
accounts receivable of the Company and its Subsidiaries and 70% of the
gross book value of the inventory of the Company and its Subsidiaries, in
each case calculated in accordance with GAAP;
(iii) Indebtedness outstanding on the Issue Date;
(iv) Commodity Agreements; provided, however, that such Commodity
Agreements are entered into for the purpose of reducing risk in the
ordinary course of the financial management of the Company
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or any Restricted Subsidiary and designed to protect the Company or such
Restricted Subsidiary against fluctuations in commodity prices;
(v) Indebtedness Incurred in connection with (a) Interest Swap
Obligations and Currency Agreements relating to Indebtedness permitted
pursuant to the "Limitation on Indebtedness" covenant that are entered into
for the purpose of reducing risk in the ordinary course of the financial
management of the Company or any Restricted Subsidiary; provided, however,
that the notional amount of each such Interest Swap Obligation and Currency
Agreement does not exceed the principal amount of the Indebtedness to which
the Interest Swap Obligation or the Currency Agreement, as the case may be,
relates, or (b) Currency Agreements that are entered into in the ordinary
course of the financial management of the Company or any of its Restricted
Subsidiaries and designed to protect the Company or such Restricted
Subsidiary against fluctuations in foreign currency exchange rates;
(vi) Indebtedness of the Company or any Restricted Subsidiary
represented by Capitalized Lease Obligations, mortgage financings or other
purchase money obligations or obligations under other financing
transactions relating to capital expenditures, in each case Incurred for
the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property used in a Related Business not to
exceed (a) in any fiscal year the lesser of (1) $10.0 million and (2) 25%
of the Company's capital expenditures as determined in accordance with GAAP
for the prior fiscal year and (b) $35.0 million in the aggregate
outstanding at any one time;
(vii) additional Indebtedness Incurred by the Company or any
Restricted Subsidiaries not to exceed $10.0 million outstanding at any
time;
(viii) Intercompany Indebtedness;
(ix) Refinancing Indebtedness;
(x) Indebtedness of any Person that becomes a Restricted Subsidiary
after the Issue Date which Indebtedness existed at the time such Person
becomes a Restricted Subsidiary; provided that (a) such Indebtedness was
not Incurred as a result of or in connection with or anticipation of such
Person becoming a Restricted Subsidiary and (b) to the extent the principal
amount of such Indebtedness and any other Indebtedness previously permitted
pursuant to this clause (x) exceeds $5.0 million in the aggregate at the
time such Restricted Subsidiary is acquired by the Company, immediately
before and immediately after giving effect to such Person becoming a
Restricted Subsidiary (as if such existing Indebtedness were Incurred on
the first day of the Four Quarter Period) the Company could Incur at least
$1.00 of additional Indebtedness in accordance with the Consolidated
Interest Coverage Ratio test of paragraph (a) of the "Limitation on
Indebtedness" covenant; and
(xi) reimbursement obligations relating to undrawn standby letters of
credit and obligations in respect of performance bonds and surety bonds, in
each case issued in the ordinary course of business.
"Permitted Investments" means (a) Investments in cash and Cash Equivalents;
(b) loans, Guarantees and reasonable advances to employees of the Company or any
Restricted Subsidiary made in the ordinary course of business of the Company or
such Restricted Subsidiary, as the case may be, in an aggregate principal amount
not exceeding $1.0 million at any time outstanding; (c) Investments by the
Company or by any Restricted Subsidiary in the Company or a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary; (d) Investments by the Company or by any Restricted
Subsidiary in another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or any Restricted Subsidiary in
compliance with the provisions of the "Merger, Consolidation and Sale of Assets"
covenant; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (e) non-cash consideration received in
accordance with the "Limitation on the Sale of Assets" covenant; (f) advances to
suppliers and customers in the ordinary course of business; (g) Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers or in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business; (h) guarantees by the Company and its Restricted
Subsidiaries of the obligations of one another
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under the Revolving Credit Facility; (i) sales of goods or services on trade
credit terms consistent with the Company's and its Subsidiaries' past practices
or otherwise consistent with trade credit terms in common use in the industry
and recorded as accounts receivable on the balance sheet of the Person making
such sale, and (j) lease, utility and other similar deposits in the ordinary
course of business; provided, further, that any contribution, transfer or other
disposition of Collateral in excess of $1.0 million in the aggregate in any
fiscal year by the Company to any of its Restricted Subsidiaries, shall not
constitute a Permitted Investment.
"Permitted Liens" means, without duplication, each of the following:
(i) Liens securing the Notes;
(ii) Liens for taxes or governmental assessments, charges, levies or
claims not yet delinquent or for which a bond has been posted in an amount
equal to the contested amount (including potential interest and penalties
thereon) not interfering in any material respect with the ordinary
operation of any Collateral or materially and adversely affecting the value
thereof;
(iii) statutory Liens of landlords, carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like Liens arising in the
ordinary course of business of ownership and operation of the relevant
property relating to obligations either (a) not yet delinquent or (b) being
contested in good faith by appropriate proceedings and as to which
appropriate reserves or other provisions have been made in advance in
accordance with GAAP, in each case, not interfering in any material respect
with the ordinary operation of any Collateral or materially and adversely
affecting the value thereof;
(iv) Liens in connection with workers' compensation, unemployment
insurance and other similar legislation, surety or appeal bonds,
performance bonds or other obligations of a like nature (in each case not
constituting Indebtedness) arising in the ordinary course of business not
interfering in any material respect with the ordinary operation of any
Collateral or materially and adversely affecting the value thereof;
(v) zoning restrictions, licenses, easements, servitudes, rights of
way, title defects, covenants running with the land and other similar
charges or encumbrances or restrictions not interfering in any material
respect with the ordinary operation of any Collateral or materially and
adversely affecting the value thereof;
(vi) assignments, leases, or subleases at Discontinued Plants not
materially and adversely affecting the value thereof;
(vii) Liens on any Collateral permitted under the Security Document
applicable thereto;
(viii) Liens granted by the Company or any Restricted Subsidiary to
secure Indebtedness Incurred pursuant to clause (vi) of the definition of
Permitted Indebtedness, in each case representing all or part of the cost
of purchase, lease, construction or improvement of Property acquired,
constructed or improved after the date hereof owed to a Person not an
Affiliate of the Company; provided, however, that (x) in any such case such
Lien shall extend only to the specific Property of the Company or any
Restricted Subsidiary leased, acquired, constructed or improved with the
proceeds of such Indebtedness and (y) prior to granting any such Lien, the
Company shall provide the Trustee with an Officers' Certificate stating
that the Property subject to such Lien and the Collateral could be operated
independently and such Property could be disposed of independently of the
Collateral without interfering with the continued operation and maintenance
of the Collateral, and without impairing the value of the Collateral or
interfering with the Trustee's ability to realize such value; provided
further that (A) the aggregate amount of Indebtedness secured by any such
Lien shall not exceed the Fair Market Value (or, if less, the cost) of the
Property so acquired or leased and (B) such Liens shall not encumber any
other Property of the Company or of any Restricted Subsidiary and shall
attach to such Property within 60 days of the acquisition or lease of, or
completion of construction on, such Property;
(ix) Liens on the Bank Collateral and the Shared Collateral securing
the Revolving Credit Facility;
(x) Liens existing on the Issue Date; and
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(xi) Liens on Property of a Person at the time such Person was merged
with the Company or a Restricted Subsidiary, Liens on acquired Property
existing at the time of acquisition thereof and Liens upon any Property of
a Person existing at the time such Person becomes a Restricted Subsidiary;
provided in each case (x) that such Property was not acquired with the
proceeds of any Asset Sale or as a replacement for any Collateral and (y)
that such Liens were not created in contemplation of such merger or
acquisition, as the case may be, and such Liens only extend to such merged
or acquired Property.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Principal Payment Default" has the meaning set forth in clause (v) of
"-- Events of Default."
"Pro Forma" shall mean for any period the pro forma Consolidated EBITDA,
Consolidated Fixed Charges, Consolidated Interest Expense or Consolidated Net
Income of the Company after giving effect to the offering of the Notes on the
Issue Date and the application of the net proceeds therefrom and the Anchor
Acquisition as if such transactions had occurred on January 1, 1996 and to any
other transactions or events for which pro forma effect is to be given pursuant
to the definition of Consolidated Interest Coverage Ratio calculated in
accordance with Regulation S-X as promulgated by the Commission applied to the
audited financial statements of Old Anchor for the 1996 fiscal year and, where
necessary, the unaudited financial statements of such company for the second and
third fiscal quarters of 1996; it being understood that prior to giving effect
to any transactions or events for which pro forma effect is to be given pursuant
to the definition of Consolidated Interest Coverage Ratio that Consolidated
EBITDA for the Company for each of the second, third and fourth fiscal quarters
of 1996 shall be $21.6 million, $8.8 million and negative $9.9 million,
respectively.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real or immovable, personal or
moveable or mixed, or tangible or corporeal, or intangible or incorporeal,
including, without limitation, Capital Stock in any other Person.
"Purchase Money Assets" means Property made subject to a Lien in accordance
with clause (viii) of the definition of Permitted Liens.
"Qualified Capital Stock" means (i) any Capital Stock that is not
Disqualified Capital Stock and (ii) each warrant, right or option to acquire
Capital Stock that is not Disqualified Capital Stock other than any such
warrant, right or other option to acquire such Capital Stock that is, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary date on which the Notes mature.
"Qualified Public Offering" means an underwritten public offering of the
Common Stock of the Company pursuant to a Registration Statement filed with the
Commission in accordance with the Securities Act resulting in Net Equity
Proceeds of at least $75.0 million.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or a
Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary
initially Incurred in accordance with the Limitation on Indebtedness covenant,
including the Notes (other than pursuant to clause (ii), (iv), (v), (vi), (vii),
(viii) or (xi) of the definition of Permitted Indebtedness) that does not (i)
result in an increase in the aggregate principal amount of Indebtedness of such
Person as of the date of such proposed Refinancing (plus the amount of any
premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by such Person
in connection with such
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Refinancing) or (ii) create Indebtedness with (a) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (b) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that if such
Indebtedness being Refinanced is subordinate or junior to the Notes or any
Guarantee, then such Refinancing Indebtedness shall be subordinate to the Notes
or such Guarantee at least to the same extent and in the same manner as the
Indebtedness being Refinanced.
"Related Business" means the businesses carried out by the Company or a
Restricted Subsidiary on the date hereof and any reasonable extensions thereof,
including, without limitation, the manufacture and sale of plastic containers
and plastic and metal closures.
"Related Business Investment" means any expenditure by the Company or a
Restricted Subsidiary, as the case may be, to acquire assets (which shall not
include any equity or debt security) used in the ordinary course of a Related
Business of the Company or such Restricted Subsidiary, as the case may be, which
shall constitute Collateral.
"Released Interests" has the meaning set forth in "-- Possession, Use and
Release of Collateral -- Release of Collateral."
"Restoration" means the restoration of all or any portion of the Collateral
in connection with any destruction or condemnation thereof.
"Restricted Subsidiary" means, as of the date of determination, any
Subsidiary of the Company, other than an Unrestricted Subsidiary.
"Revolving Credit Agreement" has the meaning set forth in the definition of
"Revolving Credit Facility."
"Revolving Credit Facility" means agreements with one or more Persons or
syndicates of Persons providing for financing for the Company and its
Subsidiaries, and all related security agreements, guarantees, notes and other
agreements relating to same, as the same may be amended, modified or
supplemented from time to time, and any agreement or agreements evidencing the
refinancing, modification, replacement, renewal, restatement, refunding,
deferral, extension, substitution or supplement thereof including, without
limitation, any arrangement involving a Wholly-Owned Subsidiary, the sole
activity of which is the financing of receivables, and including the revolving
credit facility under that certain Credit Agreement dated as of February 5, 1997
(the "Revolving Credit Agreement") among the Company, Bankers Trust Company, as
issuing bank, BT Commercial Corporation, as agent, PNC Bank, as issuing bank and
the financial institutions party thereto in their capacities as lenders
thereunder, and any security documents and guarantees delivered in connection
therewith.
"Revolving Credit Facility Secured Creditors" means the agent and the
financial institutions party to the Revolving Credit Agreement described in the
definition of "Revolving Credit Facility" in their capacities as lenders
thereunder.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any Property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary.
"Shared Collateral" has the meaning assigned to such term in the
Intercreditor Agreement.
"Specified Subsidiary" means any Subsidiary of the Company other than (x)
an Unrestricted Subsidiary which is not organized under the laws of the United
States of America, any state thereof or the District of Columbia or under the
laws of Canada or any province thereof or (y) a Subsidiary of the Company which
would not constitute a "significant subsidiary" of the Company as defined in
Rule 1.02 of Regulation S-X promulgated by the Commission, except that for
purposes of this definition, all reference therein to ten (10) percent shall be
deemed to be references to five (5) percent.
"S&P" means Standard & Poor's Corporation and its successors.
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"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company, the Parent
Guarantor or any Subsidiary Guarantor (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinate or junior in right of payment to the
Notes, the Parent Guarantee or any Subsidiary Guarantee pursuant to a written
agreement or by operation of law.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantee" means the Guarantee of the Notes made by a
Subsidiary Guarantor.
"Subsidiary Guarantor" means each future Restricted Subsidiary; provided
that any Person constituting a Subsidiary Guarantor as described above shall
cease to constitute a Subsidiary Guarantor when its Guarantee is released in
accordance with the terms of the Indenture.
"Surviving Entity" means the Person (if other than the Company) formed by
any consolidation of the Company with any Person or into which the Company is
merged or the Person which acquires by conveyance, transfer or lease the
properties and assets of the Company and of the Company's Subsidiaries as an
entirety or virtually as an entirety.
"Unrestricted Subsidiary" means (i) each Subsidiary of the Company that the
Company has designated pursuant to the provisions described under "-- Restricted
and Unrestricted Subsidiaries" as an Unrestricted Subsidiary and that has not
been redesignated a Restricted Subsidiary and (ii) any Subsidiary of an
Unrestricted Subsidiary.
"Voting Stock" with respect to any Person, means securities of any class of
Capital Stock of such Person entitling the holders thereof (whether at all times
or only so long as no senior class of stock has voting power by reason of any
contingency) to vote in the election of members of the Board of Directors (or
equivalent governing body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means, in respect of the Company, a Restricted
Subsidiary, all the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly-Owned Subsidiary of the
Company.
CERTAIN LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL
Bankruptcy Considerations. The right of the Trustee under the Indenture to
repossess and dispose of the Collateral upon the occurrence of an Event of
Default under the Indenture is likely to be significantly impaired by applicable
bankruptcy law if a bankruptcy case were to be commenced by or against the
Company prior to the Trustee's having repossessed and disposed of the
Collateral. Under the federal bankruptcy laws, secured creditors, such as the
Trustee, are prohibited from foreclosing upon, realizing upon or repossessing
security from a debtor in a bankruptcy case, or from disposing of security
repossessed from such debtor, without bankruptcy court approval. Moreover, the
federal bankruptcy laws permit the debtor to continue to
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retain and to use collateral even though the debtor is in default under the
applicable debt instruments, provided that the secured creditor is given
"adequate protection." The meaning of the term "adequate protection" may vary
according to circumstances, but it is intended in general to protect the value
of the secured creditor's interest in the Collateral and may include cash
payments or the granting of additional security, if and at such times as the
court in its discretion determines (after request by the creditor), for any
diminution in the value of the creditor's interest in Collateral as a result of
the stay of repossession or disposition or any use of the Collateral by the
debtor during the pendency of the bankruptcy case. In view of the lack of a
precise definition of the term "adequate protection" and the broad discretionary
powers of a bankruptcy court, it is impossible to predict how long payments
under the Notes could be delayed following commencement of a bankruptcy case,
whether or when the Trustee could repossess or dispose of the Collateral or
whether or to what extent holders of the Notes would be compensated for any
diminution in value of the Collateral through the requirement of "adequate
protection." Furthermore, in the event that the bankruptcy court determines that
the value of the Collateral is not sufficient to repay all amounts due on the
Notes, the holders of the Notes would hold undersecured claims. Applicable
federal bankruptcy laws do not permit the payment and/or accrual of interest,
costs and attorney's fees for "undersecured claims" during the pendency of a
debtor's bankruptcy case.
In addition, if prior to or at the time of any bankruptcy case being
commenced by or against the Company, the value of the Collateral is less than
the total amount remaining to be paid on the Notes, the issue of whether
payments on the Notes within ninety days (or one year with respect to payments
to "insiders" as defined under the federal bankruptcy laws) of the commencement
of such bankruptcy case are preferential and may be recaptured may arise under
the federal bankruptcy laws. To the extent that such issue arises, there may in
certain circumstances be defenses applicable to the recapture of potentially
preferential payments under the federal bankruptcy laws, including among other
things, that such payments were made in the ordinary course of business or
financial affairs of the Company according to ordinary business terms.
Fraudulent Conveyance. The issuance of the Notes by the Company and the
granting of liens to secure the Notes, as well as the issuance of the Guarantees
by the Guarantors, are subject to the Fraudulent Conveyance Laws. If a court
makes certain findings, it could take certain actions detrimental to the holders
of the Notes. See "Risk Factors -- Fraudulent Conveyance Risks."
Environmental Considerations. The Real Property Collateral is subject to
extensive and increasingly stringent environmental laws and regulations.
Although management believes that the Real Property Collateral is in substantial
compliance with these regulations, other than any non-compliance the liability
for which has been reserved in the Company's financial statements, the failure
of any Real Property Collateral to remain in compliance therewith or the
presence of hazardous substances at any of the Real Property Collateral could
adversely affect the value of the Real Property Collateral or the operations
conducted thereon. Furthermore, certain of the Real Property Collateral will
require significant capital expenditures to remain in compliance with existing
and future environmental regulations. See "Risk Factors -- Environmental and
Other Government Regulation."
Under the federal laws of the United States and many state laws,
contamination of a property may give rise to a lien on the property to assure
the payment of the costs of clean-up. In a number of states, including New
Jersey and Connecticut, under certain circumstances, such a lien may have
priority over all existing liens (a "superlien") including those of existing
mortgages. In addition, a lender may be exposed to unforeseen environmental
liabilities when taking a security interest in real property. Under the federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
and similar state laws, a lender may be liable in certain circumstances, as an
"owner" or "operator", for environmental clean-up costs on a mortgaged property.
Although CERCLA excludes from liability "a person who, without participating in
the management of a facility, holds indicia of ownership primarily to protect
his security interest," a lender may be held liable under CERCLA as an owner or
operator if its employees or agents participate in the management of the
property. Judicial decisions interpreting the secured creditor exemption had
varied widely, and one decision, United States v. Fleet Factors Corp., 901 F.2d
1550 (11th Cir. 1990), cert. denied, 498 U.S. 1046 (1991), had indicated that a
lender's mere power to affect and influence a borrower's operations might be
sufficient to subject the lender to CERCLA liability. However, on September 30,
1996, the Asset
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Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996
(the "Lender Liability Act") became law. The Lender Liability Act clarifies the
secured creditor exemption to impose liability only on a secured creditor who
exercises control over operational aspects of the facility and thus is
"participating in management." A number of environmentally related activities
before the loan is made and during its pendency, as well as "workout" steps to
protect a security interest are identified as permissible to protect a security
interest without triggering liability. The Lender Liability Act also identifies
the circumstances in which foreclosure and post-foreclosure activities will not
trigger CERCLA liability.
The Lender Liability Act amends the federal Solid Waste Disposal Act
("SWDA") to limit the liability of lenders holding a security interests for
costs of cleaning up contamination from underground storage tanks. However, the
Lender Liability Act has no effect on other federal environmental laws or on
state environmental laws similar to CERCLA or the SWDA that may impose liability
on lenders and other persons, and not all of those laws provide for a secured
creditor exemption. Liability under many of these federal and state laws may
exist even if the lender did not cause or contribute to the contamination and
regardless of whether the lender has actually taken possession of the property
through foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such
liability is not limited to the original or unamortized principal balance of a
loan or to the value of the property securing a loan.
Under the Indenture, the Trustee, prior to taking certain actions, may
request that holders provide an indemnification against its costs, expenses
under CERCLA or similar laws, and liabilities. It is possible that cleanup costs
under CERCLA or similar laws could become a liability of the Trustee and cause a
loss to any holder of Notes that provided an indemnification. In addition, such
holders may act directly rather than through the Trustee, in specified
circumstances, in order to pursue a remedy under the Indenture. If holders
exercise that right, they could be deemed to be lenders who are subject to the
risks discussed above.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material U.S. Federal income tax
consequences of the acceptance of, and participation in, the Exchange Offer by
initial Holders of the Notes who are subject to U.S. Federal income taxation on
a net basis with respect to the Notes ("U.S. persons") and who hold their Notes
as capital assets. This discussion is based upon the provisions of the Internal
Revenue Code of 1986, as amended, U.S. Treasury regulations, rulings and
judicial decisions now in effect, all of which are subject to change without
notice, possibly with retroactive effect. There can be no assurance that the
U.S. Internal Revenue Service will take a similar view of the U.S. Federal
income tax consequences of the acquisition, ownership or disposition of the
Notes.
This discussion does not address all aspects of the U.S. Federal income tax
laws that may be relevant to a particular investor in light of that investor's
particular circumstances, or to certain types of investors subject to special
treatment under such laws (for example, dealers in securities or currencies, S
corporations, life insurance companies, financial institutions, tax-exempt
organizations, taxpayers subject to the alternative minimum tax rules or having
a functional currency other than the U.S. dollar, and non-U.S. persons). This
discussion also does not address Notes held as a hedge against currency or other
risks, as part of a "straddle" with other investments, or as part of a
"synthetic security" or other integrated investment (including a "conversion
transaction") comprised of a Note and one or more other investments. Holders of
the Outstanding Notes contemplating acceptance of the Exchange Offer should
consult their own tax advisers with respect to the U.S. Federal income tax
consequences of their acceptance of, and participation in, the Exchange Offer in
light of their particular circumstances.
This discussion does not address the tax laws of any state, local or
foreign government (or of any political subdivision thereof), or of any estate,
gift, transfer or other non-income tax laws that may be applicable to the Notes
or Holders thereof. Holders of the Outstanding Notes contemplating acceptance of
the Exchange Offer should consult their own tax advisers with respect to the
effects of any such tax laws to which they may be subject.
109
<PAGE> 117
The exchange of an Outstanding Note for an Exchange Note by a Holder
pursuant to the Exchange Offer will not constitute a taxable exchange. Such an
exchange will not result in taxable income, gain or loss being recognized by
such Holder or by the Company. Immediately after the exchange, such Holder will
have the same adjusted basis and holding period in each Exchange Note received
as such Holder had immediately prior to the exchange in the corresponding
Outstanding Note surrendered.
OUTSTANDING NOTES REGISTRATION RIGHTS
The Company and Consumers U.S. entered into a Registration Rights Agreement
on April 17, 1997, pursuant to which the Company and the Guarantor agreed to, at
their own cost, (i) within 90 days after the Issue Date, file an Exchange Offer
Registration Statement pursuant to which Outstanding Notes could be exchanged
for Exchange Notes, (ii) use their best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within
180 days after the Issue Date, (iii) to keep the Exchange Offer open for not
less than 30 days (or longer if required by applicable law) after the date
notice of the Exchange Offer is mailed to the holders of the Outstanding Notes
and (iv) use their best efforts to consummate the Exchange Offer within 225 days
after the Issue Date.
In the event that applicable interpretations of the staff of the Commission
do not permit the Company and the Guarantor to effect the Exchange Offer, or if
for any other reason the Exchange Offer is not consummated within 225 days after
the Issue Date, or, under certain circumstances, if the Initial Purchasers shall
so request, each of the Company and the Guarantor, jointly and severally, will
at its cost, (a) as promptly as practicable, file a shelf registration statement
covering resales of the Outstanding Notes (a "Shelf Registration Statement"),
(b) use its best efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act and (c) use its best efforts to keep
effective such Shelf Registration Statement until the earlier of two years after
the Issue Date and such time as all of the Outstanding Notes covered thereby
have been sold thereunder. The Company will, in the event of the filing of a
Shelf Registration Statement, provide to each holder of the Outstanding Notes
copies of the prospectus which is a part of such Shelf Registration Statement,
notify each such holder when such Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the Outstanding Notes. A holder that sells its Outstanding Notes
pursuant to a Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification obligations).
If the Company and the Guarantor fail to comply with the above provisions
or if any such registration statement fails to become effective, then, as
liquidated damages, additional interest (the "Additional Interest") shall become
payable with respect to the Outstanding Notes as follows:
(i) if the Exchange Offer Registration Statement or Shelf Registration
Statement is not filed on or prior to the Filing Date (as defined),
Additional Interest shall accrue on the Outstanding Notes over and above
the stated interest at a rate of 0.50% per annum for the first 90 days
commencing on the 91st day after the Issue Date, such Additional Interest
rate increasing by an additional 0.50% per annum at the beginning of each
subsequent 90-day period;
(ii) if the Exchange Offer Registration Statement or Shelf
Registration Statement is not declared effective within 180 days (210 days
in the case of a Shelf Registration Statement) following the Issue Date,
Additional Interest shall accrue on the Outstanding Notes over and above
the stated interest at a rate of 0.50% per annum for the first 90 days
commencing on the 181st day after the Issue Date (commencing on the 211th
day after the Issue Date in the case of a Shelf Registration Statement),
such Additional Interest rate increasing by an additional 0.50% per annum
at the beginning of each subsequent 90-day period; and
(iii) if (A) the Company and the Guarantor have not exchanged all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to 225 days after the Issue Date or (B) the
110
<PAGE> 118
Exchange Offer Registration Statement ceases to be effective at any time
prior to the time that the Exchange Offer is consummated or (C) if
applicable, if a Shelf Registration Statement has been declared effective
and a Shelf Registration Statement ceases to be effective at any time prior
to the second anniversary of the Issue Date (unless all the Outstanding
Notes covered thereby have been sold thereunder), then Additional Interest
shall accrue on the Outstanding Notes over and above the stated interest at
a rate of 0.50% per annum for the first 90 days commencing on (x) the 226th
day after the Issue Date with respect to Outstanding Notes validly tendered
and not exchanged by the Company, in the case of (A) above, or (y) the day
such Shelf Registration Statement ceases to be effective in the case of (B)
above, such Additional Interest rate increasing by an additional 0.50% per
annum at the beginning of each subsequent 90-day period; provided, however,
that the Additional Interest rate on the Outstanding Notes may not exceed
in the aggregate 1.5% per annum; and provided further, that (1) upon the
filing of the Exchange Offer Registration Statement or Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of
the Shelf Registration Statement (in the case of (ii) above), or (3) upon
the exchange of Exchange Notes for all Outstanding Notes tendered (in the
case of clause (iii)(A) above), or upon the effectiveness of the Shelf
Registration Statement, which had ceased to remain effective (in the case
of clause (iii)(B) above), Additional Interest on the Outstanding Notes as
a result of such clause (or the relevant subclause thereof), as the case
may be, shall cease to accrue.
As used herein, "Filing Date" means (A) if no Registration Statement has
been filed by the Company pursuant to this Agreement, the 90th day after the
Issue Date; provided, however, that if notice regarding the obligation to file a
Shelf Registration Statement (a "Shelf Notice") is given within 10 days of the
Filing Date as determined under clause (A) above, then the Filing Date with
respect to the Shelf Registration Statement shall be the 15th calendar day after
the date of the giving of such Shelf Notice; or (B) in each other case (which
may be applicable notwithstanding the consummation of the Exchange Offer), the
30th day after the delivery of a Shelf Notice.
Any amounts of Additional Interest due pursuant to clauses (i), (ii) or
(iii) above will be payable in case, on the same original interest payment dates
as the Outstanding Notes. The amount of Additional Interest will be determined
by multiplying the applicable Additional Interest rate by the principal amount
of the Outstanding Notes multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.
As a result of its failure to have an Exchange Offer Registration Statement
or Shelf Registration Statement declared effective on or prior to October 14,
1997 (the 180th day after the Issue Date), the Company is currently paying
Additional Interest in the amount of 0.50% per annum on the Notes. In addition,
the Company will not have exchanged all Notes validly tendered in accordance
with the terms of the Exchange Offer on or prior to November 28, 1997 (the 225th
day after the Issue Date) and as a result, the Additional Interest rate will
increase by an additional 0.50% per annum commencing on November 29, 1997.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which will be available upon request to the Company.
BOOK-ENTRY; DELIVERY AND FORM
The Outstanding Notes were issued in the form of one global certificate
(the "Outstanding Global Note") for QIBs. The Exchange Notes will initially be
issued in the form of one or more global certificates (collectively, the
"Exchange Global Notes"). The Outstanding Global Note was deposited on the date
of closing of the sale of the Outstanding Notes, and the Exchange Global Notes
will be deposited on the date of closing of the Exchange Offer, with, or on
behalf of, DTC and registered in the name of a nominee of DTC. The term "Global
Notes" means the Outstanding Global Notes or the Exchange Global Notes, as the
context may require.
111
<PAGE> 119
Exchange Notes to be held by "accredited investors" (as such term is
defined in Rule 501 under the Securities Act) (each an "Accredited Investor")
will be issued in registered definitive form without coupons ("Certificated
Securities"). Upon the transfer of Certificated Securities by an Accredited
Investor to a QIB, such Certificated Securities will, unless the Global Notes
have previously been exchanged in whole for Certificated Securities, be
exchanged for an interest in a Global Note.
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of Notes of
the individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Such accounts initially will be designated by or on behalf of the Initial
Purchasers and ownership of beneficial interests in the Global Notes will be
limited to persons who have accounts with DTC, including Euroclear and Cedel
("participants") or persons who hold interests through participants. QIBs may
hold their interests in the Global Notes directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in the Global Notes will
be able to transfer that interest except in accordance with DTC's procedures, in
addition to those provided for under the Indenture with respect to the Notes.
Payments of the principal of, premium (if any), interest (including
Additional Interest) on, the Global Notes will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, interest (including Additional Interest) on the
Global Notes, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the Global Notes as shown on the records of DTC or its nominee. The Company
also expects that payments by participants to owners of beneficial interests in
the Global Notes held through such participants will be governed by standing
instructions and customary practice, as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Notes to persons in
states which require physical delivery of the Notes, or to pledge such
securities, such holder must transfer its interest in a Global Note, in
accordance with the normal procedures of DTC and with the procedures set forth
in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Indenture, DTC will exchange the Global Notes
for Certificated Securities, which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the
112
<PAGE> 120
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Company within 90 days, Certificated Securities will be issued
in exchange for the Global Notes.
PLAN OF DISTRIBUTION
Except as provided herein, this Prospectus may not be used for an offer to
resell, resale or other retransfer of Exchange Notes.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver this
Prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Note received in
exchange for Outstanding Notes where such Outstanding Notes were acquired by
such broker-dealer for its own account as a result of market-making activities
or other trading activities. The Company acknowledges and each Holder, other
than a broker-dealer, must acknowledge that it is not engaged in, does not
intend to engage in, and has no arrangement or understanding with any person to
participate in, any distribution of Exchange Notes.
The Company will not receive any proceeds from the exchange of Outstanding
Notes for Exchange Notes or from the resale of Exchange Notes by broker-dealers.
Exchange Notes received by broker-dealers for their own account pursuant to the
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, or at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through broker-dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any Exchange Notes. Any broker-dealer
that resells Exchange Notes that were received by it for its own account
pursuant to the Exchange Offer and any person that participates in the
distribution of such Exchange Notes may be deemed an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of Exchange
Notes and any commissions or concessions received by any such broker-dealers may
be deemed to be underwriting compensation under the Securities Act.
By tendering Outstanding Notes and executing the Letter of Transmittal, a
party tendering Outstanding Notes for Exchange certifies that (i) it is not an
affiliate of the Company or Consumers U.S. or, if such tendering party is an
affiliate of the Company or Consumers U.S., it will comply with the registration
and prospectus requirements of the Securities Act to the extent applicable, (ii)
the Exchange Notes are being acquired in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such person is the Holder
thereof, (iii) such tendering party has not entered into any arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of Exchange Notes, (iv) such tendering party is
not a broker-dealer who purchased the Outstanding Notes for resale pursuant to
an exemption under the Securities Act and (v) such tendering party will be able
to trade the Exchange Notes acquired in the Exchange Offer without restriction
under the Securities Act. The Letter of
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<PAGE> 121
Transmittal also states that by acknowledging that it will deliver a prospectus,
and by delivering such a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
In addition, in connection with any resales of Exchange Notes, any
broker-dealer (a "Participating Broker-Dealer") who acquired the Outstanding
Notes for its own account as a result of market-making activities or other
trading activities must deliver a prospectus meeting the requirements of the
Securities Act. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of the Outstanding Notes) with this Prospectus. For a period of
180 days after the Exchange Date, the Company and will make this Prospectus, as
it may be amended or supplemented from time to time, available to any
Participating Broker-Dealer for use in connection with any such resale of
Exchange Notes, provided that such Participating Broker-Dealer indicates in the
Letter of Transmittal that it is a broker-dealer. In addition, until , 1997, (90
days after the date of this Prospectus), all dealers effecting transactions in
the Exchange Notes may be required to deliver a prospectus.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes for Outstanding Notes pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Company or the Parent Guarantor of the happening
of any event which makes any statement in this Prospectus untrue in any material
respect or which requires the making of any changes in this Prospectus in order
to make the statement therein not misleading (which notice the Company and the
Parent Guarantor agree to deliver promptly to such broker-dealer), such
broker-dealer will suspend the use of this Prospectus until the Company and the
Parent Guarantor have amended or supplemented this Prospectus to correct such
misstatement or omission and have furnished copies of the amended or
supplemented Prospectus to such broker-dealer. If the Company or the Parent
Guarantor gives any such notice to suspend the use of the Prospectus, it will
extend the 180-day period referred to above by the number of days during the
period from and including the date of the giving of such notice up to and
including when broker-dealers shall have received copies of the supplemented or
amended Prospectus necessary to permit resales of Exchange Notes.
The Company has agreed to pay all expenses incident to the Exchange Offer
(other than commissions or concessions of any broker-dealers) and will indemnify
the Holders of the Outstanding Notes (including participating broker-dealers)
participating in the Exchange Offer against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon for the Company by
Eckert Seamans Cherin & Mellott, LLC, Pittsburgh, Pennsylvania. Jones, Day,
Reavis & Pogue, New York, New York is acting as special counsel to the Company
in connection with certain legal matters relating to the Exchange Offer and will
give an opinion on certain New York law matters, including the binding effect of
the Exchange Notes. C. Kent May, a member of Eckert Seamans Cherin & Mellott,
LLC, is an executive officer and a director of the Company.
EXPERTS
The Summarization Letter of AAA contained in Annex A hereto and the
descriptions thereof under the heading "Risk Factors -- Security for the Notes"
with respect to AAA's appraisal of the estimated value of the existing assets of
the Company constituting the Collateral have been included in this Prospectus in
reliance upon the authority of AAA as experts in such matters.
Old Anchor's consolidated balance sheets as of December 31, 1995 and 1996
and its consolidated statements of operations, cash flows and stockholder's
equity (deficiency in assets) for each of the three years in the period ended
December 31, 1996 included in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as stated in their report included
herein (which report disclaims an opinion on the aforementioned consolidated
financial statements of Old Anchor and includes an explanatory paragraph
referring to the bankruptcy proceedings of Old Anchor and to the remaining
deficiency in assets after the sale of substantially all of the assets and
business of Old Anchor and the substantial doubt
114
<PAGE> 122
that it raises relative to the ability of Old Anchor to continue as a going
concern). The Company's balance sheet as of June 30, 1997 and its statements of
operations, cash flows and stockholders' equity for the period from February 5,
1997 to June 30, 1997 and the Parent Guarantor's consolidated balance sheet as
of June 30, 1997 and its statements of operations, cash flows and stockholder's
equity for the period from February 5, 1997 to June 30, 1997 included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
reports.
115
<PAGE> 123
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
AUDITED FINANCIAL STATEMENTS OF ANCHOR
Report of Independent Public Accountants...................................... F-2
Balance Sheet at June 30, 1997................................................ F-3
Statement of Operations
Period from February 5, 1997 to June 30, 1997............................... F-4
Statement of Stockholders' Equity
Period from February 5, 1997 to June 30, 1997............................... F-5
Statement of Cash Flows
Period from February 5, 1997 to June 30, 1997............................... F-6
Notes to Financial Statements................................................. F-7
UNAUDITED CONDENSED FINANCIAL STATEMENTS OF ANCHOR
Condensed Balance Sheet
September 30, 1997.......................................................... F-18
Condensed Statement of Operations
Period from February 5, 1997 to September 30, 1997.......................... F-19
Condensed Statement of Stockholders' Equity
Period from February 5, 1997 to September 30, 1997.......................... F-20
Condensed Statement of Cash Flows
Period from February 5, 1997 to September 30, 1997.......................... F-21
Notes to Condensed Financial Statements....................................... F-22
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CONSUMERS U.S.
Report of Independent Public Accountants...................................... F-29
Consolidated Balance Sheet at June 30, 1997................................... F-30
Consolidated Statement of Operations
Period from February 5, 1997 to June 30, 1997............................... F-31
Consolidated Statement of Stockholder's Equity
Period from February 5, 1997 to June 30, 1997............................... F-32
Consolidated Statement of Cash Flows
Period from February 5, 1997 to June 30, 1997............................... F-33
Notes to Consolidated Financial Statements.................................... F-34
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF CONSUMERS U.S.
Condensed Consolidated Balance Sheet
September 30, 1997.......................................................... F-44
Condensed Consolidated Statement of Operations
Period from February 5, 1997 to September 30, 1997.......................... F-45
Condensed Consolidated Statement of Stockholder's Equity
Period from February 5, 1997 to September 30, 1997.......................... F-46
Condensed Consolidated Statement of Cash Flows
Period from February 5, 1997 to September 30, 1997.......................... F-47
Notes to Condensed Consolidated Financial Statements.......................... F-48
</TABLE>
F-1
<PAGE> 124
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Anchor Glass Container Corporation:
We have audited the accompanying balance sheet of Anchor Glass Container
Corporation (a Delaware corporation) as of June 30, 1997, and the related
statements of operations, stockholders' equity and cash flows for the period
from February 5, 1997 through June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Anchor Glass Container
Corporation as of June 30, 1997, and the results of its operations and its cash
flows for the period from February 5, 1997 through June 30, 1997, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
October 31, 1997
F-2
<PAGE> 125
ANCHOR GLASS CONTAINER CORPORATION
BALANCE SHEET
JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 6,106
Accounts receivable, less allowance for doubtful accounts of $1,706............... 62,262
Inventories --
Raw materials and manufacturing supplies........................................ 24,616
Semi-finished and finished products............................................. 92,582
Other current assets.............................................................. 8,724
--------
Total current assets.................................................... 194,290
Property, plant and equipment:
Land............................................................................ 7,769
Buildings....................................................................... 74,075
Machinery, equipment and molds.................................................. 252,447
Less accumulated depreciation, net.............................................. (20,494)
--------
313,797
Other assets...................................................................... 24,163
Strategic alliance with customer.................................................. 22,650
Goodwill, net of accumulated amortization of $1,000............................... 45,557
--------
$600,457
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility......................................................... $ 963
Current maturities of long-term debt.............................................. 352
Accounts payable.................................................................. 33,504
Accrued expenses.................................................................. 55,219
Accrued interest.................................................................. 3,448
Accrued compensation and employee benefits........................................ 36,403
--------
Total current liabilities............................................... 129,889
Long-term debt.................................................................... 151,897
Long-term pension liabilities..................................................... 49,365
Long-term postretirement liabilities.............................................. 58,386
Other long-term liabilities....................................................... 67,382
--------
327,030
Commitments and contingencies (Note 13)
Redeemable preferred stock, Series A, $.01 par value; 2,239,320 shares authorized,
issued and outstanding; $25 liquidation and redemption value.................... 55,983
--------
Stockholders' equity:
Preferred stock, Series B, $.01 par value; authorized 5,000,000 shares; issued and
outstanding 3,360,000 shares, $25 liquidation and redemption value.............. 34
Issuable preferred stock, at $25 per share...................................... 2,688
Common stock, $.10 par value; authorized 50,000,000 shares;
Class A, issued and outstanding 490,898 shares.................................. 49
Class B, issued and outstanding 902,615 shares.................................. 90
Class C, none issued and outstanding............................................ --
Warrants, Class C Common stock, issued and outstanding 2,107,843 shares........... 10,518
Capital in excess of par value.................................................... 92,294
Accumulated deficit............................................................... (18,118)
--------
87,555
--------
$600,457
========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 126
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 5, 1997 TO JUNE 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<S> <C>
Net sales......................................................................... $ 261,141
Costs and expenses:
Costs of products sold.......................................................... 244,285
Selling and administrative expenses............................................. 11,176
---------
Income from operations............................................................ 5,680
Other income, net................................................................. 211
Interest expense.................................................................. (7,882)
---------
Loss before extraordinary item.................................................... (1,991)
Extraordinary item --
Write-off of deferred financing costs, net of nil tax........................... (11,200)
---------
Net loss.......................................................................... $ (13,191)
Preferred stock dividends......................................................... (4,927)
---------
Loss applicable to common stock................................................... $ (18,118)
=========
Loss per share applicable to common stock before extraordinary item............... $ (6.64)
=========
Net loss per share applicable to common stock..................................... $ (17.38)
=========
Weighted average number of common shares outstanding.............................. 1,042,206
=========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 127
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM FEBRUARY 5, 1997 TO JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS CLASS
SERIES B A B ISSUABLE CAPITAL ACCUMU- TOTAL
PREFERRED COMMON COMMON PREFERRED IN-EXCESS LATED STOCKHOLDERS'
STOCK STOCK STOCK STOCK WARRANTS OF PAR DEFICIT EQUITY
--------- ------ ------ --------- -------- --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 5, 1997..... $-- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of 3,360,000 shares
of Series B Preferred
Stock to Consumers
U.S. .................... 34 -- -- -- -- 83,966 -- 84,000
Issuance of 200,000 shares
of Class B Common Stock
to Consumers U.S. ....... -- -- 20 -- -- 2,480 -- 2,500
Issuance of 490,898 shares
of Class A Common Stock
to creditors of Old
Anchor................... -- 49 -- -- -- 2,405 -- 2,454
Issuance of 1,405,229
warrants to purchase
Class C Common Stock in
conjunction with the
financing of the Anchor
Loan Facility............ -- -- -- -- 7,012 -- -- 7,012
Issuance of 702,615 shares
of Class B Common Stock
to Consumers U.S. in
conjunction with the
financing of the Notes... -- -- 70 -- -- 3,443 -- 3,513
Issuance of 702,614 warrants
to purchase Class C
Common Stock in
conjunction with the
financing of the Notes... -- -- -- -- 3,506 -- -- 3,506
Pay-in-kind dividends
payable to Consumers U.S.
on Series B Preferred
Stock.................... -- -- -- 2,688 -- -- (2,688) --
Dividends accrued on Series
A Preferred Stock........ -- -- -- -- -- -- (2,239) (2,239)
Net loss.................... -- -- -- -- -- -- (13,191) (13,191)
--- --- --- ------ ------- ------- -------- --------
Balance, June 30, 1997........ $34 $ 49 $ 90 $ 2,688 $ 10,518 $92,294 $(18,118) $ 87,555
=== === === ====== ======= ======= ======== ========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 128
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF CASH FLOWS
PERIOD FROM FEBRUARY 5, 1997 TO JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Loss before extraordinary item........................................................... $ (1,991)
Adjustments to reconcile loss before extraordinary item to net cash provided by operating
activities:
Depreciation and amortization.......................................................... 21,578
Other amortization..................................................................... 1,598
Other.................................................................................. 140
Decrease in cash resulting from changes in assets and liabilities........................ (17,344)
---------
3,981
Cash flows from investing activities:
Purchase of assets and assumption of liabilities of Old Anchor........................... (200,470)
Expenditures for property, plant and equipment........................................... (12,251)
Acquisition related contribution to defined benefit pension plans........................ (9,056)
Other.................................................................................... (871)
---------
(222,648)
Cash flows from financing activities:
Proceeds from issuance of long-term debt................................................. 280,000
Principal payments of long-term debt..................................................... (130,137)
Proceeds from issuance of preferred stock................................................ 84,000
Proceeds from issuance of common stock................................................... 1,000
Net draws on Revolving Credit Facility................................................... 963
Other, primarily financing fees.......................................................... (11,053)
---------
224,773
Cash and cash equivalents:
Increase in cash and cash equivalents.................................................... 6,106
Balance, beginning of period............................................................. --
---------
Balance, end of period................................................................... $ 6,106
=========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest................................................................................. $ 3,546
=========
Income tax payments (refunds), net....................................................... $ --
=========
Increase (decrease) in cash resulting from changes in assets and liabilities:
Accounts receivable...................................................................... $ (13,477)
Inventories.............................................................................. 5,507
Other current assets..................................................................... 678
Accounts payable, accrued expenses and other current liabilities......................... (9,423)
Other, net............................................................................... (629)
---------
$ (17,344)
=========
</TABLE>
Supplemental noncash investing and financing activities:
In connection with the Anchor Acquisition, the Company issued $46,983 face
amount of Series A Preferred Stock and $2,454 of Class A Common Stock and
incurred $1,500 of fees. In connection with the Anchor Loan Facility, the
Company issued 1,405,229 warrants to the lenders valued at $7,012.
<TABLE>
<S> <C>
Anchor Acquisition:
Fair value of assets acquired............................................................ $ 525,000
Acquisition costs accrued................................................................ (50,000)
Goodwill................................................................................. 47,000
Purchase price........................................................................... (250,000)
---------
Liabilities assumed...................................................................... $ 272,000
==========
</TABLE>
In February 1997, the Company contributed $9,000 face amount of Series A
Preferred Stock to the Company's defined benefit pensions plans.
In connection with the issuance of the Notes, the Company issued 702,615
shares of Class B Common Stock to Consumers U.S. and 702,614 warrants valued at
$3,506 to the initial purchasers of the Notes. Also, with the issuance of the
Notes, the Company recorded an extraordinary loss for the write-off of deferred
financing fees of the Anchor Loan Facility.
The Company considers short-term investments with original maturities of
ninety days or less at the date of purchase to be classified as cash
equivalents.
See Notes to Financial Statements.
F-6
<PAGE> 129
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- PURCHASE OF ASSETS
Anchor Glass Acquisition Corporation (the "Company"), a Delaware
corporation and a majority-owned subsidiary of Consumers Packaging Inc.
("Consumers"), was formed in January 1997 to acquire certain assets and assume
certain liabilities of Anchor Glass Container Corporation ("Old Anchor"), now
Anchor Resolution Corp.
On February 5, 1997, pursuant to an Asset Purchase Agreement dated December
18, 1996, as amended (the "Asset Purchase Agreement"), among Consumers,
Owens-Brockway Glass Container Inc. ("Owens") and Old Anchor, the Company (the
rights and obligations of Consumers having been assigned to the Company) and
Owens acquired substantially all of the assets of, and assumed certain
liabilities, of Old Anchor.
The Company purchased eleven operating glass container manufacturing
facilities and other related assets (the "Anchor Acquisition"). Owens purchased
assets and assumed liabilities of Old Anchor's Antioch and Hayward, California
facilities and purchased certain other existing inventories. Owens also
purchased Old Anchor's investment in Rocky Mountain Bottle Company, a joint
venture with Coors Brewing Company ("Coors"), and assumed Old Anchor's agreement
to manufacture Coors' glass packaging products in the United States.
The total purchase price approximated $378,000, excluding fees of
approximately $1,500. The portion of the purchase price paid in cash by Owens
amounted to approximately $128,000. The remaining purchase price of
approximately $250,000 from the Company was comprised of approximately $200,500
in cash, $47,000 face amount (1,879,320 shares) of mandatorily redeemable 10%
cumulative convertible preferred stock ("Series A Preferred Stock") and $2,500
of common stock (490,898 shares with an estimated value of $5.00 per share) (the
"Class A Common Stock") of the Company.
The purchase price paid by the Company in connection with the Anchor
Acquisition is subject to adjustment. On June 13, 1997, Old Anchor delivered to
the Company the closing balance sheet dated January 10, 1997, which indicates
that Old Anchor believes that it is entitled to additional payments from the
Company and Owens totaling approximately $76,300 relating primarily to purchase
price adjustments. On July 28, 1997, the Company and Owens delivered individual
notices of disagreement to Old Anchor, opposing some of the adjustments sought
by Old Anchor as well as asserting other adjustments in the Company's or Owen's
favor. The Company's notice of disagreement requested a reduction to the
purchase price of approximately $96,800. There may be litigation and/or
arbitration over some or all aspects of adjustments requested by all parties.
Such adjustments, if material, could impact the purchase price paid by the
Company in connection with the Anchor Acquisition, the allocation of the
purchase price and, as a result, the Company's balance sheet at June 30, 1997.
There have been numerous settlement discussions between the Company's management
and key members of the creditors committee for Old Anchor which would eliminate
the necessity for either arbitration or litigation. Based on these settlement
discussions, management believes that any such settlement would not have a
material adverse impact on the June 30, 1997 Balance Sheet.
The Company obtained the cash portion of the purchase price principally
from an $85,000 cash investment by Consumers consisting of $84,000 face amount
(3,360,000 shares) of redeemable 8% cumulative convertible preferred stock (the
"Series B Preferred Stock") and $1,000 of common stock (200,000 shares) (the
"Class B Common Stock") and a $130,000 bank loan.
Upon consummation of the purchase and effective February 6, 1997, the
Company changed its name to Anchor Glass Container Corporation.
The Anchor Acquisition is accounted for by using the purchase method, with
the purchase price being allocated to the assets acquired and preacquisition
liabilities assumed based on their estimated fair value at the
F-7
<PAGE> 130
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
date of acquisition. These allocations are based on preliminary appraisals,
evaluations, estimations and other studies. Certain acquisition costs and fees,
including the costs of closing and consolidating certain facilities have also
been recorded by the Company at the date of acquisition. The Company has not yet
finalized these allocations and certain contingent liabilities have not yet been
resolved, as well as the final purchase price. The excess of the purchase price
over the fair value of net assets purchased of approximately $47,000 is
classified as Goodwill on the accompanying balance sheet.
The estimated values of assets acquired and liabilities assumed as of
February 5, 1997 after giving effect to the Anchor Acquisition and consideration
paid is as follows:
<TABLE>
<S> <C>
Accounts receivable.............................................. $ 48,000
Inventories...................................................... 123,000
Property, plant and equipment.................................... 322,000
Goodwill......................................................... 47,000
Other assets..................................................... 32,000
Current liabilities.............................................. (139,000)
Long-term debt................................................... (2,000)
Other long-term liabilities...................................... (181,000)
---------
$ 250,000
=========
</TABLE>
On January 9, 1997, the Pension Benefit Guaranty Corporation ("PBGC")
notified Old Anchor that it intended to institute involuntary termination
proceedings with respect to the three defined benefit pension plans then
maintained by Old Anchor, and currently maintained by the Company. However, the
PBGC reached an agreement with Vitro, S.A., the parent of Old Anchor, in which
Vitro, S.A. agreed to provide a limited guaranty to the PBGC with respect to the
unfunded benefit liabilities of the Company's defined benefit plans, if the
plans, or any one of them, are terminated before August 1, 2006. Consequently,
the PBGC agreed not to terminate the plans as a result of the Asset Purchase
Agreement and the assumption of the plans by the Company. In conjunction with
the purchase, the Company assumed all liabilities of the plans and funded $9,056
of plan contributions, previously unfunded following Old Anchor's filing of
Chapter 11. Additionally, the Company issued to the plans $9,000 face amount
(360,000 shares) of Series A Preferred Stock.
NOTE 2 -- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of
clear, amber, green and other color glass containers of various types, designs
and sizes to customers principally in the beer, food, iced tea, distilled
spirits and soft drink industries. The Company markets its products throughout
the United States. The Company's international and export sales are
insignificant. Sales to The Stroh Brewery Company represented approximately
12.5% of total net sales for the period ended June 30, 1997.
Inventories
Inventories are stated at the lower of cost or market. The cost of
substantially all inventories of raw materials and semi-finished and finished
products is determined on the first-in, first-out method. Manufacturing supplies
and certain other inventories are valued at weighted average costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments
and furnace rebuilds which extend useful lives, and expenditures for glass
forming machine molds are capitalized and depreciated using
F-8
<PAGE> 131
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
the straight-line method over the estimated useful lives of the assets for
financial statement purposes while accelerated depreciation methods are
principally used for tax purposes. Generally, annual depreciation rates range
from 2.5% for buildings, 6.3% to 20% for machinery and equipment and 40% for
molds. Furnace and machine rebuilds, which are recurring in nature and which
extend the lives of the related assets, are capitalized and depreciated over the
period of extension, generally at rates of 20% to 25%, based on the type and
extent of these rebuilds. Depreciation of leased property recorded as capital
assets is computed on a straight-line basis over the estimated useful lives of
the assets. Maintenance and repairs are charged directly to expense as incurred.
Goodwill
Goodwill represents the excess of the purchase price over the estimated
fair value of net assets acquired and is amortized on a straight-line basis over
a twenty year period. Amortization expense for the period ended June 30, 1997
was approximately $1,000. The Company has not yet finalized the allocations of
net assets and certain contingent liabilities have not yet been resolved, as
well as the final purchase price.
Income Taxes
The Company applied Statement of Financial Accounting Standards No.
109 -- Accounting for Income Taxes ("SFAS 109") which establishes financial
accounting and reporting standards for the effects of income taxes which result
from a company's activities during the current and preceding years.
Retirement Plans
The Company has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974 and the Retirement Protection Act of 1994, which requires
the Company to make significant additional contributions into its underfunded
defined benefit plans.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 -- Employers'
Accounting for Postretirement Benefits Other Than Pensions ("SFAS 106") requires
accrual of postretirement benefits (such as healthcare benefits) during the
period that an employee provides service. This accounting method has no effect
on the Company's cash outlays for these postretirement benefits.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 -- Disclosures about
Fair Value of Financial Instruments requires disclosure of the estimated fair
values of certain financial instruments. The estimated fair value amounts have
been determined using available market information or other appropriate
valuation methodologies that require considerable judgment in interpreting
market data and developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated fair
value amounts. As the long-term debt has not been registered or traded in an
established trading market, and the debt was issued during the current period,
the Company has estimated the fair value of the debt to be the carrying value.
The carrying amount of other financial instruments approximate their estimated
fair values.
The fair value information presented herein is based on information
available to management as of June 30, 1997. Although management is not aware of
any factors that would significantly affect the estimated
F-9
<PAGE> 132
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date and, therefore, the current
estimates of fair value may differ significantly from the amounts presented
herein.
Earnings Per Share
Earnings per share is calculated based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
period. Common stock equivalents are not included in any period that has a loss
applicable to common stock as they would be anti-dilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 -- Earnings Per Share ("SFAS 128").
SFAS 128 differs from current accounting guidance in that earnings per share is
classified as basic earnings per and dilutive earnings per share, compared to
primary earnings per share and fully diluted earnings per share under the
current standards. Basic earnings per share differs from primary earnings per
share in that it includes only the weighted average common shares outstanding
and does not include any dilutive securities in the calculation. Diluted
earnings per share under the new standard differs in certain calculations
compared to fully diluted earnings per share under the existing standards.
Adoption of SFAS 128 is required for interim and annual periods ending after
December 15, 1997. Had the Company applied the provisions of SFAS 128 in the
period from February 5, 1997 to June 30, 1997 to the earnings per share
calculations, there would have been no impact compared to that which is
reported.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimated.
NOTE 3 -- REVOLVING CREDIT FACILITY
In conjunction with the Anchor Acquisition, the Company entered into a
credit agreement dated as of February 5, 1997, with Bankers Trust Company
("BTCo") as issuing bank and BT Commercial Corporation, as agent, to provide a
$110,000 senior secured revolving credit facility (the "Revolving Credit
Facility"). The Revolving Credit Facility enables the Company to obtain
revolving credit loans for working capital purposes and the issuance of letters
of credit for its account in an aggregate amount not to exceed $110,000.
Advances outstanding at any one time cannot exceed an amount equal to the
borrowing base as defined in the Revolving Credit Facility.
Revolving credit loans bear interest at a rate based upon, at the Company's
option, (i) the higher of the prime rate of BTCo, 0.5% in excess of the
overnight federal funds rate and 0.5% in excess of the adjusted certificate of
deposit rate, as defined, each plus a defined margin, or (ii) the average of the
offering rates of banks in the New York interbank Eurodollar market, plus a
defined margin. Interest is payable monthly. A commitment fee of 0.5% on the
unused portion of the facility and letter of credit fees, as defined, is payable
quarterly. The Revolving Credit Facility expires February 5, 2002.
At June 30, 1997, advances outstanding under the Revolving Credit Facility
were $963 and the borrowing availability was $72,106. The total outstanding
letters of credit on this facility were $12,788. At June 30, 1997, the weighted
average interest rate on borrowings outstanding was 9.0%.
The Company's obligations under the Revolving Credit Facility are secured
by a first priority lien on substantially all of the Company's inventories and
accounts receivable and related collateral and a second
F-10
<PAGE> 133
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
priority pledge of all of the Series B Preferred Stock and the Class B Common
Stock. In addition, the Company's obligations under the Revolving Credit
Facility are guaranteed by Consumers U.S., Inc., ("Consumers U.S.") the
Company's parent and a wholly-owned indirect subsidiary of Consumers and the
holder of the outstanding Series B Preferred Stock and Class B Common Stock.
The Revolving Credit Facility contains certain covenants that restrict the
Company from taking various actions, including, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
making of investments, the payment of dividends and other restricted payments,
mergers, acquisitions and other fundamental corporate changes, capital
expenditures, operating lease payments and transactions with affiliates. The
Revolving Credit Facility also contains certain financial covenants that require
the Company to meet and maintain certain financial tests and minimum ratios,
including a minimum working capital ratio, a minimum consolidated net worth test
and a minimum interest coverage ratio, all of which have been met at June 30,
1997.
NOTE 4 -- LONG-TERM DEBT
Long-term debt at June 30, 1997 consists of the following:
<TABLE>
<S> <C>
$150,000 First Mortgage Notes, interest at 11.25% due 2005........ $150,000
Other............................................................. 2,249
--------
152,249
Less current maturities........................................... 352
--------
$151,897
========
</TABLE>
In connection with the Anchor Acquisition, the Company entered into a
Senior Credit Agreement, dated as of February 5, 1997, with BTCo., as agent, to
provide a $130,000 bank loan (the "Anchor Loan Facility"). The Anchor Loan
Facility was repaid in full from the net proceeds of the issuance of the
$150,000 11.25% First Mortgage Notes, due 2005, (the "Notes"). The Anchor Loan
Facility bore interest at a rate of 12.50%.
As additional consideration in providing the Anchor Loan Facility, the
Company issued to BT Securities Corporation and TD Securities, 1,405,229
warrants convertible to Class C Common Stock. The warrants are valued at
approximately $7,000. As a result of the refinancing of the Anchor Loan
Facility, deferred financing fees of $11,200 were written off as an
extraordinary loss in the second quarter of 1997.
Effective April 17, 1997, the Company completed an offering of the Notes,
issued under an indenture dated as of April 17, 1997 (the "Indenture"), among
the Company, Consumers U.S. and The Bank of New York, as Trustee. The Notes are
senior secured obligations of the Company, ranking senior in right of payment to
all existing and future subordinate indebtedness of the Company and pari passu
with all existing and future senior indebtedness of the Company. The Notes are
guaranteed by Consumers U.S. Proceeds from the issuance of the Notes, net of
fees, were approximately $144,000 and were used to repay $130,000 outstanding
under the Anchor Loan Facility and $8,800 of advances outstanding under the
Revolving Credit Facility, with the balance used for general corporate purposes.
Interest on the Notes accrues at 11.25% per annum and is payable
semiannually on each April 1 and October 1 to registered holders of the Notes at
the close of business on the March 15 and September 15 immediately preceding the
applicable interest payment date. The Notes are not redeemable prior to April 1,
2001; however, the Notes are redeemable at the Company's option in whole at any
time or in part from time to time at redemption prices defined in the Indenture.
The Indenture provides that upon the occurrence of a change in control, the
Company will be required to offer to repurchase all of the Notes at a purchase
price in cash equal to 101% of the principal amount plus interest accrued to the
date of purchase.
F-11
<PAGE> 134
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
All of the obligations of the Company under the Notes and the Indenture are
secured by a first priority perfected security interest in substantially all of
the existing and future real property, personal property and other assets of the
Company and a first priority perfected security interest in collateral ranking
pari passu with the security interest in favor of the Revolving Credit Facility.
The Indenture, subject to certain exceptions, restricts the Company from
taking various actions, including, but not limited to, subject to specified
exceptions, the incurrence of additional indebtedness, the granting of
additional liens, the payment of dividends and other restricted payments,
mergers, acquisitions and transactions with affiliates.
All of the Company's debt agreements contain cross-default provisions.
Principal payments required on long-term debt are $138 in the remainder of
1997, $286 in 1998, $291 in 1999, $297 in 2000 and $303 in 2001. Payments to be
made in 2002 and thereafter are $150,934.
In connection with the issuance of the Notes on April 17, 1997, the Company
issued 702,615 shares of Class B Common Stock to Consumers U.S. and 702,614
warrants, valued at $5.00 per share, to the initial purchasers.
NOTE 5 -- REDEEMABLE PREFERRED STOCK
The Company has designated 2,239,320 shares as Series A Preferred Stock and
5,000,000 shares as Series B Preferred Stock. The Series A Preferred Stock
ranks, as to dividends and redemption and upon liquidation, prior to all other
classes and series of capital stock of the Company. The holders of Series A
Preferred Stock are entitled to receive, when and as declared by the Board of
Directors of the Company, cumulative dividends, payable quarterly in cash, at an
annual rate of 10%. Holders of Series A Preferred Stock are not entitled to
vote, except as defined in its Certificate of Designation. No dividends have
been declared or paid as of June 30, 1997.
The Company is required to redeem all outstanding shares of the Series A
Preferred Stock on February 5, 2009, and, on or after February 5, 2000, may, at
its option, redeem outstanding shares of Series A Preferred Stock at a price of
$25.00 per share, if the trading price of the common stock equals or exceeds
$6.00 per share. Shares of Series A Preferred Stock are convertible into shares
of Class A Common Stock, at the option of the holder, at a ratio determined by
dividing the liquidation value of the Series A Preferred Stock by $6.00 and such
ratio is subject to adjustment from time to time.
Pursuant to the Asset Purchase Agreement, the Company is obligated to
register all of the shares of the Class A Common Stock and Series A Preferred
Stock under the Securities Exchange Act and to qualify the shares for listing on
a nationally recognized United States securities exchange or on The Nasdaq Stock
Market's National Market.
The Series B Preferred Stock ranks, as to dividends and redemption and upon
liquidation, junior to the Series A Preferred Stock but senior to all other
classes and series of capital stock of the Company. The holders of Series B
Preferred Stock are entitled to receive cumulative dividends, payable quarterly
at an annual rate of 8%. During the period from February 5, 1997 through and
including December 31, 1999, the dividend is payable in additional shares of
Series B Preferred Stock. Thereafter, the dividends will be payable in cash when
and as declared by the Board of Directors. Holders of Series B Preferred Stock
are not entitled to vote, except as defined in its Certificate of Designation.
Shares of Series B Preferred Stock are not subject to mandatory redemption.
On or after February 5, 2000, the Company may, at its option, redeem outstanding
shares of Series B Preferred Stock at a price of $25.00 per share, if the
trading price of the common stock equals or exceeds $5.50 per share. Shares of
Series B Preferred Stock are convertible into shares of Class B Common Stock, at
the option of the holder, at a ratio determined by dividing the liquidation
value of the Series A Preferred Stock by $5.50 and such ratio is subject to
adjustment from time to time.
F-12
<PAGE> 135
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 6 -- COMMON STOCK
For the period from February 5, 1997 to February 5, 2000, the common stock
is divided into three classes, Class A and Class B, which are voting, and Class
C, which is non-voting. During this period, the number of Directors of the
Company is fixed at nine, with the holders of the Class A shares having the
right to elect four Directors and the holders of the Class B shares having the
right to elect five Directors. Holders of the Class C Shares do not participate
in the election of Directors. On February 5, 2000, the three classes of common
stock will automatically be consolidated into one single class of common stock
with identical rights. The Company currently has outstanding warrants
exercisable for 2,107,843 shares of Class C Common Stock at an exercise price of
$.10 per share, which has already been deemed paid.
NOTE 7 -- RELATED PARTY INFORMATION
G&G Investments, Inc.
The Company is party to a management agreement with G&G Investments, Inc.
("G&G"), (the majority owner of Consumers), in which G&G is to provide specified
managerial services for the Company. For these services, G&G is entitled to
receive an annual management fee of $3,000 and reimbursement of its
out-of-pocket costs. The terms of the Revolving Credit Facility and the
Indenture limit the management fee annual payment to $1,500 unless certain
financial maintenance tests are met. The Company has recorded an expense of
$1,233 for this agreement for the period ended June 30, 1997 and no payments
have been made.
Other affiliates
Related party transactions with Consumers and its affiliates for the period
from February 5, 1997 to June 30, 1997 are summarized as follows:
<TABLE>
<S> <C>
Purchases of inventory.............................................. $1,035
Payable for inventory............................................... 23
Sales of inventory and other........................................ 5,098
Receivable from sales of inventory and other........................ 3,814
</TABLE>
All transactions with Consumers and its affiliates are conducted on terms
which, in the opinion of management, are no less favorable than with third
parties.
NOTE 8 -- PENSION PLANS
As part of the Anchor Acquisition, the Company assumed the pension plans
previously maintained by Old Anchor. The Company has defined benefit retirement
plans for salaried and hourly-paid employees. Benefits are calculated on a
salary-based formula for salaried plans and on a service-based formula hourly
plans. Pension costs for the period from February 5, 1997 to June 30, 1997 are
summarized below:
<TABLE>
<S> <C>
Service cost-benefits earned during the year...................... $ 1,790
Interest cost on projected benefit obligation..................... 12,830
Return on plan assets............................................. (13,220)
--------
Total pension cost........................................... $ 1,400
========
</TABLE>
The Company has substantial unfunded obligations related to its employee
pension plans. The Retirement Protection Act of 1994 requires the Company to
make significant additional funding contributions into its underfunded defined
benefit retirement plans and will increase the premiums paid to the PBGC.
F-13
<PAGE> 136
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
As an objection to the sale, the PBGC entered a determination to terminate
Old Anchor's qualified defined benefit pension plans. However, in conjunction
with the sale, the Company assumed all liabilities of the plans and funded
$9,056 of plan contributions, previously unfunded following Old Anchor's filing
of Chapter 11. Additionally, the Company issued $9,000 face amount of Series A
Preferred Stock and Vitro, the parent of Old Anchor, has guaranteed to fund
certain qualified defined benefit plan obligations, should the Company default
on its obligations. Consequently, the PBGC agreed not to terminate the plans as
a result of the Agreement and the assumption of the plans by the Company.
The Company also sponsors two defined contribution plans covering
substantially all salaried and hourly employees. In 1994, the salaried
retirement and savings programs were changed, resulting in the freezing of
benefits under the defined benefit pension plans for salaried employees and
amending the defined contribution savings plan for salaried employees. Under the
amended savings plan, the Company matches employees' basic contributions to the
plan in an amount equal to 150% of the first 4% of an employee's compensation.
Expenses under the savings programs for the period from February 5, 1997 to June
30, 1997 were approximately $1,100.
The funded status of the Company's pension plans at June 30, 1997 is as
follows:
<TABLE>
<CAPTION>
ACCUMULATED ASSETS EXCEED
BENEFITS ACCUMULATED
EXCEED ASSETS BENEFITS
------------- -------------
<S> <C> <C>
Actuarial present value of accumulated plan benefits:
Vested benefit obligation............................... $ 306,903 $ 111,701
======== ========
Accumulated benefit obligation.......................... $ 315,630 $ 111,701
======== ========
Projected benefit obligation............................ 315,630 111,701
Plan assets at fair value................................. 242,970 120,808
-------- --------
Projected benefit obligation in excess of (less than) plan
assets.................................................. $ 72,660 $ (9,107)
======== ========
Accrued (prepaid) pension cost............................ $ 72,660 $ (9,107)
======== ========
</TABLE>
Significant assumptions used in determining net pension cost and related
pension obligations for the benefit plans for 1997 are as follows:
<TABLE>
<S> <C>
Discount rate......................................................... 7.50%
Expected long-term rate of return on plan assets...................... 9.0
</TABLE>
NOTE 9 -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides benefits to substantially all salaried, and certain
hourly employees under several plans. SFAS 106 requires accrual of
postretirement benefits (such as healthcare benefits) during the years an
employee provides services. Currently, the Company funds these healthcare
benefits on a pay-as-you-go basis. The Company also contributes to a
multi-employer trust, and under the requirements of SFAS 106, recognizes as
postretirement benefit cost the required annual contribution. The Company's cash
flows are not affected by implementation of SFAS 106.
F-14
<PAGE> 137
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
The accumulated postretirement benefit obligation at June 30, 1997 is as
follows:
<TABLE>
<S> <C>
Retirees........................................................... $38,815
Eligible plan participants......................................... 8,507
Other active plan participants..................................... 13,764
-------
$61,086
=======
Accrued postretirement benefit costs............................... $61,086
=======
</TABLE>
Net postretirement benefit costs for the period from February 5, 1997 to
June 30 1997 consist of the following components:
<TABLE>
<S> <C>
Service cost - benefits earned during the year...................... $ 419
Interest cost on accumulated postretirement benefit obligation...... 1,653
------
$2,072
======
</TABLE>
The assumed healthcare cost trend used in measuring the accumulated
postretirement benefit obligation as of June 30, 1997 was 9.0% declining
gradually to 5.5% by the year 2003, after which it remains constant. A one
percentage point increase in the assumed healthcare cost trend rate for each
year would increase the accumulated postretirement benefit obligation as of June
30, 1997 by approximately 12% and the net postretirement healthcare cost for the
period ended June 30, 1997 by approximately 13%. The assumed discount rate used
in determining the accumulated postretirement benefit obligation was 7.50% for
1997.
The Company also contributes to a multi-employer trust which provides
certain other postretirement benefits to retired hourly employees. Expenses
under this program for the period from February 5, 1997 to June 30, 1997 were
$1,540.
NOTE 10 -- PLANT CLOSING COSTS
As part of the Anchor Acquisition, the Company closed its Houston, Texas
and Dayville, Connecticut plants in order to reduce excess capacity. Exit
charges applicable to these two plants of approximately $33,000 have been
recorded as of the date of acquisition. Amounts charged against the liability as
of June 30, 1997 are approximately $10,300.
NOTE 11 -- INCOME TAXES
The Company applies SFAS 109 under which the liability method is used in
accounting for income taxes. Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes,
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Under SFAS 109, if on the basis of
available evidence, it is more likely than not that all or a portion of the
deferred tax asset will not be realized, the asset must be reduced by a
valuation allowance. Since realization is not assured as of June 30, 1997,
management has deemed it appropriate to establish a realization reserve against
the tax asset created during the period.
F-15
<PAGE> 138
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
The following significant components of the deferred tax assets and
liabilities are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accruals and reserves............................................ $ 2,670
Property, plant and equipment.................................... 2,400
Pension and post retirement liabilities.......................... 800
Tax loss carry forwards.......................................... 130
-------
6,000
Valuation allowance................................................ (2,400)
-------
3,600
-------
Deferred tax liabilities:
Goodwill......................................................... 3,500
Other assets..................................................... 100
-------
3,600
-------
Net deferred tax assets............................................ $ --
=======
</TABLE>
The effective tax rate reconciliation at June 30, 1997 is as follows:
<TABLE>
<S> <C>
Statutory rate..................................................... 39%
Permanent differences.............................................. 21
---
18
Valuation allowance................................................ 18
---
Effective rate..................................................... --%
===
</TABLE>
NOTE 12 -- LEASES
The Company leases distribution and office facilities, machinery,
transportation, data processing and office equipment under non-cancelable leases
which expire at various dates through 2004. These leases generally provide for
fixed rental payments and include renewal and purchase options at amounts which
are generally based on fair market value at expiration of the lease. The Company
has no material capital leases.
Future minimum lease payments under non-cancelable operating leases are as
follows:
<TABLE>
<S> <C>
Remaining in 1997.................................................. $ 9,700
1998............................................................... 16,500
1999............................................................... 12,700
2000............................................................... 9,500
2001............................................................... 8,600
After 2001......................................................... 20,300
-------
$77,300
=======
</TABLE>
Rental expenses for all operating leases for the period from February 5,
1997 to June 30, 1997 were $8,845.
In connection with the Anchor Acquisition, the Company assumed and amended
Old Anchor's lease of the headquarters facility located in Tampa, Florida and a
related option to purchase. The term of the amended lease expires January 2,
1998, unless the Company has exercised its purchase right, and the term then
expires February 1, 1998. The property is encumbered by a mortgage, which is
required to be repaid or refinanced by February 1, 1998. The Company is
obligated to pay this indebtedness if the Company does not exercise its
F-16
<PAGE> 139
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
purchase option. If the property is subsequently sold, a portion of the net
proceeds is to be reimbursed to the Company.
NOTE 13 -- COMMITMENTS AND CONTINGENCIES
The Company is a respondent in various environment-related cases. The
Company is not otherwise party to, and none of its assets are subject to any
other pending legal proceedings, other than ordinary routine litigation
incidental to its business and against which the Company is adequately insured
and indemnified or which is not material. The Company believes that the ultimate
outcome of these cases will not materially affect future operations.
NOTE 14 -- SUBSEQUENT EVENTS
Following the issuance of the Notes, the Company filed, with the Securities
and Exchange Commission, a Registration Statement on July 16, 1997, (File No.
333-31363) on Form S-4 under the Securities Act of 1933, with respect to an
issue of 11.25% First Mortgage Notes, due 2005, identical in all material
respects to the Notes, except that the new Notes would not bear legends
restricting the transfer thereof. Upon the effectiveness of the Registration
Statement, the Company will commence an offer to the holders of the Notes to
exchange their Notes for a like principal amount of new Notes. The Company
entered into a Registration Rights Agreement on April 17, 1997. Pursuant to this
agreement, additional interest will accrue on the Notes if the Registration
Statement is not declared effective or the exchange offer is not completed by
dates as defined in the agreement.
In connection with a plan to simplify the corporate ownership structure of
Consumers, the Company and their affiliates, Glenshaw Glass Company, Inc., a
wholly-owned subsidiary of G&G, may become a subsidiary of the Company.
In September 1997, Hillsboro Glass Company ("Hillsboro"), a
glass-manufacturing plant owned by G&G, discontinued manufacturing. All of
Hillsboro's rights and obligations to fill orders under a supply contract
between Consumers and one of its major customers will be purchased by Consumers
and the Company.
F-17
<PAGE> 140
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 804
Accounts receivable............................................................... 60,840
Inventories --
Raw materials and manufacturing supplies........................................ 24,421
Semi-finished and finished products............................................. 93,770
Other current assets.............................................................. 8,778
--------
Total current assets.................................................... 188,613
Property, plant and equipment, net................................................ 309,942
Other assets...................................................................... 45,100
Goodwill.......................................................................... 45,057
--------
$588,712
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility......................................................... $ 5,861
Current maturities of long-term debt.............................................. 353
Accounts payable.................................................................. 31,037
Accrued expenses.................................................................. 44,232
Accrued interest.................................................................. 7,197
Accrued compensation and employee benefits........................................ 36,471
--------
Total current liabilities............................................... 125,151
Long-term debt.................................................................... 151,954
Pension liabilities............................................................... 44,001
Other long-term liabilities....................................................... 124,600
--------
320,555
Commitments and contingencies (Note 7)
Redeemable preferred stock........................................................ 55,983
--------
Stockholders' equity:
Preferred stock................................................................. 34
Common stock.................................................................... 139
Issuable preferred stock........................................................ 4,382
Warrants........................................................................ 10,518
Capital in excess of par value.................................................. 92,294
Accumulated deficit............................................................. (20,344)
--------
87,023
--------
$588,712
========
</TABLE>
See Notes to Condensed Financial Statements.
F-18
<PAGE> 141
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<S> <C>
Net sales........................................................................ $ 415,636
Costs and expenses:
Costs of products sold......................................................... 386,130
Selling and administrative expenses............................................ 18,127
--------
Income from operations........................................................... 11,379
Other income, net................................................................ 234
Interest expense................................................................. (12,725)
--------
Loss before extraordinary item................................................... (1,112)
Extraordinary item --
Write-off of deferred financing costs, net of nil tax.......................... (11,200)
--------
Net loss......................................................................... $ (12,312)
Preferred stock dividends........................................................ (8,032)
--------
Loss applicable to common stock.................................................. $ (20,344)
========
Loss per share applicable to common stock before extraordinary item.............. $ (7.72)
========
Net loss per share applicable to common stock.................................... $ (17.18)
========
Weighted average number of common shares outstanding............................. 1,183,909
========
</TABLE>
See Notes to Condensed Financial Statements.
F-19
<PAGE> 142
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CLASS CLASS
SERIES B A B ISSUABLE CAPITAL ACCUMU- TOTAL
PREFERRED COMMON COMMON PREFERRED IN-EXCESS LATED STOCKHOLDERS'
STOCK STOCK STOCK STOCK WARRANTS OF PAR DEFICIT EQUITY
--------- ------ ------ --------- -------- --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 5, 1997..... $-- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of 3,360,000 shares
of Series B Preferred
Stock to Consumers
U.S...................... 34 -- -- -- -- 83,966 -- 84,000
Issuance of 200,000 shares
of Class B Common Stock
to Consumers U.S......... -- -- 20 -- -- 2,480 -- 2,500
Issuance of 490,898 shares
of Class A Common Stock
to creditors of Old
Anchor................... -- 49 -- -- -- 2,405 -- 2,454
Issuance of 1,405,229
warrants to purchase
Class C Common Stock in
conjunction with the
financing of the Anchor
Loan Facility............ -- -- -- -- 7,012 -- -- 7,012
Issuance of 702,615 shares
of Class B Common Stock
to Consumers U.S. in
conjunction with the
financing of the Notes... -- -- 70 -- -- 3,443 -- 3,513
Issuance of 702,614 warrants
to purchase Class C
Common Stock in
conjunction with the
financing of the Notes... -- -- -- -- 3,506 -- -- 3,506
Pay-in-kind dividends
payable to Consumers U.S.
on Series B Preferred
Stock.................... -- -- -- 4,382 -- -- (4,382) --
Dividends accrued on Series
A Preferred Stock........ -- -- -- -- -- -- (3,650) (3,650)
Net loss.................... -- -- -- -- -- -- (12,312) (12,312)
------- --- --- ------ ------ ------ ------- -------
Balance, September 30, 1997... $34 $ 49 $ 90 $ 4,382 $ 10,518 $92,294 $(20,344) $87,023
======= === === ====== ====== ====== ======= =======
</TABLE>
See Notes to Condensed Financial Statements.
F-20
<PAGE> 143
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Loss before extraordinary item.................................................. $ (1,112)
Adjustments to reconcile loss before extraordinary item to net cash provided by
operating activities:
Depreciation and amortization................................................ 34,806
Other amortization........................................................... 3,616
Other........................................................................ 224
Decrease in cash resulting from changes in assets and liabilities............... (34,170)
--------
3,364
Cash flows from investing activities:
Purchase of assets and liabilities of Old Anchor................................ (200,470)
Expenditures for property, plant and equipment.................................. (21,034)
Acquisition related contribution to defined benefit pension plans............... (9,056)
Other........................................................................... (773)
--------
(231,333)
Cash flows from financing activities:
Proceeds from issuance of long-term debt........................................ 280,000
Principal payments on long-term debt............................................ (130,148)
Proceeds from issuance of preferred stock....................................... 84,000
Proceeds from issuance of common stock.......................................... 1,000
Net draws on Revolving Credit Facility.......................................... 5,861
Other, primarily financing fees................................................. (11,940)
--------
228,773
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents................................ 804
Balance, beginning of period.................................................... --
--------
Balance, end of period.......................................................... $ 804
========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest........................................................................ $ 4,103
========
Income tax payments (refunds), net.............................................. $ --
========
</TABLE>
Supplemental noncash investing and financing activities:
In connection with the Anchor Acquisition, the Company issued $46,983
face amount of Series A Preferred Stock and $2,454 of Class A Common Stock.
In connection with the Anchor Loan Facility, the Company issued 1,405,229
of warrants to the lenders valued at $7,012.
In February 1997, the Company contributed $9,000 face amount of Series
A Preferred Stock to the Company's defined benefit pensions plans.
In connection with the Notes, the Company issued 702,615 shares of
Class B Common Stock to Consumers U.S. and 702,614 warrants valued at
$3,506 to the initial purchasers of the Notes. Also, with the issuance of
the Notes, the Company recorded an extraordinary loss for the write-off of
deferred financing fees of the Anchor Loan Facility.
See Notes to Condensed Financial Statements.
F-21
<PAGE> 144
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 1 -- PURCHASE OF ASSETS
Anchor Glass Acquisition Corporation (the "Company"), a Delaware
corporation and a majority-owned subsidiary of Consumers Packaging Inc.
("Consumers"), was formed in January 1997 to acquire certain assets and assume
certain liabilities of Anchor Glass Container Corporation ("Old Anchor"), now
Anchor Resolution Corp.
On February 5, 1997, pursuant to an Asset Purchase Agreement dated December
18, 1996, as amended (the "Asset Purchase Agreement"), between Consumers,
Owens-Brockway Glass Container Inc. ("Owens") and Old Anchor, the Company (the
rights and obligations of Consumers having been assigned to the Company) and
Owens acquired substantially all of the assets of, and assumed certain
liabilities, of Old Anchor.
The Company purchased eleven operating glass container manufacturing
facilities and other related assets (the "Anchor Acquisition"). Owens purchased
assets and assumed liabilities of Old Anchor's Antioch and Hayward, California
facilities and purchased certain other existing inventories. Owens also
purchased Old Anchor's investment in Rocky Mountain Bottle Company, a joint
venture with Coors Brewing Company ("Coors"), and assumed Old Anchor's agreement
to manufacture Coors' glass packaging products in the United States.
The total purchase price approximated $378,000, excluding fees of
approximately $1,500. The portion of the purchase price paid in cash by Owens
amounted to approximately $128,000. The remaining purchase price of
approximately $250,000 from the Company was comprised of approximately $200,500
in cash, $47,000 face amount (1,879,320 shares) of mandatorily redeemable 10%
cumulative convertible preferred stock ("Series A Preferred Stock") and $2,500
of common stock (490,898 shares with an estimated value of $5.00 per share) (the
"Class A Common Stock") of the Company.
The purchase price paid by the Company in connection with the Anchor
Acquisition is subject to adjustment. On June 13, 1997, Old Anchor delivered to
the Company the closing balance sheet dated January 10, 1997, which indicates
that Old Anchor believes that it is entitled to additional payments from the
Company and Owens totaling approximately $76,300 relating primarily to purchase
price adjustments. On July 28, 1997, the Company and Owens delivered individual
notices of disagreement to Old Anchor, opposing some of the adjustments sought
by Old Anchor as well as asserting other adjustments in the Company's or Owen's
favor. The Company's notice of disagreement requested a reduction to the
purchase price of approximately $96,800. There may be litigation and/or
arbitration over some or all aspects of adjustments requested by all parties.
Such adjustments, if material, could impact the purchase price paid by the
Company in connection with the Anchor Acquisition, the allocation of the
purchase price and, as a result, the Company's balance sheet at September 30,
1997. There have been numerous settlement discussions between the Company's
management and key members of the creditors committee for Old Anchor which would
eliminate the necessity for either arbitration or litigation. Based on these
settlement discussions, management believes that any such settlement would not
have a material adverse impact on the September 30, 1997 Condensed Balance
Sheet.
The Company obtained the cash portion of the purchase price principally
from an $85,000 cash investment by Consumers consisting of $84,000 face amount
(3,360,000 shares) of redeemable 8% cumulative convertible preferred stock (the
"Series B Preferred Stock") and $1,000 of common stock (200,000 shares) (the
"Class B Common Stock"), and a $130,000 bank loan.
Upon consummation of the purchase and effective February 6, 1997, the
Company changed its name to Anchor Glass Container Corporation.
F-22
<PAGE> 145
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The Anchor Acquisition is accounted for by using the purchase method, with
the purchase price being allocated to the assets acquired and preacquisition
liabilities assumed based on their estimated fair value at the date of
acquisition. These allocations are based on preliminary appraisals, evaluations,
estimations and other studies. Certain acquisition costs and fees, including the
costs of closing and consolidating certain facilities have also been recorded by
the Company at the date of acquisition. The Company has not yet finalized these
allocations and certain contingent liabilities have not yet been resolved, as
well as the final purchase price. The excess of the purchase price over the fair
value of net assets purchased of approximately $47,000 is classified as Goodwill
on the accompanying condensed balance sheet.
The estimated values of assets acquired and liabilities assumed as of
February 5, 1997 after giving effect to the Anchor Acquisition and consideration
paid is as follows:
<TABLE>
<S> <C>
Accounts receivable.............................................. $ 48,000
Inventories...................................................... 123,000
Property, plant and equipment.................................... 322,000
Goodwill......................................................... 47,000
Other assets..................................................... 32,000
Current liabilities.............................................. (139,000)
Long-term debt................................................... (2,000)
Other long-term liabilities...................................... (181,000)
---------
$ 250,000
=========
</TABLE>
On January 9, 1997, the Pension Benefit Guaranty Corporation ("PBGC")
notified Old Anchor that it intended to institute involuntary termination
proceedings with respect to the three defined benefit pension plans then
maintained by Old Anchor, and currently maintained by the Company. However, the
PBGC reached an agreement with Vitro, S.A., the parent of Old Anchor, in which
Vitro, S.A. agreed to provide a limited guaranty to the PBGC with respect to the
unfunded benefit liabilities of the Company's defined benefit plans, if the
plans, or any one of them, are terminated before August 1, 2006. Consequently,
the PBGC agreed not to terminate the plans as a result of the Asset Purchase
Agreement and the assumption of the plans by the Company. In conjunction with
the purchase, the Company assumed all liabilities of the plans and funded $9,056
of plan contributions, previously unfunded following Old Anchor's filing of
Chapter 11. Additionally, the Company issued to the plans $9,000 face amount
(360,000 shares) of Series A Preferred Stock.
NOTE 2 -- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Management's Responsibility
In the opinion of management, the accompanying condensed financial
statements contain all adjustments, consisting of only normal recurring
adjustments, and excluding any amounts resulting from purchase price adjustments
discussed above, necessary to present fairly the financial position as of
September 30, 1997 and the results of operations and cash flows for the period
from February 5, 1997 to September 30, 1997.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The results of operations for the interim period
may not be necessarily indicative of the results of the full fiscal year.
F-23
<PAGE> 146
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of
clear, amber, green and other color glass containers of various types, designs
and sizes to customers principally in the beer, food, iced tea, distilled
spirits and soft drink industries. The Company markets its products throughout
the United States.
Inventories
Inventories are stated at the lower of cost or market. The cost of
substantially all inventories of raw materials and semi-finished and finished
products is determined on the first-in, first-out method. Manufacturing supplies
and certain other inventories are valued at weighted average costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments
and furnace rebuilds which extend useful lives, and expenditures for glass
forming machine molds are capitalized and depreciated using the straight-line
method over the estimated useful lives of the assets for financial statement
purposes while accelerated depreciation methods are principally used for tax
purposes. Generally, annual depreciation rates range from 2.5% for buildings,
6.3% to 20% for machinery and equipment and 40% for molds. Furnace and machine
rebuilds, which are recurring in nature and which extend the lives of the
related assets, are capitalized and depreciated over the period of extension,
generally at rates of 20% to 25%, based on the type and extent of these
rebuilds. Depreciation of leased property recorded as capital assets is computed
on a straight-line basis over the estimated useful lives of the assets.
Maintenance and repairs are charged directly to expense as incurred.
Goodwill
Goodwill represents the excess of the purchase price over the estimated
fair value of net assets acquired and is amortized on a straight line basis over
a twenty year period. Amortization expense for the period ended September 30,
1997 was approximately $1,500. The Company has not yet finalized the allocations
of net assets and certain contingent liabilities have not yet been resolved, as
well as the final purchase price.
Income Taxes
The Company applied Statement of Financial Accounting Standards No.
109 -- Accounting for Income Taxes ("SFAS 109") which establishes financial
accounting and reporting standards for the effects of income taxes which result
from a company's activities during the current and preceding years.
Retirement Plans
The Company has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974 and the Retirement Protection Act of 1994, which requires
the Company to make significant additional contributions into its underfunded
defined benefit plans.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 -- Employers'
Accounting for Postretirement Benefits Other Than Pensions ("SFAS 106") requires
accrual of postretirement benefits (such as healthcare benefits) during the
period that an employee provides service. This accounting method has no effect
on the Company's cash outlays for these retirement benefits.
F-24
<PAGE> 147
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Earnings per share
Earnings per share is calculated based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
period. Common stock equivalents are not included in any period that has a loss
applicable to common stock as they would be anti-dilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 -- Earnings Per Share ("SFAS 128").
SFAS 128 differs from current accounting guidance in that earnings per share is
classified as basic earnings per and dilutive earnings per share, compared to
primary earnings per share and fully diluted earnings per share under the
current standards. Basic earnings per share differs from primary earnings per
share in that it includes only the weighted average common shares outstanding
and does not include any dilutive securities in the calculation. Diluted
earnings per share under the new standard differs in certain calculations
compared to fully diluted earnings per share under the existing standards.
Adoption of SFAS 128 is required for interim and annual periods ending after
December 15, 1997. Had the Company applied the provisions of SFAS 128 in the
period from February 5, 1997 to September 30, 1997 to the earnings per share
calculations, there would have been no impact compared to that which is
reported.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimated.
NOTE 3 -- REVOLVING CREDIT FACILITY
In conjunction with the Anchor Acquisition, the Company entered into a
credit agreement dated as of February 5, 1997, with Bankers Trust Company
("BTCo") as issuing bank and BT Commercial Corporation, as agent, to provide a
$110,000 senior secured revolving credit facility (the "Revolving Credit
Facility"). The Revolving Credit Facility enables the Company to obtain
revolving credit loans for working capital purposes and the issuance of letters
of credit for its account in an aggregate amount not to exceed $110,000.
Advances outstanding at any one time can not exceed an amount equal to the
borrowing base as defined in the Revolving Credit Facility.
Revolving credit loans bear interest at a rate based upon, at the Company's
option, (i) the higher of the prime rate of BTCo, 0.5% in excess of the
overnight federal funds rate and 0.5% in excess of the adjusted certificate of
deposit rate, as defined, each plus a defined margin, or (ii) the average of the
offering rates of banks in the New York interbank Eurodollar market, plus a
defined margin. Interest is payable monthly. A commitment fee of 0.5% on the
unused portion of the facility and letter of credit fees, as defined, is payable
quarterly. The Revolving Credit Facility expires February 5, 2002.
At September 30, 1997, advances outstanding under the Revolving Credit
Facility were $5,861 and the total outstanding letters of credit on this
facility were $12,788.
The Company's obligations under the Revolving Credit Facility are secured
by a first priority lien on substantially all of the Company's inventories and
accounts receivable and related collateral and a second priority pledge of all
of the Series B preferred stock and the Class B common stock. In addition, the
Company's obligations under the Revolving Credit Facility are guaranteed by
Consumers U.S. Inc., the
F-25
<PAGE> 148
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Company's parent and a wholly-owned indirect subsidiary of Consumers and the
holder of the outstanding Series B Preferred Stock and Class B Common Stock.
The Revolving Credit Facility contains certain covenants that restrict the
Company from taking various actions, including, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
making of investments, the payment of dividends and other restricted payments,
mergers, acquisitions and other fundamental corporate changes, capital
expenditures, operating lease payments and transactions with affiliates. The
Revolving Credit Facility also contains certain financial covenants that require
the Company to meet and maintain certain financial tests and minimum ratios,
including a minimum working capital ratio, a minimum consolidated net worth test
and a minimum interest coverage ratio, all of which have been met at September
30, 1997.
NOTE 4 -- LONG-TERM DEBT
In connection with the Anchor Acquisition, the Company entered into a
Senior Credit Agreement, dated as of February 5, 1997, with Bankers Trust
Company, as agent, to provide a $130,000 bank loan (the "Anchor Loan Facility").
The Anchor Loan Facility was repaid in full from the net proceeds of the
issuance of the $150,000 11.25% First Mortgage Notes, due 2005, (the "Notes").
The Anchor Loan Facility bore interest at a rate of 12.50%.
As additional consideration in providing the Anchor Loan Facility, the
Company issued to BT Securities Corporation and TD Securities, 1,405,229
warrants convertible to Class C common stock. The warrants are valued at
approximately $7,000. As a result of the refinancing of the Anchor Loan
Facility, deferred financing fees of $11,200 were written off as an
extraordinary loss in the second quarter of 1997.
Effective April 17, 1997, the Company completed an offering of the Notes,
issued under an indenture dated as of April 17, 1997 (the "Indenture"), among
the Company, Consumers U.S. and The Bank of New York, as Trustee. The Notes are
senior secured obligations of the Company, ranking senior in right of payment to
all existing and future subordinate indebtedness of the Company and pari passu
with all existing and future senior indebtedness of the Company. The Notes are
guaranteed by Consumers U.S. Proceeds from the issuance of the Notes, net of
fees, were approximately $144,000 and were used to repay $130,000 outstanding
under the Anchor Loan Facility and $8,800 of advances outstanding under the
Revolving Credit Facility, with the balance used for general corporate purposes.
Interest on the Notes accrues at 11.25% per annum and is payable
semiannually on each April 1 and October 1 to registered holders of the Notes at
the close of business on the March 15 and September 15 immediately preceding the
applicable interest payment date. The Notes are not redeemable prior to April 1,
2001; however, the Notes are redeemable at the Company's option in whole at any
time or in part from time to time at redemption prices defined in the Indenture.
The Indenture provides that upon the occurrence of a change in control, the
Company will be required to offer to repurchase all of the Notes at a purchase
price in cash equal to 101% of the principal amount plus interest accrued to the
date of purchase.
All of the obligations of the Company under the Notes and the Indenture are
secured by a first priority perfected security interest in substantially all of
the existing and future real property, personal property and other assets of the
Company and a first priority perfected security interest in collateral ranking
pari passu with the security interest in favor of the Revolving Credit Facility.
The Indenture, subject to certain exceptions, restricts the Company from
taking various actions, including, but not limited to, subject to specified
exceptions, the incurrence of additional indebtedness, the granting of
additional liens, the payment of dividends and other restricted payments,
mergers, acquisitions and transactions with affiliates.
F-26
<PAGE> 149
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
In connection with the refinancing of the Notes on April 17, 1997, the
Company issued 702,615 shares of Class B Common Stock to Consumers U.S. and
702,614 warrants, valued at $5.00 per share, to the initial purchasers.
NOTE 5 -- REDEEMABLE PREFERRED STOCK
The Company has designated 2,239,320 shares as Series A Preferred Stock and
5,000,000 shares as Series B Preferred Stock. The Series A Preferred Stock
ranks, as to dividends and redemption and upon liquidation, prior to all other
classes and series of capital stock of the Company. The holders of Series A
Preferred Stock are entitled to receive, when and as declared by the Board of
Directors of the Company, cumulative dividends, payable quarterly in cash, at an
annual rate of 10%. Holders of Series A Preferred Stock are not entitled to
vote, except as defined. No dividends have been declared or paid as of September
30, 1997.
The Company is required to redeem all outstanding shares of the Series A
Preferred Stock on February 5, 2009, and, on or after February 5, 2000, may, at
its option, redeem outstanding shares of Series A Preferred Stock at a price of
$25.00 per share, if the trading price of the common stock equals or exceeds
$6.00 per share. Shares of Series A Preferred Stock are convertible into shares
of Class A Common Stock, at the option of the holder, at a ratio determined by
dividing the liquidation value of the Series A Preferred Stock by $6.00 and such
ratio is subject to adjustment from time to time.
Pursuant to the Asset Purchase Agreement, the Company is obligated to
register all of the shares of the Class A Common Stock and Series A Preferred
Stock under the Securities Exchange Act and to qualify the shares for listing on
a nationally recognized United States securities exchange or on The Nasdaq Stock
Market's National Market.
The Series B Preferred Stock ranks, as to dividends and redemption and upon
liquidation, junior to the Series A Preferred Stock but senior to all other
classes and series of capital stock of the Company. The holders of Series B
Preferred Stock are entitled to receive cumulative dividends, payable quarterly
at an annual rate of 8%. During the period from February 5, 1997 through and
including December 31, 1999, the dividend is payable in additional shares of
Series B Preferred Stock. Thereafter, the dividends will be payable in cash when
and as declared by the Board of Directors. Holders of Series B Preferred Stock
are not entitled to vote, except as defined.
Shares of Series B Preferred Stock are not subject to mandatory redemption.
On or after February 5, 2000, the Company may, at its option, redeem outstanding
shares of Series B Preferred Stock at a price of $25.00 per share, if the
trading price of the common stock equals or exceeds $5.50 per share. Shares of
Series B Preferred Stock are convertible into shares of Class B Common Stock, at
the option of the holder, at a ratio determined by dividing the liquidation
value of the Series A Preferred Stock by $5.50 and such ratio is subject to
adjustment from time to time.
NOTE 6 -- COMMON STOCK
For the period from February 5, 1997 to February 5, 2000, the common stock
is divided into three classes, Class A and Class B, which are voting, and Class
C, which is non-voting. During this period, the number of Directors of the
Company is fixed at nine, with the holders of the Class A shares having the
right to elect four Directors and the holders of the Class B shares having the
right to elect five Directors. Holders of the Class C shares do not participate
in the election of Directors. On February 5, 2000, the three classes of common
stock will automatically be consolidated into one single class of common stock
with identical rights. The Company currently has outstanding warrants
exercisable for 2,107,843 shares of Class C Common Stock at an exercise price of
$.10 per share, which has already been deemed paid.
F-27
<PAGE> 150
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
The Company is a respondent in various environment-related cases. The
Company is not otherwise party to, and none of its assets are subject to any
other pending legal proceedings, other than ordinary routine litigation
incidental to its business and against which the Company is adequately insured
and indemnified or which is not material. The Company believes that the ultimate
outcome of these cases will not materially affect future operations.
NOTE 8 -- SUBSEQUENT EVENTS
Following the issuance of the Notes, the Company filed, with the Securities
and Exchange Commission, a Registration Statement on July 16, 1997, (File No.
333-31363) on Form S-4 under the Securities Act of 1933, with respect to an
issue of 11.25% First Mortgage Notes, due 2005, identical in all material
respects to the Notes, except that the new Notes would not bear legends
restricting the transfer thereof. Upon the effectiveness of the Registration
Statement, the Company will commence an offer to the holders of the Notes to
exchange their Notes for a like principal amount of new Notes. The Company
entered into a Registration Rights Agreement on April 17, 1997. Pursuant to this
agreement, additional interest will accrue on the Notes if the Registration
Statement is not declared effective or the exchange offer is not completed by
dates as defined in the agreement.
In connection with a plan to simplify the corporate ownership structure of
Consumers, the Company and their affiliates, Glenshaw Glass Company, Inc., a
wholly-owned subsidiary of G&G, may become a subsidiary of the Company.
In September 1997, Hillsboro Glass Company ("Hillsboro"), a
glass-manufacturing plant owned by G&G, discontinued manufacturing. All of
Hillsboro's rights and obligations to fill orders under a supply contract
between Consumers and one of its major customers will be purchased by Consumers
and the Company.
F-28
<PAGE> 151
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Consumers U.S., Inc.:
We have audited the accompanying consolidated balance sheet of Consumers U.S.,
Inc. (a Delaware corporation) as of June 30, 1997, and the related consolidated
statements of operations, stockholder's equity and cash flows for the period
from February 5, 1997 through June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consumers U. S.,
Inc. as of June 30, 1997, and the results of its operations and its cash flows
for the period from February 5, 1997 through June 30, 1997, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
October 31, 1997
F-29
<PAGE> 152
CONSUMERS U.S., INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 6,106
Accounts receivable, less allowance for doubtful accounts of $1,706............... 62,262
Inventories --
Raw materials and manufacturing supplies........................................ 24,616
Semi-finished and finished products............................................. 92,582
Other current assets.............................................................. 8,724
--------
Total current assets.................................................... 194,290
Property, plant and equipment:
Land............................................................................ 7,769
Buildings....................................................................... 74,075
Machinery, equipment and molds.................................................. 252,447
Less accumulated depreciation, net.............................................. (20,494)
--------
313,797
Other assets...................................................................... 24,163
Strategic alliance with customer.................................................. 22,650
Goodwill, net of accumulated amortization of $1,000............................... 43,162
--------
$598,062
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Revolving credit facility......................................................... $ 963
Current maturities of long term-debt.............................................. 352
Accounts payable.................................................................. 33,504
Accrued expenses.................................................................. 55,219
Accrued interest.................................................................. 3,448
Accrued compensation and employee benefits........................................ 36,403
--------
Total current liabilities............................................... 129,889
Long-term debt.................................................................... 151,897
Long-term pension liabilities..................................................... 49,365
Long-term postretirement liabilities.............................................. 58,386
Other long-term liabilities....................................................... 67,382
--------
327,030
Commitments and contingencies (Note 12)
Redeemable preferred stock of subsidiary, Series A, $.01 par value; 2,239,320
shares authorized, issued and outstanding; $25 liquidation and redemption
value........................................................................... 55,983
--------
Minority interest................................................................. 2,638
--------
Stockholder's equity:
Common stock, $.01 par value; authorized 20,000,000 shares;
issued and outstanding 17,000,100 shares........................................ 170
Capital in excess of par value.................................................... 86,330
Accumulated deficit............................................................... (3,978)
--------
82,522
--------
$598,062
========
</TABLE>
See Notes to Consolidated Financial Statements.
F-30
<PAGE> 153
CONSUMERS U.S., INC.
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 5, 1997 TO JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Net sales....................................................................... $ 261,141
Costs and expenses:
Costs of products sold........................................................ 244,285
Selling and administrative expenses........................................... 11,176
-----------
Income from operations.......................................................... 5,680
Other income, net............................................................... 211
Interest expense................................................................ (7,882)
-----------
Loss before extraordinary item.................................................. (1,991)
Extraordinary item --
Write-off of deferred financing costs, net of nil tax......................... (11,200)
-----------
Loss before minority interest................................................... (13,191)
Minority interest............................................................... 11,452
-----------
Net loss........................................................................ $ (1,739)
===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-31
<PAGE> 154
CONSUMERS U.S., INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
PERIOD FROM FEBRUARY 5, 1997 TO JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL TOTAL
COMMON IN-EXCESS ACCUMULATED STOCKHOLDER'S
STOCK OF PAR DEFICIT EQUITY
------ --------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, February 5, 1997...................... $ -- $ -- $ -- $ --
Issuance of 17,000,100 shares of Common Stock
to Consumers International................ 170 86,330 -- 86,500
Dividends accrued on Series A Preferred Stock
of subsidiary............................. -- -- (2,239) (2,239)
Net loss..................................... -- -- (1,739) (1,739)
------ ------- ------- -------
Balance, June 30, 1997......................... $170 $86,330 $(3,978) $82,522
====== ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
F-32
<PAGE> 155
CONSUMERS U.S., INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM FEBRUARY 5, 1997 TO JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Loss before extraordinary item........................................................ $ (1,991)
Adjustments to reconcile loss before extraordinary item to net cash provided by
operating activities:
Depreciation and amortization....................................................... 21,578
Other amortization.................................................................. 1,598
Other............................................................................... 140
Decrease in cash resulting from changes in assets and liabilities..................... (17,344)
---------
3,981
Cash flows from investing activities:
Purchase of assets and assumption of liabilities of Old Anchor........................ (200,470)
Expenditures for property, plant and equipment........................................ (12,251)
Acquisition related contribution to defined benefit pension plans..................... (9,056)
Other................................................................................. (871)
---------
(222,648)
Cash flows from financing activities:
Proceeds from issuance of long-term debt.............................................. 280,000
Principal payments of long-term debt.................................................. (130,137)
Proceeds from issuance of common stock................................................ 85,000
Net draws on revolving credit facility................................................ 963
Other, primarily financing fees....................................................... (11,053)
---------
224,773
Cash and cash equivalents:
Increase in cash and cash equivalents................................................. 6,106
Balance, beginning of period.......................................................... --
---------
Balance, end of period................................................................ $ 6,106
=========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest.............................................................................. $ 3,546
=========
Income tax payments (refunds), net.................................................... $ --
=========
Increase (decrease) in cash resulting from changes in assets and liabilities:
Accounts receivable................................................................... $ (13,477)
Inventories........................................................................... 5,507
Other current assets.................................................................. 678
Accounts payable, accrued expenses and other current liabilities...................... (9,423)
Other, net............................................................................ (629)
---------
$ (17,344)
=========
</TABLE>
Supplemental noncash investing and financing activities:
In connection with the Anchor Acquisition, Anchor issued $46,983 face amount
of Series A Preferred Stock and $2,454 of Class A Common Stock and incurred
$1,500 of fees. In connection with the Anchor Loan Facility, Anchor issued
1,405,229 warrants to the lenders valued at $7,012.
<TABLE>
<S> <C>
Anchor Acquisition:
Fair value of assets acquired......................................................... $ 525,000
Acquisition costs accrued............................................................. (50,000)
Goodwill.............................................................................. 47,000
Purchase price........................................................................ (250,000)
---------
Liabilities assumed................................................................... $ 272,000
==========
</TABLE>
In February 1997, Anchor contributed $9,000 face amount of Series A
Preferred Stock to Anchor's defined benefit pensions plans.
In connection with the issuance of the Notes, Anchor issued 702,615 shares
of Class B Common Stock to Consumers U.S. and 702,614 warrants valued at $3,506
to the initial purchasers of the Notes. Also, with the issuance of the Notes,
Anchor recorded an extraordinary loss for the write-off of deferred financing
fees of the Anchor Loan Facility.
The Company considers short-term investments with original maturities of
ninety days or less at the date of purchase to be classified as cash
equivalents.
See Notes to Consolidated Financial Statements.
F-33
<PAGE> 156
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization of the Company
Consumers U.S., Inc. ("Consumers U.S."), a Delaware corporation and a
wholly-owned subsidiary of Consumers International Inc. ("Consumers
International"), a Canadian corporation and a wholly-owned subsidiary of
Consumers Packaging Inc. ("Consumers"), was formed in January 1997 to hold an
investment in Anchor Glass Acquisition Corp. ("Anchor") which acquired certain
assets and assumed certain liabilities of Anchor Glass Container Corporation
("Old Anchor"), now Anchor Resolution Corp.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Consumers U.S. and its partially-owned subsidiary, Anchor (together the
"Company"). All material intercompany accounts and transactions have been
eliminated in consolidation. The Company holds 63.4% of the total voting common
shares of Anchor and holds the majority of the Anchor Board of Director
positions, and accordingly the results of Anchor's operations have been
consolidated in these financial statements. Minority interest represents the
minority shareholders' proportionate share of the equity and the income or loss
of Anchor. The minority shareholders' 74.2% proportionate share of income or
loss of Anchor is based upon all outstanding common shares and warrants of
Anchor. Consumers U.S. has no independent activities.
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of
clear, amber, green and other color glass containers of various types, designs
and sizes to customers principally in the beer, food, iced tea, distilled
spirits and soft drink industries. The Company markets its products throughout
the United States. The Company's international and export sales are
insignificant. Sales to The Stroh Brewery Company represented approximately
12.5% of total net sales for the period ended June 30, 1997.
Inventories
Inventories are stated at the lower of cost or market. The cost of
substantially all inventories of raw materials and semi-finished and finished
products is determined on the first-in, first-out method. Manufacturing supplies
and certain other inventories are valued at weighted average costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments
and furnace rebuilds which extend useful lives, and expenditures for glass
forming machine molds are capitalized and depreciated using the straight-line
method over the estimated useful lives of the assets for financial statement
purposes while accelerated depreciation methods are principally used for tax
purposes. Generally, annual depreciation rates range from 2.5% for buildings,
6.3% to 20% for machinery and equipment and 40% for molds. Furnace and machine
rebuilds, which are recurring in nature and which extend the lives of the
related assets, are capitalized and depreciated over the period of extension,
generally at rates of 20% to 25%, based on the type and extent of these
rebuilds. Depreciation of leased property recorded as capital assets is computed
on a straight-line basis over the estimated useful lives of the assets.
Maintenance and repairs are charged directly to expense as incurred.
Goodwill
Goodwill represents the excess of the purchase price over the estimated
fair value of net assets acquired and is amortized on a straight line basis over
a twenty year period. Amortization expense for the period ended
F-34
<PAGE> 157
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
June 30, 1997 was approximately $1,000. The Company has not yet finalized the
allocations of net assets and certain contingent liabilities have not yet been
resolved, as well as the final purchase price.
Income Taxes
The Company applied Statement of Financial Accounting Standards No.
109 -- Accounting for Income Taxes ("SFAS 109") which establishes financial
accounting and reporting standards for the effects of income taxes which result
from a company's activities during the current and preceding years.
Retirement Plans
Anchor has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974 and the Retirement Protection Act of 1994, which requires
the Company to make significant additional contributions into its underfunded
defined benefit plans.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 -- Employers'
Accounting for Postretirement Benefits Other Than Pensions ("SFAS 106") requires
accrual of postretirement benefits (such as healthcare benefits) during the
period that an employee provides service. This accounting method has no effect
on the Company's cash outlays for these postretirement benefits.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 -- Disclosures about
Fair Value of Financial Instruments requires disclosure of the estimated fair
values of certain financial instruments. The estimated fair value amounts have
been determined using available market information or other appropriate
valuation methodologies that require considerable judgment in interpreting
market data and developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated fair
value amounts. As the long-term debt has not been registered or traded in an
established trading market, and the debt was issued during the current period,
the company has estimated the fair value of the debt to be the carrying value.
The carrying amount of other financial instruments approximate their estimated
fair values.
The fair value information presented herein is based on information
available to management as of June 30, 1997. Although management is not aware of
any factors that would significantly affect the estimated value amounts, such
amounts have not been comprehensively revalued for purposes of these financial
statements since that date and, therefore, the current estimates of fair value
may differ significantly from the amounts presented herein.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimated.
F-35
<PAGE> 158
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 2 -- PURCHASE OF ASSETS
On February 5, 1997, pursuant to an Asset Purchase Agreement dated December
18, 1996, as amended (the "Asset Purchase Agreement"), between Consumers,
Owens-Brockway Glass Container Inc. ("Owens") and Old Anchor, the Company (the
rights and obligations of Consumers having been assigned to Anchor) and Owens
acquired substantially all of the assets of, and assumed certain liabilities, of
Old Anchor.
The Company purchased eleven operating glass container manufacturing
facilities and other related assets (the "Anchor Acquisition"). Owens purchased
assets and assumed liabilities of Old Anchor's Antioch and Hayward, California
facilities and purchased certain other existing inventories. Owens also
purchased Old Anchor's investment in Rocky Mountain Bottle Company, a joint
venture with Coors Brewing Company ("Coors"), and assumed Old Anchor's agreement
to manufacture Coors' glass packaging products in the United States.
The total purchase price approximated $378,000, excluding fees of
approximately $1,500. The portion of the purchase price paid in cash by Owens
amounted to approximately $128,000. The remaining purchase price of
approximately $250,000 from the Company was comprised of: approximately $200,500
in cash, $47,000 face amount (1,879,320 shares) of mandatorily redeemable 10%
cumulative convertible preferred stock of Anchor ("Series A Preferred Stock")
and $2,500 of common stock of Anchor (490,898 shares with an estimated value of
$5.00 per share) (the "Class A Common Stock").
The purchase price paid by Anchor in connection with the Anchor Acquisition
is subject to adjustment. On June 13, 1997, Old Anchor delivered to Anchor the
closing balance sheet, dated January 10, 1997 which indicates that Old Anchor
believes that it is entitled to additional payments from the Company and Owens
totaling approximately $76,300 relating primarily to purchase price adjustments.
On July 28, 1997, Anchor and Owens delivered individual notices of disagreement
to Old Anchor, opposing some of the adjustments sought by Old Anchor as well as
asserting other adjustments in Anchor's or Owen's favor. Anchor's notice of
disagreement requested a reduction to the purchase price of approximately
$96,800. There may be litigation and/or arbitration over some or all aspects of
adjustments requested by all parties. Such adjustments, if material, could
impact the purchase price paid by Anchor in connection with the Anchor
Acquisition, the allocation of purchase price and, as a result, the Company's
balance sheet at June 30, 1997. There have been numerous settlement discussions
between Anchor's management and key members of the creditors committee for Old
Anchor which would eliminate the necessity for either arbitration or litigation.
Based on these settlement discussions, management believes that any such
settlement would not have a material adverse impact on the June 30, 1997
Consolidated Balance Sheet.
The Company obtained the cash portion of the purchase price principally
from an $85,000 cash investment by Consumers International in common stock of
Consumers U.S. and a $130,000 bank loan.
For the period from February 5, 1997 to February 5, 2000, the common stock
of Anchor is divided into three classes, Class A and Class B, which are voting,
and Class C, which is non-voting. During this period, the number of Directors of
Anchor is fixed at nine, with the holders of the Class A shares having the right
to elect four Directors and the holders of the Class B shares having the right
to elect five Directors. Holders of the Class C shares do not participate in the
election of Directors. On February 5, 2000, the three classes of common stock
will automatically be consolidated into one single class of common stock with
identical rights. Anchor currently has outstanding warrants exercisable for
2,107,843 shares of Class C common stock for an exercise price of $.10 per
share, which has already been deemed paid.
Upon consummation of the purchase and effective February 6, 1997, Anchor
changed its name to Anchor Glass Container Corporation.
F-36
<PAGE> 159
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
The Anchor Acquisition is accounted for by using the purchase method, with
the purchase price being allocated to the assets acquired and preacquisition
liabilities assumed based on their estimated fair value at the date of
acquisition. These allocations are based on preliminary appraisals, evaluations,
estimations and other studies. Certain acquisition costs and fees, including the
costs of closing and consolidating certain facilities have also been recorded by
the Company at the date of acquisition. The Company has not yet finalized these
allocations and certain contingent liabilities have not yet been resolved, as
well as the final purchase price. The excess of the purchase price over the fair
value of net assets purchased of approximately $47,000 is classified as Goodwill
on the accompanying consolidated balance sheet.
The estimated values of assets acquired and liabilities assumed as of
February 5, 1997 after giving effect to the Anchor Acquisition and consideration
paid is as follows:
<TABLE>
<S> <C>
Accounts receivable.............................................. $ 48,000
Inventories...................................................... 123,000
Property, plant and equipment.................................... 322,000
Goodwill......................................................... 47,000
Other assets..................................................... 32,000
Current liabilities.............................................. (139,000)
Long-term debt................................................... (2,000)
Other long-term liabilities...................................... (181,000)
---------
$ 250,000
=========
</TABLE>
On January 9, 1997, the Pension Benefit Guaranty Corporation ("PBGC")
notified Old Anchor that it intended to institute involuntary termination
proceedings with respect to the three defined benefit pension plans then
maintained by Old Anchor, and currently maintained by Anchor. However, the PBGC
reached an agreement with Vitro, S.A., the parent of Old Anchor, in which Vitro,
S.A. agreed to provide a limited guaranty to the PBGC with respect to the
unfunded benefit liabilities of Anchor's defined benefit plans, if the plans, or
any one of them, are terminated before August 1, 2006. Consequently, the PBGC
agreed not to terminate the plans as a result of the Asset Purchase Agreement
and the assumption of the plans by Anchor. In conjunction with the purchase,
Anchor assumed all liabilities of the plans and funded $9,056 of plan
contributions, previously unfunded following Old Anchor's filing of Chapter 11.
Additionally, Anchor issued to the plans $9,000 face amount (360,000 shares) of
Series A Preferred Stock.
NOTE 3 -- REVOLVING CREDIT FACILITY
In conjunction with the Anchor Acquisition, Anchor entered into a credit
agreement dated as of February 5, 1997, with Bankers Trust Company ("BTCo") as
issuing bank and BT Commercial Corporation, as agent, to provide a $110,000
senior secured revolving credit facility (the "Revolving Credit Facility"). The
Revolving Credit Facility enables Anchor to obtain revolving credit loans for
working capital purposes and the issuance of letters of credit for its account
in an aggregate amount not to exceed $110,000. Advances outstanding at any one
time cannot exceed an amount equal to the borrowing base as defined in the
Revolving Credit Facility.
Revolving credit loans bear interest at a rate based upon, at Anchor's
option, (i) the higher of the prime rate of BTCo, 0.5% in excess of the
overnight federal funds rate and 0.5% in excess of the adjusted certificate of
deposit rate, as defined, each plus a defined margin, or (ii) the average of the
offering rates of banks in the New York interbank Eurodollar market, plus a
defined margin. Interest is payable monthly. A commitment fee of 0.5% per annum
on the unused portion of the facility and letter of credit fees, as defined, is
payable quarterly. The Revolving Credit Facility expires February 5, 2002.
F-37
<PAGE> 160
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
At June 30, 1997, advances outstanding under the Revolving Credit Facility
were $963 and the borrowing availability was $72,106. The total outstanding
letters of credit on this facility were $12,788. At June 30, 1997, the weighted
average interest rate on borrowings outstanding was 9.0%.
Anchor's obligations under the Revolving Credit Facility are secured by a
first priority lien on substantially all of Anchor's inventories and accounts
receivable and related collateral and a second priority pledge of all of
Anchor's Series B preferred shares and Class B common shares. In addition,
Anchor's obligations under the Revolving Credit Facility are guaranteed by
Consumers U.S., the holder of Anchor's outstanding Series B preferred shares and
Class B common shares.
The Revolving Credit Facility contains certain covenants that restrict
Anchor from taking various actions, including, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
making of investments, the payment of dividends and other restricted payments,
mergers, acquisitions and other fundamental corporate changes, capital
expenditures, operating lease payments and transactions with affiliates. The
Revolving Credit Facility also contains certain financial covenants that require
Anchor to meet and maintain certain financial tests and minimum ratios,
including a minimum working capital ratio, a minimum consolidated net worth test
and a minimum interest coverage ratio, all of which have been met at June 30,
1997.
NOTE 4 -- LONG-TERM DEBT
Long-term debt at June 30, 1997 consists of the following:
<TABLE>
<S> <C>
$150,000 First Mortgage Notes, interest at 11.25% due 2005........ $150,000
Other............................................................. 2,249
--------
152,249
Less current maturities........................................... 352
--------
$151,897
========
</TABLE>
In connection with the Anchor Acquisition, Anchor entered into a Senior
Credit Agreement, dated as of February 5, 1997, with Bankers Trust Company, as
agent, to provide a $130,000 bank loan (the "Anchor Loan Facility"). The Anchor
Loan Facility was repaid in full from the net proceeds of the issuance of the
$150,000 11.25% First Mortgage Notes, due 2005, (the "Notes"). The Anchor Loan
Facility bore interest at a rate of 12.50%.
As additional consideration in providing the Anchor Loan Facility, Anchor
issued to BT Securities Corporation and TD Securities, 1,405,229 warrants
convertible to Class C common stock. The warrants are valued at approximately
$7,000. As a result of the refinancing of the Anchor Loan Facility, deferred
financing fees of $11,200 were written off as an extraordinary loss in the
second quarter of 1997.
Effective April 17, 1997, Anchor completed an offering of the Notes, issued
under an indenture dated as of April 17, 1997 (the "Indenture"), among Anchor,
Consumers U.S. and The Bank of New York, as Trustee. The Notes are senior
secured obligations of Anchor, ranking senior in right of payment to all
existing and future subordinate indebtedness of Anchor and pari passu with all
existing and future senior indebtedness of Anchor. The Notes are guaranteed by
Consumers U.S. Proceeds from the issuance of the Notes, net of fees, were
approximately $144,000 and were used to repay $130,000 outstanding under the
Anchor Loan Facility and $8,800 of advances outstanding under the Revolving
Credit Facility, with the balance used for general corporate purposes.
Interest on the Notes accrues at 11.25% per annum and is payable
semiannually on each April 1 and October 1 to registered holders of the Notes at
the close of business on the March 15 and September 15
F-38
<PAGE> 161
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
immediately preceding the applicable interest payment date. The Notes are not
redeemable prior to April 1, 2001; however, the Notes are redeemable at Anchor's
option in whole at any time or in part from time to time at redemption prices
defined in the Indenture. The Indenture provides that upon the occurrence of a
change in control, Anchor will be required to offer to repurchase all of the
Notes at a purchase price in cash equal to 101% of the principal amount plus
interest accrued to the date of purchase.
All of the obligations of Anchor under the Notes and the Indenture are
secured by a first priority perfected security interest in substantially all of
the existing and future real property, personal property and other assets of
Anchor and a first priority perfected security interest in collateral ranking
pari passu with the security interest in favor of the Revolving Credit Facility.
The Indenture, subject to certain exceptions, restricts the Company from
taking various actions, including, but not limited to, subject to specified
exceptions, the incurrence of additional indebtedness, the granting of
additional liens, the payment of dividends and other restricted payments,
mergers, acquisitions and transactions with affiliates.
All of the Company's debt agreements contain cross-default provisions.
Principal payments required on long-term debt are $138 in the remainder of
1997, $286 in 1998, $291 in 1999, $297 in 2000 and $303 in 2001. Payments to be
made in 2002 and thereafter are $150,934
In connection with the issuance of the Notes on April 17, 1997, Anchor
issued 702,615 Class B common shares to Consumers U.S. and 702,614 warrants,
valued at $5.00 per share, to the initial purchasers.
NOTE 5 -- REDEEMABLE PREFERRED STOCK
Anchor has designated 2,239,320 shares as Series A Preferred Stock. The
Series A Preferred Stock ranks, as to dividends and redemption and upon
liquidation, prior to all other classes and series of capital stock of Anchor.
The holders of Series A Preferred Stock are entitled to receive, when and as
declared by the Board of Directors of Anchor, cumulative dividends, payable
quarterly in cash, at an annual rate of 10%. Holders of Series A Preferred Stock
are not entitled to vote, except as defined. No dividends have been declared or
paid as of June 30, 1997.
Anchor is required to redeem all outstanding shares of the Series A
Preferred Stock on February 5, 2009, and, on or after February 5, 2000, may, at
its option, redeem outstanding shares of Series A Preferred Stock at a price of
$25.00 per share, if the trading price of the common stock equals or exceeds
$6.00 per share. Shares of Series A Preferred Stock are convertible into shares
of Class A Common Stock, at the option of the holder, at a ratio determined by
dividing the liquidation value of the Series A Preferred Stock by $6.00 and such
ratio is subject to adjustment from time to time.
Pursuant to the Asset Purchase Agreement, Anchor is obligated to register
all of the shares of the Class A Common Stock and Series A Preferred Stock under
the Securities Exchange Act and to qualify the shares for listing on a
nationally recognized United States securities exchange or on The Nasdaq Stock
Market's National Market.
NOTE 6 -- RELATED PARTY INFORMATION
G&G Investments, Inc.
Anchor is party to a management agreement with G&G Investments, Inc.
("G&G"), (the majority owner of Consumers), in which G&G is to provide specified
managerial services for Anchor. For these services, G&G is entitled to receive
an annual management fee of $3,000 and reimbursement of its out-of-pocket costs.
The terms of Revolving Credit Facility and the Indenture limit the management
fee annual
F-39
<PAGE> 162
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
payment to $1,500 unless certain financial maintenance tests are met. The
Company has recorded an expense of $1,233 for this agreement for the period
ended June 30, 1997 and no payments have been made.
Other affiliates
Related party transactions with Consumers and its affiliates for the period
from February 5, 1997 to June 30, 1997 are summarized as follows:
<TABLE>
<S> <C>
Purchases of inventory............................................ $1,035
Payable for inventory............................................. 23
Sales of inventory and other...................................... 5,098
Receivable from sales of inventory and other...................... 3,814
</TABLE>
All transactions with Consumers and its affiliates are conducted on terms
which, in the opinion of management, are no less favorable than with third
parties.
NOTE 7 -- PENSION PLANS
As part of the Anchor Acquisition, Anchor assumed the pension plans
previously maintained by Old Anchor. Anchor has defined benefit retirement plans
for salaried and hourly-paid employees. Benefits are calculated on a
salary-based formula for salaried plans and on a service-based formula for
hourly plans. Pension costs for the period from February 5, 1997 to June 30,
1997 are summarized below:
<TABLE>
<S> <C>
Service cost-benefits earned during the year...................... $ 1,790
Interest cost on projected benefit obligation..................... 12,830
Return on plan assets............................................. (13,220)
------
Total pension cost.............................................. $ 1,400
======
</TABLE>
Anchor has substantial unfunded obligations related to its employee pension
plans. The Retirement Protection Act of 1994 requires Anchor to make significant
additional funding contributions into its underfunded defined benefit retirement
plans and will increase the premiums paid to the PBGC.
As an objection to the sale, the PBGC entered a determination to terminate
Old Anchor's qualified defined benefit pension plans. However, in conjunction
with the sale, Anchor assumed all liabilities of the plans and funded $9,056 of
plan contributions, previously unfunded following Old Anchor's filing of Chapter
11. Additionally, Anchor issued $9,000 face amount of Series A Preferred Stock
and Vitro, the parent of Old Anchor, has guaranteed to fund certain qualified
defined benefit plan obligations, should Anchor default on its obligations.
Consequently, the PBGC agreed not to terminate the plans as a result of the
Agreement and the assumption of the plans by Anchor.
Anchor also sponsors two defined contribution plans covering substantially
all salaried and hourly employees. In 1994, the salaried retirement and savings
programs were changed, resulting in the freezing of benefits under the defined
benefit pension plans for salaried employees and amending the defined
contribution savings plan for salaried employees. Under the amended savings
plan, Anchor matches employees' basic contributions to the plan in an amount
equal to 150% of the first 4% of an employee's compensation. Expenses under the
savings programs for the period from February 5, 1997 to June 30, 1997 were
approximately $1,100.
F-40
<PAGE> 163
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
The funded status of Anchor's pension plans at June 30, 1997 is as follows:
<TABLE>
<CAPTION>
ACCUMULATED ASSETS EXCEED
BENEFITS ACCUMULATED
EXCEED ASSETS BENEFITS
------------- -------------
<S> <C> <C>
Actuarial present value of accumulated plan
benefits:
Vested benefit obligation......................... $ 306,803 $ 111,701
======= =======
Accumulated benefit obligation.................... $ 315,630 $ 111,701
======= =======
Projected benefit obligation...................... 315,630 111,701
Plan assets at fair value........................... 242,970 120,808
------- -------
Projected benefit obligation in excess of (less
than) plan assets................................. $ 72,660 $ (9,107)
======= =======
Accrued (prepaid) pension cost...................... $ 72,660 $ (9,107)
======= =======
</TABLE>
Significant assumptions used in determining net pension cost and related
pension obligations for the benefit plans for 1997 are as follows:
<TABLE>
<S> <C>
Discount rate......................................................... 7.50%
Expected long-term rate of return on plan assets...................... 9.0
</TABLE>
NOTE 8 -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides benefits to substantially all salaried, and certain
hourly employees under several plans. SFAS 106 requires accrual of
postretirement benefits (such as healthcare benefits) during the years an
employee provides services. Currently, the Company funds these healthcare
benefits on a pay-as-you-go basis. The Company also contributes to a
multi-employer trust, and under the requirements of SFAS 106, recognizes as
postretirement benefit cost the required annual contribution. The Company's cash
flows are not affected by implementation of SFAS 106.
The accumulated postretirement benefit obligation at June 30, 1997 is as
follows:
<TABLE>
<S> <C>
Retirees........................................................... $38,815
Eligible plan participants......................................... 8,507
Other active plan participants..................................... 13,764
-------
$61,086
=======
Accrued postretirement benefit costs............................... $61,086
=======
</TABLE>
Net postretirement benefit costs for the period from February 5, 1997 to
June 30, 1997 consist of the following components:
<TABLE>
<S> <C>
Service cost -- benefits earned during the year..................... $ 419
Interest cost on accumulated postretirement benefit obligation...... 1,653
------
$2,072
======
</TABLE>
The assumed healthcare cost trend used in measuring the accumulated
postretirement benefit obligation as of June 30, 1997 was 9.0% declining
gradually to 5.5% by the year 2003, after which it remains constant. A one
percentage point increase in the assumed healthcare cost trend rate for each
year would increase the accumulated postretirement benefit obligation as of June
30, 1997 by approximately 12% and the net
F-41
<PAGE> 164
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
postretirement healthcare cost for the period ended June 30, 1997 by
approximately 13%. The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7.50% for 1997.
The Company also contributes to a multi-employer trust which provides
certain other postretirement benefits to retired hourly employees. Expenses
under this program for the period from February 5, 1997 to June 30, 1997 were
$1,540.
NOTE 9 -- PLANT CLOSING COSTS
As part of the Anchor Acquisition, the Company closed its Houston, Texas
and Dayville, Connecticut plants in order to reduce excess capacity. Exit
charges applicable to these two plants of approximately $33,000 have been
recorded as of the date of acquisition. Amounts charged against the liability as
of June 30, 1997 are approximately $10,300.
NOTE 10 -- INCOME TAXES
The Company applies SFAS 109 under which the liability method is used in
accounting for income taxes. Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes,
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Under SFAS 109, if on the basis of
available evidence, it is more likely than not that all or a portion of the
deferred tax asset will not be realized, the asset must be reduced by a
valuation allowance. Since realization is not assured as of June 30, 1997,
management has deemed it appropriate to establish a realization reserve against
the tax asset created during the period.
The following significant components of the deferred tax assets and
liabilities are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accruals and reserves............................................ $ 2,670
Property, plant and equipment.................................... 2,400
Pensions and postretirement liabilities.......................... 800
Tax loss carryforwards........................................... 130
-------
6,000
Valuation allowance................................................ (2,400)
-------
3,600
-------
Deferred tax liabilities:
Goodwill......................................................... 3,500
Other assets..................................................... 100
-------
3,600
-------
Net deferred tax assets............................................ $ --
=======
</TABLE>
The effective tax rate reconciliation at June 30, 1997 is as follows:
<TABLE>
<S> <C>
Statutory rate......................................................... 39%
Permanent differences.................................................. 21
----
18
Valuation allowance.................................................... 18
----
Effective rate......................................................... --%
====
</TABLE>
F-42
<PAGE> 165
CONSUMERS U.S., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 11 -- LEASES
The Company leases distribution and office facilities, machinery,
transportation, data processing and office equipment under non-cancelable leases
which expire at various dates through 2004. These leases generally provide for
fixed rental payments and include renewal and purchase options at amounts which
are generally based on fair market value at expiration of the lease. The Company
has no material capital leases.
Future minimum lease payments under non-cancelable operating leases are as
follows:
<TABLE>
<S> <C>
Remaining in 1997.................................................. $ 9,700
1998............................................................... 16,500
1999............................................................... 12,700
2000............................................................... 9,500
2001............................................................... 8,600
After 2001......................................................... 20,300
-------
$77,300
=======
</TABLE>
Rental expense for all operating leases for the period from February 5,
1997 to June 30, 1997 was $8,845.
In connection with the Anchor Acquisition, Anchor assumed and amended Old
Anchor's lease of the headquarters facility located in Tampa, Florida and a
related option to purchase. The term of the amended lease expires January 2,
1998, unless Anchor has exercised its purchase right, and the term then expires
February 1, 1998. The property is encumbered by a mortgage, which is required to
be repaid or refinanced by February 1, 1998. Anchor is obligated to pay this
indebtedness if Anchor does not exercise its purchase option. If the property is
subsequently sold, a portion of the net proceeds is to be reimbursed to Anchor.
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
Anchor is a respondent in various environment-related cases. The Company is
not otherwise party to, and none of its assets are subject to any other pending
legal proceedings, other than ordinary routine litigation incidental to its
business and against which the Company is adequately insured and indemnified or
which is not material. The Company believes that the ultimate outcome of these
cases will not materially affect future operations.
NOTE 13 -- SUBSEQUENT EVENTS
Following the issuance of the Notes, the Company filed, with the Securities
and Exchange Commission, a Registration Statement on July 16, 1997, (File
No.333-31363) on Form S-4 under the Securities Act of 1933 (currently under
review), with respect to an issue of 11.25% First Mortgage Notes, due 2005,
identical in all material respects to the Notes, except that the new Notes would
not bear legends restricting the transfer thereof. Upon the effectiveness of the
Registration Statement, the Company will commence an offer to the holders of the
Notes to exchange their Notes for a like principal amount of new Notes. The
Company entered into a Registration Rights Agreement on April 17, 1997. Pursuant
to this agreement, additional interest will accrue on the Notes if the
Registration Statement is not declared effective or the exchange offer is not
completed by dates as defined in the agreement.
In connection with a plan to simplify the corporate ownership structure of
Consumers, Anchor and their affiliates, Glenshaw Glass Company, Inc., a
wholly-owned subsidiary of G&G, may become a subsidiary of Anchor.
In September 1997, Hillsboro Glass Company ("Hillsboro"), a
glass-manufacturing plant owned by G&G, discontinued manufacturing. All of
Hillsboro's rights and obligations to fill orders under a supply contract
between Consumers and one of its major customers will be purchased by Consumers
and Anchor.
F-43
<PAGE> 166
CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 804
Accounts receivable............................................................... 60,840
Inventories --
Raw materials and manufacturing supplies........................................ 24,421
Semi-finished and finished products............................................. 93,770
Other current assets.............................................................. 8,778
--------
Total current assets.................................................... 188,613
Property, plant and equipment, net................................................ 309,942
Other assets...................................................................... 45,100
Goodwill.......................................................................... 42,662
--------
$586,317
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Revolving credit facility......................................................... $ 5,861
Current maturities of long-term debt.............................................. 353
Accounts payable.................................................................. 31,037
Accrued expenses.................................................................. 44,232
Accrued interest.................................................................. 7,197
Accrued compensation and employee benefits........................................ 36,471
--------
Total current liabilities............................................... 125,151
Long-term debt.................................................................... 151,954
Pension liabilities............................................................... 44,001
Other long-term liabilities....................................................... 124,600
--------
320,555
Commitments and contingencies (Note 6)
Redeemable preferred stock of subsidiary.......................................... 55,983
--------
Minority interest................................................................. 2,243
--------
Stockholder's equity:
Common stock.................................................................... 170
Capital in excess of par value.................................................. 86,330
Accumulated deficit............................................................. (4,115)
--------
82,385
--------
$586,317
========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-44
<PAGE> 167
CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
Net sales....................................................................... $ 415,636
Costs and expenses:
Costs of products sold........................................................ 386,130
Selling and administrative expenses........................................... 18,127
-----------
Income from operations.......................................................... 11,379
Other income, net............................................................... 234
Interest expense................................................................ (12,725)
-----------
Loss before extraordinary item.................................................. (1,112)
Extraordinary item --
Write-off of deferred financing costs, net of nil tax......................... (11,200)
-----------
Loss before minority interest................................................... (12,312)
Minority interest............................................................... 11,847
-----------
Net loss........................................................................ $ (465)
===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-45
<PAGE> 168
CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CAPITAL ACCUMU- TOTAL
COMMON IN-EXCESS LATED STOCKHOLDER'S
STOCK OF PAR DEFICIT EQUITY
------ --------- ------- -------------
<S> <C> <C> <C> <C>
Balance, February 5, 1997.............................. $ -- $ -- $ -- $ --
Issuance of 17,000,100 shares of Common Stock to
Consumers International........................... 170 86,330 -- 86,500
Dividends accrued on Series A Preferred Stock of
subsidiary........................................ -- -- (3,650) (3,650)
Net loss............................................. -- -- (465) (465)
------ ------- ------- -------
Balance, September 30, 1997............................ $170 $86,330 $(4,115) $82,385
====== ======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-46
<PAGE> 169
CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Loss before extraordinary item................................................. $ (1,112)
Adjustments to reconcile loss before extraordinary item
to net cash provided by operating activities:
Depreciation and amortization............................................... 34,806
Other amortization.......................................................... 3,616
Other....................................................................... 224
Decrease in cash resulting from changes in assets and liabilities.............. (34,170)
--------
3,364
Cash flows from investing activities:
Purchase of assets and liabilities of Old Anchor............................... (200,470)
Expenditures for property, plant and equipment................................. (21,034)
Acquisition related contribution to defined benefit pension plans.............. (9,056)
Other.......................................................................... (773)
--------
(231,333)
Cash flows from financing activities:
Proceeds from issuance of long-term debt....................................... 280,000
Principal payments on long-term debt........................................... (130,148)
Proceeds from issuance of preferred stock...................................... 84,000
Proceeds from issuance of common stock......................................... 1,000
Net draws on Revolving Credit Facility......................................... 5,861
Other, primarily financing fees................................................ (11,940)
--------
228,773
Cash and cash equivalents:
Increase in cash and cash equivalents.......................................... 804
Balance, beginning of period................................................... --
--------
Balance, end of period......................................................... $ 804
========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest....................................................................... $ 4,103
========
Income tax payments (refunds), net............................................. $ --
========
</TABLE>
Supplemental noncash investing and financing activities:
In connection with the Anchor Acquisition, Anchor issued $46,983 face
amount of Series A Preferred Stock and $2,454 of Class A Common Stock. In
connection with the Anchor Loan Facility, Anchor issued 1,405,229 of
warrants to the lenders valued at $7,012.
In February 1997, Anchor contributed $9,000 face amount of Series A
Preferred Stock to Anchor's defined benefit pensions plans.
In connection with the issuance of the Notes, Anchor issued 702,615
shares of Class B Common Stock to Consumers U.S. and 702,614 warrants
valued at $3,506 to the initial purchasers of the Notes. Also, with the
issuance of the Notes, the Company recorded an extraordinary loss for the
write-off of deferred financing fees of the Anchor Loan Facility.
See Notes to Condensed Consolidated Financial Statements.
F-47
<PAGE> 170
CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization of the Company
Consumers U.S., Inc., ("Consumers U.S.") a Delaware corporation and a
wholly-owned subsidiary of Consumers International Inc. ("Consumers
International"), a Canadian corporation and a wholly-owned subsidiary of
Consumers Packaging Inc. ("Consumers"), was formed in January 1997 to hold an
investment in Anchor Glass Acquisition Corp. ("Anchor") which acquired certain
assets and assumed certain liabilities of Anchor Glass Container Corporation
("Old Anchor"), now Anchor Resolution Corp.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Consumers U.S. and its partially-owned subsidiary, Anchor (together the
"Company"). All material intercompany accounts and transactions have been
eliminated in consolidation. The Company holds 63.4% of the total voting common
shares of Anchor and holds the majority of the Anchor Board of Director
positions, and accordingly the results of Anchor's operations have been
consolidated in these financial statements. Minority interest represents the
minority shareholders' proportionate share of the equity and the income or loss
of Anchor. The minority shareholders' 74.2% proportionate share of income or
loss of Anchor is based upon all outstanding common shares and warrants of
Anchor. Consumers U.S. has no independent activities.
Management's Responsibility
In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments, consisting of only normal
recurring adjustments, and excluding any amounts resulting from purchase price
adjustments discussed above, necessary to present fairly the financial position
as of September 30, 1997 and the results of operations and cash flows for the
period from February 5, 1997 to September 30, 1997.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The results of operations for the interim period
may not be necessarily indicative of the results of the full fiscal year.
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of
clear, amber, green and other color glass containers of various types, designs
and sizes to customers principally in the beer, food, iced tea, distilled
spirits and soft drink industries. The Company markets its products throughout
the United States.
Inventories
Inventories are stated at the lower of cost or market. The cost of
substantially all inventories of raw materials and semi-finished and finished
products is determined on the first-in, first-out method. Manufacturing supplies
and certain other inventories are valued at weighted average costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments
and furnace rebuilds which extend useful lives, and expenditures for glass
forming machine molds are capitalized and depreciated using the straight-line
method over the estimated useful lives of the assets for financial statement
purposes while accelerated depreciation methods are principally used for tax
purposes. Generally, annual depreciation rates
F-48
<PAGE> 171
CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
range from 2.5% for buildings, 6.3% to 20% for machinery and equipment and 40%
for molds. Furnace and machine rebuilds, which are recurring in nature and which
extend the lives of the related assets, are capitalized and depreciated over the
period of extension, generally at rates of 20% to 25%, based on the type and
extent of these rebuilds. Depreciation of leased property recorded as capital
assets is computed on a straight-line basis over the estimated useful lives of
the assets. Maintenance and repairs are charged directly to expense as incurred.
Goodwill
Goodwill represents the excess of the purchase price over the estimated
fair value of net assets acquired and is amortized on a straight line basis over
a twenty year period. Amortization expense for the period ended September 30,
1997 was approximately $1,500. The Company has not yet finalized the allocations
of net assets and certain contingent liabilities have not yet been resolved, as
well as the final purchase price.
Income Taxes
The Company applied Statement of Financial Accounting Standards No.
109 -- Accounting for Income Taxes ("SFAS 109") which establishes financial
accounting and reporting standards for the effects of income taxes which result
from a company's activities during the current and preceding years.
Retirement Plans
Anchor has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974 and the Retirement Protection Act of 1994, which requires
the Company to make significant additional contributions into its underfunded
defined benefit plans.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 -- Employers'
Accounting for Postretirement Benefits Other Than Pensions ("SFAS 106") requires
accrual of postretirement benefits (such as healthcare benefits) during the
period that an employee provides service. This accounting method has no effect
on the Company's cash outlays for these retirement benefits.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimated.
NOTE 2 -- PURCHASE OF ASSETS
On February 5, 1997, pursuant to an Asset Purchase Agreement dated December
18, 1996, as amended (the "Asset Purchase Agreement"), between Consumers,
Owens-Brockway Glass Container Inc. ("Owens") and Old Anchor, the Company (the
rights and obligations of Consumers having been assigned to Anchor) and Owens
acquired substantially all of the assets of, and assumed certain liabilities, of
Old Anchor.
The Company purchased eleven operating glass container manufacturing
facilities and other related assets (the "Anchor Acquisition"). Owens purchased
assets and assumed liabilities of Old Anchor's Antioch
F-49
<PAGE> 172
CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
and Hayward, California facilities and purchased certain other existing
inventories. Owens also purchased Old Anchor's investment in Rocky Mountain
Bottle Company, a joint venture with Coors Brewing Company ("Coors"), and
assumed Old Anchor's agreement to manufacture Coors' glass packaging products in
the United States.
The total purchase price approximated $378,000, excluding fees of
approximately $1,500. The portion of the purchase price paid in cash by Owens
amounted to approximately $128,000. The remaining purchase price of
approximately $250,000 from the Company was comprised of: approximately $200,500
in cash, $47,000 face amount (1,879,320 shares) of mandatorily redeemable 10%
cumulative convertible preferred stock of Anchor ("Series A Preferred Stock")
and $2,500 of common stock of Anchor (490,898 shares with an estimated value of
$5.00 per share) (the "Class A Common Stock").
The purchase price paid by Anchor in connection with the Anchor Acquisition
is subject to adjustment. On June 13, 1997, Old Anchor delivered to Anchor the
closing balance sheet dated January 10, 1997, which indicates that Old Anchor
believes that it is entitled to additional payments from Anchor and Owens
totaling approximately $76,300 relating primarily to purchase price adjustments.
On July 28, 1997, Anchor and Owens delivered individual notices of disagreement
to Old Anchor, opposing some of the adjustments sought by Old Anchor as well as
asserting other adjustments in Anchor's or Owen's favor. Anchor's notice of
disagreement requested a reduction to the purchase price of approximately
$96,800. There may be litigation and/or arbitration over some or all aspects of
adjustments requested by all parties. Such adjustments, if material, could
impact the purchase price paid by Anchor in connection with the Anchor
Acquisition, the allocation of purchase price and, as a result, Anchor's balance
sheet at September 30, 1997. There have been numerous settlement discussions
between Anchor's management and key members of the creditors committee for Old
Anchor which would eliminate the necessity for either arbitration or litigation.
Based on these settlement discussions, management believes that any such
settlement would not have a material adverse impact on the September 30, 1997
Condensed Consolidated Balance Sheet.
The Company obtained the cash portion of the purchase price principally
from an $85,000 cash investment by Consumers International in common stock of
Consumers U.S. and a $130,000 bank loan.
For the period from February 5, 1997 to February 5, 2000, the common stock
of Anchor is divided into three classes, Class A and Class B, which are voting,
and Class C, which is non-voting. During this period, the number of Directors of
Anchor is fixed at nine, with the holders of the Class A shares having the right
to elect four Directors and the holders of the Class B shares having the right
to elect five Directors. Holders of the Class C shares do not participate in the
election of Directors. On February 5, 2000, the three classes of common stock
will automatically be consolidated into one single class of common stock with
identical rights. Anchor currently has outstanding warrants exercisable for
2,107,843 shares of Class C common stock for an exercise price of $.10 per
share, which has already been deemed paid.
Upon consummation of the purchase and effective February 6, 1997, Anchor
changed its name to Anchor Glass Container Corporation.
The Anchor Acquisition is accounted for by using the purchase method, with
the purchase price being allocated to the assets acquired and preacquisition
liabilities assumed based on their estimated fair value at the date of
acquisition. These allocations are based on preliminary appraisals, evaluations,
estimations and other studies. Certain acquisition costs and fees, including the
costs of closing and consolidating certain facilities have also been recorded by
the Company at the date of acquisition. The Company has not yet finalized these
allocations and certain contingent liabilities have not yet been resolved, as
well as the final purchase price. The excess of the purchase price over the fair
value of net assets purchased of approximately $47,000 is classified as Goodwill
on the accompanying condensed consolidated balance sheet.
F-50
<PAGE> 173
CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The estimated values of assets acquired and liabilities assumed as of
February 5, 1997 after giving effect to the Anchor Acquisition and consideration
paid is as follows:
<TABLE>
<S> <C>
Accounts receivable.............................................. $ 48,000
Inventories...................................................... 123,000
Property, plant and equipment.................................... 322,000
Goodwill......................................................... 47,000
Other assets..................................................... 32,000
Current liabilities.............................................. (139,000)
Long-term debt................................................... (2,000)
Other long-term liabilities...................................... (181,000)
---------
$ 250,000
=========
</TABLE>
On January 9, 1997, the Pension Benefit Guaranty Corporation ("PBGC")
notified Old Anchor that it intended to institute involuntary termination
proceedings with respect to the three defined benefit pension plans then
maintained by Old Anchor, and currently maintained by Anchor. However, the PBGC
reached an agreement with Vitro, S.A., the parent of Old Anchor, in which Vitro,
S.A. agreed to provide a limited guaranty to the PBGC with respect to the
unfunded benefit liabilities of Anchor's defined benefit plans, if the plans, or
any one of them, are terminated before August 1, 2006. Consequently, the PBGC
agreed not to terminate the plans as a result of the Asset Purchase Agreement
and the assumption of the plans by Anchor. In conjunction with the purchase,
Anchor assumed all liabilities of the plans and funded $9,056 of plan
contributions, previously unfunded following Old Anchor's filing of Chapter 11.
Additionally, Anchor issued to the plans $9,000 face amount (360,000 shares) of
Series A Preferred Stock.
NOTE 3 -- REVOLVING CREDIT FACILITY
In conjunction with the Anchor Acquisition, Anchor entered into a credit
agreement dated as of February 5, 1997, with Bankers Trust Company ("BTCo") as
issuing bank and BT Commercial Corporation, as agent, to provide a $110,000
senior secured revolving credit facility (the "Revolving Credit Facility"). The
Revolving Credit Facility enables Anchor to obtain revolving credit loans for
working capital purposes and the issuance of letters of credit for its account
in an aggregate amount not to exceed $110,000. Advances outstanding at any one
time can not exceed an amount equal to the borrowing base as defined in the
Revolving Credit Facility.
Revolving credit loans bear interest at a rate based upon, at Anchor's
option, (i) the higher of the prime rate of BTCo, 0.5% in excess of the
overnight federal funds rate and 0.5% in excess of the adjusted certificate of
deposit rate, as defined, each plus a defined margin, or (ii) the average of the
offering rates of banks in the New York interbank Eurodollar market, plus a
defined margin. Interest is payable monthly. A commitment fee of 0.5% on the
unused portion of the facility and letter of credit fees, as defined, is payable
quarterly. The Revolving Credit Facility expires February 5, 2002.
At September 30, 1997, advances outstanding under the Revolving Credit
Facility were $5,861 and the total outstanding letters of credit on this
facility were $12,788.
Anchor's obligations under the Revolving Credit Facility are secured by a
first priority lien on substantially all of Anchor's inventories and accounts
receivable and related collateral and a second priority pledge of all of the
Series B preferred stock and the Class B common stock. In addition, Anchor's
obligations under the Revolving Credit Facility are guaranteed by Consumers
U.S., the holder of the outstanding Series B preferred stock and Class B common
stock.
F-51
<PAGE> 174
CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The Revolving Credit Facility contains certain covenants that restrict
Anchor from taking various actions, including, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
making of investments, the payment of dividends and other restricted payments,
mergers, acquisitions and other fundamental corporate changes, capital
expenditures, operating lease payments and transactions with affiliates. The
Revolving Credit Facility also contains certain financial covenants that require
Anchor to meet and maintain certain financial tests and minimum ratios,
including a minimum working capital ratio, a minimum consolidated net worth test
and a minimum interest coverage ratio, all of which have been met at September
30, 1997.
NOTE 4 -- LONG-TERM DEBT
In connection with the Anchor Acquisition, Anchor entered into a Senior
Credit Agreement, dated as of February 5, 1997, with Bankers Trust Company, as
agent, to provide a $130,000 bank loan (the "Anchor Loan Facility"). The Anchor
Loan Facility was repaid in full from the net proceeds of the issuance of the
$150,000 11.25% First Mortgage Notes, due 2005, (the "Notes"). The Anchor Loan
Facility bore interest at a rate of 12.50%.
As additional consideration in providing the Anchor Loan Facility, Anchor
issued to BT Securities Corporation and TD Securities, 1,405,229 warrants
convertible to Class C common stock. The warrants are valued at approximately
$7,000. As a result of the refinancing of the Anchor Loan Facility, deferred
financing fees of $11,200 were written off as an extraordinary loss in the
second quarter of 1997.
Effective April 17, 1997, Anchor completed an offering of the Notes, issued
under an indenture dated as of April 17, 1997 (the "Indenture"), among Anchor,
Consumers U.S. and The Bank of New York, as Trustee. The Notes are senior
secured obligations of Anchor, ranking senior in right of payment to all
existing and future subordinate indebtedness of Anchor and pari passu with all
existing and future senior indebtedness of Anchor. The Notes are guaranteed by
Consumers U.S. Proceeds from the issuance of the Notes, net of fees, were
approximately $144,000 and were used to repay $130,000 outstanding under the
Anchor Loan Facility and $8,800 of advances outstanding under the Revolving
Credit Facility, with the balance used for general corporate purposes.
Interest on the Notes accrues at 11.25% per annum and is payable
semiannually on each April 1 and October 1 to registered holders of the Notes at
the close of business on the March 15 and September 15 immediately preceding the
applicable interest payment date. The Notes are not redeemable prior to April 1,
2001; however, the Notes are redeemable at Anchor's option in whole at any time
or in part from time to time at redemption prices defined in the Indenture. The
Indenture provides that upon the occurrence of a change in control, Anchor will
be required to offer to repurchase all of the Notes at a purchase price in cash
equal to 101% of the principal amount plus interest accrued to the date of
purchase.
All of the obligations of Anchor under the Notes and the Indenture are
secured by a first priority perfected security interest in substantially all of
the existing and future real property, personal property and other assets of
Anchor and a first priority perfected security interest in collateral ranking
pari passu with the security interest in favor of the Revolving Credit Facility.
The Indenture, subject to certain exceptions, restricts Anchor from taking
various actions, including, but not limited to, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
payment of dividends and other restricted payments, mergers, acquisitions and
transactions with affiliates.
In connection with the refinancing of the Notes on April 17, 1997, Anchor
issued 702,615 shares of Class B common stock to Consumers U.S. and 702,614
warrants, valued at $5.00 per share, to the initial purchasers.
F-52
<PAGE> 175
CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 5 -- REDEEMABLE PREFERRED STOCK
Anchor has designated 2,239,320 shares as Series A Preferred Stock. The
Series A Preferred Stock ranks, as to dividends and redemption and upon
liquidation, prior to all other classes and series of capital stock of Anchor.
The holders of Series A Preferred Stock are entitled to receive, when and as
declared by the Board of Directors of Anchor, cumulative dividends, payable
quarterly in cash, at an annual rate of 10%. Holders of Series A Preferred Stock
are not entitled to vote, except as defined. No dividends have been declared or
paid as of September 30, 1997.
Anchor is required to redeem all outstanding shares of the Series A
Preferred Stock on February 5, 2009, and, on or after February 5, 2000, may, at
its option, redeem outstanding shares of Series A Preferred Stock at a price of
$25.00 per share, if the trading price of the common stock equals or exceeds
$6.00 per share. Shares of Series A Preferred Stock are convertible into shares
of Class A Common Stock, at the option of the holder, at a ratio determined by
dividing the liquidation value of the Series A Preferred Stock by $6.00 and such
ratio is subject to adjustment from time to time.
Pursuant to the Asset Purchase Agreement, Anchor is obligated to register
all of the shares of the Class A Common Stock and Series A Preferred Stock under
the Securities Exchange Act and to qualify the shares for listing on a
nationally recognized United States securities exchange or on The Nasdaq Stock
Market's National Market.
NOTE 6 -- COMMITMENTS AND CONTINGENCIES
Anchor is a respondent in various environment-related cases. The Company is
not otherwise party to, and none of its assets are subject to any other pending
legal proceedings, other than ordinary routine litigation incidental to its
business and against which the Company is adequately insured and indemnified or
which is not material. The Company believes that the ultimate outcome of these
cases will not materially affect future operations.
NOTE 7 -- SUBSEQUENT EVENTS
Following the issuance of the Notes, the Company filed, with the Securities
and Exchange Commission, a Registration Statement on July 16, 1997, (File
No.333-31363) on Form S-4 under the Securities Act of 1933 (currently under
review), with respect to an issue of 11.25% First Mortgage Notes, due 2005,
identical in all material respects to the Notes, except that the new Notes would
not bear legends restricting the transfer thereof. Upon the effectiveness of the
Registration Statement, the Company will commence an offer to the holders of the
Notes to exchange their Notes for a like principal amount of new Notes. The
Company entered into a Registration Rights Agreement on April 17, 1997. Pursuant
to this agreement, additional interest will accrue on the Notes if the
Registration Statement is not declared effective or the exchange offer is not
completed by dates as defined in the agreement.
In connection with a plan to simplify the corporate ownership structure of
Consumers, Anchor and their affiliates. Glenshaw Glass Company, Inc., a
wholly-owned subsidiary of G&G, may become a subsidiary of Anchor.
In September 1997, Hillsboro Glass Company ("Hillsboro"), a
glass-manufacturing plant owned by G&G, discontinued manufacturing. All of
Hillsboro's rights and obligations to fill orders under a supply contract
between Consumers and one of its major customers will be purchased by Consumers
and Anchor.
F-53
<PAGE> 176
INDEX TO FINANCIAL INFORMATION FOR OLD ANCHOR
<TABLE>
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants........................................... H-2
Consolidated Balance Sheets
December 31, 1995 and 1996...................................................... H-3
Consolidated Statements of Operations
Years Ended December 31, 1994, 1995 and 1996.................................... H-4
Consolidated Statements of Stockholder's Equity (Deficiency in Assets)
Years Ended December 31, 1994, 1995 and 1996.................................... H-5
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1995 and 1996.................................... H-6
Notes to Consolidated Financial Statements......................................... H-7
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet September 30, 1996............................ H-21
Condensed Consolidated Statement of Operations Nine Months Ended September 30,
1996............................................................................ H-22
Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30,
1996............................................................................ H-23
Notes to Condensed Consolidated Financial Statements............................... H-24
SELECTED CONSOLIDATED FINANCIAL DATA................................................. H-27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS......................................................................... H-30
</TABLE>
H-1
<PAGE> 177
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Anchor Glass Container Corporation:
We have audited the accompanying consolidated balance sheets of Anchor
Resolution Corp. (Debtor-in-Possession) (the Company) as of December 31, 1996
and 1995, and the related consolidated statements of operations, stockholder's
equity (deficiency in assets) and cash flows for the three years ended December
31, 1996, 1995 and 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to report on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our report.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has experienced
significant losses in the last three fiscal years, and has a net deficiency in
assets of $236,307,000 at December 31, 1996. As described in Notes 2 and 3 to
the accompanying financial statements, in September 1996, the Company filed a
voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code. Furthermore, as discussed in Note 2, on February 5, 1997, the Company sold
substantially all of its assets and certain liabilities. The Company's
bankruptcy petition and remaining deficiency in assets after this sale raise
substantial doubt about the Company's ability to continue as a going concern.
Specifically, the accompanying consolidated financial statements do not purport
to show (a) as to assets, their realizable value on a liquidation basis or their
availability to satisfy liabilities; (b) as to prepetition liabilities, the
amounts that may be allowed for claims or contingencies, or the status and
priority thereof; (c) as to stockholder accounts, the effect of any changes that
may be made in the capitalization of the Company; or (d) as to operations, the
effect of any changes that may be made in its business. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Because of the possible material effect of the matters discussed in the
preceding paragraph, we are unable to express, and we do not express, an opinion
on the financial statements referred to above.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
October 31, 1997
H-2
<PAGE> 178
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
--------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................................ $ 4,898 $ 18,315
Accounts receivable, less allowance for doubtful accounts of $1,503 and $1,826........... 55,851 40,965
Inventories
Raw materials and manufacturing supplies............................................... 28,528 39,036
Semi-finished and finished products.................................................... 115,891 141,538
Other current assets..................................................................... 18,593 14,982
--------- ----------
Total current assets............................................................ 223,761 254,836
Property, plant and equipment:
Land and land improvements............................................................. 10,405 22,822
Buildings.............................................................................. 120,377 147,981
Machinery, equipment and molds......................................................... 524,643 551,709
Less accumulated depreciation, net..................................................... (344,655) (323,665)
--------- ----------
310,770 398,847
Other assets............................................................................. 52,072 38,742
Intangible pension asset................................................................. 17,140 21,773
Deferred income taxes.................................................................... -- 2,367
Investment in joint venture.............................................................. 39,725 20,631
Excess of cost over fair value of net assets acquired (Goodwill), net of accumulated
amortization of $83,630 in 1995........................................................ -- 471,152
--------- ----------
$ 643,468 $1,208,348
========= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY IN ASSETS)
Liabilities not subject to compromise:
Current liabilities:
Debtor-in-Possession Facility............................................................ $ 90,455 $ --
Revolving credit facility................................................................ -- 3,000
Senior Secured Notes..................................................................... 158,025 --
Current maturities of long term debt..................................................... -- 1,770
Accounts payable......................................................................... 25,727 74,120
Accrued expenses......................................................................... 32,740 32,105
Accrued interest......................................................................... 1,510 11,246
Accrued compensation and employee benefits............................................... 60,423 55,869
Deferred income taxes.................................................................... -- 543
--------- ----------
Total current liabilities....................................................... 368,880 178,653
Long-term debt........................................................................... -- 552,680
Pension liabilities...................................................................... 44,179 68,260
Other long-term liabilities.............................................................. 119,722 119,152
--------- ----------
163,901 740,092
Liabilities subject to compromise........................................................ 379,994 --
--------- ----------
Total liabilities............................................................... 912,775 918,745
Commitments and contingencies (Note 15)
Stockholder's equity (deficiency in assets):
Common stock $.10 par value; authorized 1,000 shares, issued and outstanding, 1 share.... -- --
Capital in excess of par value........................................................... 576,300 483,816
Accumulated deficit...................................................................... (823,213) (167,373)
Amount related to minimum pension liability.............................................. (22,394) (26,840)
--------- ----------
(269,307) 289,603
--------- ----------
$ 643,468 $1,208,348
========= ==========
</TABLE>
See Notes to Consolidated Financial Statements.
H-3
<PAGE> 179
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
--------- -------- ----------
<S> <C> <C> <C>
Net sales................................................ $ 814,370 $956,639 $1,089,317
Costs and expenses:
Cost of products sold.................................. 831,612 906,393 996,780
Selling and administrative expenses.................... 39,570 48,998 52,371
Restructuring and other charges........................ 49,973 10,267 79,481
Impairment of long-lived assets........................ 490,232 -- --
Write-up of assets held for sale....................... (8,967) -- --
--------- -------- --------
Loss from operations..................................... (588,050) (9,019) (39,315)
Other income (expense), net.............................. (10,020) 171 (2,385)
Interest expense (1996 contractual interest of
$57,768)............................................... (48,601) (56,871) (56,070)
--------- -------- --------
Loss before reorganization items, income taxes and
extraordinary item..................................... (646,671) (65,719) (97,770)
Reorganization items..................................... (5,008) -- --
--------- -------- --------
Loss before income taxes and extraordinary item.......... (651,679) (65,719) (97,770)
Income tax provision..................................... 1,825 250 250
--------- -------- --------
Loss before extraordinary item........................... (653,504) (65,969) (98,020)
Extraordinary item --
Write-off of deferred financing fees, net of nil tax... (2,336) -- --
--------- -------- --------
Net loss................................................. $(655,840) $(65,969) $ (98,020)
========= ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
H-4
<PAGE> 180
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY IN ASSETS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL
IN TOTAL
EXCESS STOCKHOLDER'S
COMMON OF RETAINED MINIMUM EQUITY
STOCK PAR EARNINGS PENSION (DEFICIENCY
(A) VALUE (DEFICIT) LIABILITY IN ASSETS)
------ -------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994.......... $ -- $433,816 $ (3,384) $(17,680) $ 412,752
Amount related to minimum pension
liability....................... -- -- -- 9,822 9,822
Net loss.......................... -- -- (98,020) -- (98,020)
----- -------- --------- -------- ---------
Balance, December 31, 1994........ -- 433,816 (101,404) (7,858) 324,554
Capital contribution from Vitro,
S.A............................. -- 50,000 -- -- 50,000
Amount related to minimum pension
liability....................... -- -- -- (18,982) (18,982)
Net loss.......................... -- -- (65,969) -- (65,969)
----- -------- --------- -------- ---------
Balance, December 31, 1995........ -- 483,816 (167,373) (26,840) 289,603
Capital contribution from Vitro,
S.A............................. -- 92,484 -- -- 92,484
Amount related to minimum pension
liability....................... -- -- -- 4,446 4,446
Net loss.......................... -- -- (655,840) -- (655,840)
----- -------- --------- -------- ---------
Balance, December 31, 1996........ $ -- $576,300 $(823,213) $(22,394) $(269,307)
===== ======== ========= ======== =========
</TABLE>
- ---------------
(A) One share, $.10 par value outstanding
See Notes to Consolidated Financial Statements.
H-5
<PAGE> 181
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Loss before extraordinary item................................... $(653,504) $ (65,969) $(98,020)
Adjustments to reconcile loss before extraordinary item to net
cash provided by (used in) operating activities:
Impairment of long-lived assets................................ 490,232 -- --
Write-up of assets held for sale............................... (8,967) -- --
Restructuring and other charges................................ 49,973 10,267 79,481
Depreciation................................................... 72,537 76,994 79,037
Amortization................................................... 29,119 22,921 21,439
Other.......................................................... 3,131 462 354
Decrease in cash resulting from changes in assets and
liabilities...................................................... (19,697) (44,245) (54,377)
Increase in cash resulting from changes in prepetition
liabilities...................................................... 8,765 -- --
--------- --------- --------
(28,411) 430 27,914
Cash flows from investing activities:
Expenditures for property, plant and equipment................... (46,254) (70,368) (93,833)
Proceeds from sales of property, plant and equipment............. 14,022 49,490 953
Investment in joint venture...................................... (18,552) (20,631) --
Other............................................................ (13,108) (6,991) (3,775)
--------- --------- --------
(63,892) (48,500) (96,655)
Cash flows from financing activities:
Proceeds from issuance of long-term debt......................... 80,000 -- --
Principal payments on long-term debt............................. (92,191) (365) (702)
Capital contribution from Vitro S.A.............................. 92,484 50,000 --
Sale of accounts receivable...................................... -- 30,000 --
Net draws on Debtor-In-Possession facility....................... 90,455 -- --
Draws on Prepetition Credit Agreement............................ -- 87,000 75,000
Repayments on Prepetition Credit Agreement....................... (83,000) (114,000) (45,000)
Other, primarily financing fees.................................. (8,862) (437) (831)
--------- --------- --------
78,886 52,198 28,467
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents................. (13,417) 4,128 (40,274)
Balance, beginning of year....................................... 18,315 14,187 54,461
--------- --------- --------
Balance, end of year............................................. $ 4,898 $ 18,315 $ 14,187
========= ========= ========
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash provided by (used in) operating activities reflects net
cash payments for interest and taxes as follows:
Interest........................................................... $ 51,412 $ 52,003 $ 60,573
========= ========= ========
Income taxes (refunds), net........................................ $ (209) $ (328) $ (149)
========= ========= ========
In addition, the Company had the following non-cash activities:
Extraordinary item--write off of deferred financing fees......... $ 2,336 $ -- $ --
========= ========= ========
Increase (decrease) in cash resulting from changes in assets and
liabilities:
Accounts receivable.............................................. $ (15,351) $ (6,881) $ (8,600)
Inventories...................................................... 36,154 (5,606) (3,564)
Other current assets............................................. (1,623) (4,050) (1,773)
Accounts payable, accrued expenses and other current
liabilities.................................................... (26,246) (22,462) (34,564)
Other, net....................................................... (12,631) (5,246) (5,876)
--------- --------- --------
$ (19,697) $ (44,245) $(54,377)
========= ========= ========
</TABLE>
The Company considers short-term investments with original maturities of
ninety days or less at the date of purchase to be classified as cash
equivalents.
See Notes to Consolidated Financial Statements.
H-6
<PAGE> 182
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are prepared on the
historical cost basis of accounting and reflect adjustments for the impairment
of goodwill and other long-lived assets. As discussed in Note 3, Anchor
Resolution Corp. (formerly known as Anchor Glass Container Corporation) (the
"Company") is operating as a debtor-in-possession under Chapter 11 of the United
States Bankruptcy Code ("Chapter 11"). The accompanying consolidated financial
statements do not purport to reflect or provide for the consequences of the
bankruptcy proceedings. In particular, such consolidated financial statements do
not purport to show (a) as to assets, the remaining assets, their realizable
value on a liquidated basis or their availability to satisfy liabilities; (b) as
to prepetition liabilities, the amounts that may be allowed for claims or
contingencies, or the status and priority thereof; (c) as to stockholder's
accounts, the effect of any changes that may be made in the capitalization of
the Company; or (d) as to operations, the effect of any changes that may be made
in the Company's remaining business.
Organization of the Company
At December 31, 1996, the Company is a wholly-owned subsidiary of Container
Holdings Corp. ("Container") which is a direct wholly-owned subsidiary of Vitro,
Sociedad Anonima ("Vitro"), a limited liability corporation incorporated under
the laws of the United Mexican States. On September 13, 1996, the Company filed
a voluntary petition for reorganization under Chapter 11 (See Note 3). On
February 5, 1997, Consumers Packaging Inc. ("CPI") and Owens-Brockway Glass
Container Inc. ("OI") acquired substantially all of the assets and business of
the Company in accordance with the terms of the Agreement (See Note 2).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of
clear, amber, green and other color glass containers of various types, designs
and sizes to customers principally in the beer, food, iced tea, distilled
spirits, wine and soft drink industries. The Company markets its products
throughout the United States. The Company's international operations and export
sales are insignificant. Sales to Anheuser-Busch represented 11%, 24% and 25% of
total net sales for 1996, 1995 and 1994, respectively. As a result of the
current highly competitive environment, the Company had been informed by
Anheuser-Busch that the Company's 1996 and future volume allocations would be
reduced. Additionally, sales to The Strohs Brewery Company represented 10.8% of
total net sales for 1996.
Inventories
Inventories are stated at the lower of cost or market. The cost of
substantially all inventories of raw materials and semi-finished and finished
products is determined on the last-in, first-out ("LIFO") method. At December
31, 1996 and 1995, the estimated current cost of these inventories exceeds their
stated value determined on the LIFO basis by approximately $16,740 and $13,599,
respectively. Manufacturing supplies
H-7
<PAGE> 183
and certain other inventories are valued at weighted average actual or standard
costs that approximate actual costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments
and furnace rebuilds, which extend useful lives, and expenditures for glass
forming machine molds are capitalized and depreciated using the straight-line
method over the estimated useful lives of the assets for financial statement
purposes while accelerated depreciation methods are principally used for tax
purposes. Generally, annual depreciation rates range from 2.5% for buildings,
6.3% to 20% for machinery and equipment and 40% for molds. Furnace and machine
rebuilds, which are recurring in nature and which extend the lives of the
related assets, are recorded as a charge to accumulated depreciation. Annual
depreciation rates for such expenditures range from 20% to 25%, based on the
type and extent of these rebuilds. Depreciation of leased property recorded as
capital assets is computed on a straight-line basis over the estimated useful
lives of the assets. Maintenance and repairs are charged directly to expense as
incurred.
Excess of Cost Over Fair Value of Net Assets Acquired (Goodwill)
As a result of the declining profitability, diminishing cash flows and the
Company's bankruptcy as discussed in Note 3, the recoverable value of the
carrying amount of long-lived assets and intangibles was reviewed for
impairment.
Based upon this review, the amount of remaining excess of purchase price
over fair value of net assets acquired at December 31, 1996, of $457,232 and
other long-lived assets of $33,000 were written off.
The excess of cost over fair value of net assets acquired had been
amortized on a straight line basis over a 40 year period. Amortization expense,
included as a component of cost of products sold, for the years ended December
31, 1996, 1995 and 1994 was $13,920, $13,925 and $13,920, respectively.
Income Taxes
Statement of Financial Accounting Standards No. 109 -- Accounting for
Income Taxes ("SFAS 109") establishes financial accounting and reporting
standards for the effects of income taxes that result from a company's
activities during the current and preceding years. In general, SFAS 109 requires
that each company within a consolidated group recognize tax expense based on its
own income. The Company and its subsidiaries file a consolidated tax return with
Container and its subsidiaries. To the extent that current operating loss
benefits of the consolidated group or post acquisition loss carryforwards are
allocated to the Company as a reduction of current income taxes payable, such
benefits are reflected as a contribution of capital. The Company's tax benefits
arising prior to acquisition (preacquisition losses) are reflected as a
reduction in goodwill when the losses are utilized. Post acquisition losses of
the Company are used to offset current or future income tax provisions.
Retirement Plans
The Company has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974. As a result of the Bankruptcy Proceedings (See Note 3),
certain plan contributions were not made as of December 31, 1996 (See Note 12).
At December 31, 1996 and 1995, the Company has recorded an additional minimum
pension liability for underfunded plans representing the excess of the
underfunded liability over previously recorded accrued pension costs.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 -- Employers'
Accounting for Postretirement Benefits Other Than Pensions ("SFAS 106") requires
accrual of postretirement benefits (such as healthcare benefits) during the
period that an employee provides service. The transition obligation from the
adoption of
H-8
<PAGE> 184
SFAS 106 approximated $3,400 and is being amortized on a straight-line basis
over a period of twenty years. This accounting method has no effect on the
Company's cash outlays for these retirement benefits.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 -- Disclosures about
Fair Value of Financial Instruments requires disclosure of the estimated fair
values of certain financial instruments. The estimated fair value amounts have
been determined using available market information or other appropriate
valuation methodologies that require considerable judgment in interpreting
market data and developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated fair
value amounts. Based on the uncertainty of the ultimate outcome of the
Bankruptcy Proceedings, discussed in Note 3, the Company is unable to estimate
the fair value of long-term debt at December 31, 1996. The carrying amount of
other financial instruments approximate their estimated fair values.
The fair value information presented herein is based on information
available to management as of December 31, 1996. Such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date and, therefore, the current estimates of fair value may differ
significantly from the amounts presented herein. As a result of the Bankruptcy
Proceedings discussed in Note 3, the ultimate value of these financial
instruments is dependent upon the payment under the Company's future plan of
reorganization.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimated.
NOTE 2 -- SALE OF ASSETS
On February 5, 1997, OI and Anchor Glass Acquisition Corporation ("New
Anchor"), a majority-owned subsidiary of CPI, acquired substantially all of the
assets and business of the Company, pursuant to the Asset Purchase Agreement
dated December 18, 1996, as amended (the "Agreement").
New Anchor purchased eleven operating glass container manufacturing
facilities, five idled glass container manufacturing facilities and other
related assets. OI purchased assets and assumed liabilities of the Company's
Antioch, California and Hayward, California facilities and purchased certain
other existing inventories. OI also purchased the Company's investment in Rocky
Mountain Bottle Company, a joint venture with Coors Brewing Company ("Coors"),
and assumed the Company's agreement to manufacture Coors' glass packaging
products in the United States.
The total purchase price approximated $378,000, excluding fees of
approximately $1,500. The purchase price received from OI amounted to
approximately $128,000 and was received in cash. The remaining purchase price of
approximately $250,000 from New Anchor was comprised of: approximately $200,500
in cash, $47,000 face amount (1,879,320 shares) of mandatorily redeemable 10%
cumulative convertible preferred stock and $2,500 of common stock (490,898
shares with an estimated value of $5.00 per share) of New Anchor.
The purchase price paid by New Anchor in connection with the Anchor
Acquisition is subject to adjustment. On June 13, 1997, the Company delivered to
New Anchor the closing balance sheet dated January 10, 1997, which indicates
that the Company believes that it is entitled to additional payments from New
Anchor and Owens totaling approximately $76,300 relating primarily to purchase
price adjustments. On July 28, 1997, New Anchor and Owens delivered individual
notices of disagreement to the Company,
H-9
<PAGE> 185
opposing some of the adjustments sought by the Company as well as asserting
other adjustments in New Anchor or Owen's favor. New Anchor's notice of
disagreement requested a reduction to the purchase price of approximately
$96,800. There may be litigation and/or arbitration over some or all aspects of
adjustments requested by all parties. Such adjustments, if material, could
impact the purchase price paid by New Anchor in connection with the Anchor
Acquisition.
Proceeds from the sale were used to repay the outstanding balance of the
DIP Facility and accrued interest thereon, of approximately $109,000 (principal
balance of $90,455 at December 31, 1996). The remainder of the proceeds will be
used against prepetition liabilities, as ultimately determined under the
Company's Plan of Reorganization (see Note 3).
Upon consummation of the purchase and effective February 6, 1997, New
Anchor changed its name to Anchor Glass Container Corporation and the Company
changed its name to Anchor Resolution Corp.
As an objection to the sale, the Pension Benefit Guaranty Corporation
("PBGC") entered a determination to terminate the Company's qualified defined
benefit pension plans. However, in conjunction with the sale, New Anchor assumed
all liabilities of the plans and funded approximately $9,100 of plan
contributions, previously unfunded following the Company's filing of Chapter 11
(see Note 3). Additionally, New Anchor issued to the plans $9,000 face amount
(360,000 shares) of mandatorily redeemable 10% cumulative preferred stock and
Vitro agreed to provide a limited guaranty to the PBGC with respect to the
unfunded benefit liabilities of the Company's defined benefit plans.
Consequently, the PBGC agreed not to terminate the plans as a result of the
Agreement and the assumption of the plans by New Anchor.
On October 4, 1996, the Company entered into an asset purchase agreement
with Ball-Foster Glass Container Co. L.L.C., ("Ball-Foster"). Pursuant to that
agreement, Ball-Foster was to acquire substantially all of the assets of the
Company for $365.0 million in cash at closing, subject to adjustment, as set
forth in that agreement. In addition, Ball-Foster was to assume specified
liabilities of the Company. Payment of the purchase price was guaranteed by
Saint-Gobain Corporation, parent company of Ball-Foster.
Also on October 4, 1996, the Company filed a motion with the Bankruptcy
Court seeking an order (i) authorizing the sale to Ball-Foster, subject to
higher and better bids, of substantially all of the Company's assets free and
clear of certain liens, claims and encumbrances and (ii) authorizing assumption
and assignment of certain unexpired leases and executory contracts. The Court
had entered several amended scheduling orders which established a timetable for
the sale process. The amended deadline for submissions of higher and better bids
was December 12, 1996. At that time, the Company received a higher and better
offer from CPI and OI. Ball-Foster received a termination fee of $3,000 from the
proceeds of the transaction.
H-10
<PAGE> 186
The following unaudited pro forma condensed balance sheet gives effect to
the sale of assets and business and payoff of the DIP Facility (as defined)
described above as if such transactions occurred on December 31, 1996:
<TABLE>
<S> <C>
Cash..................................................................... $ 237,000
Other current assets..................................................... 7,500
Investment in Common Stock of Anchor Glass Container Corporation......... 2,500
Investment in Preferred Stock of Anchor Glass Container Corporation...... 47,000
Property, plant and equipment............................................ 7,000
Other assets............................................................. 10,000
---------
Total assets................................................... $ 311,000
---------
Liabilities not subject to compromise:
Current liabilities.................................................... $ 165,000
Other long-term liabilities............................................ 16,000
Liabilities subject to compromise........................................ 376,000
---------
Total liabilities.............................................. 557,000
---------
Deficiency in assets........................................... $(246,000)
=========
</TABLE>
The Company's remaining deficiency in assets after this sale raises
substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include adjustments that might result
from the outcome of this uncertainty.
NOTE 3 -- BANKRUPTCY PROCEEDINGS
As a result of the continued decline in the Company's results of operations
from the effects of the highly competitive glass container market and the
Company's high debt level, on September 13, 1996 (the "Petition Date"), the
Company filed a voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). On September 30, 1996, Anchor
Recycling Corporation, a wholly-owned subsidiary of the Company, also filed a
voluntary petition to reorganize under Chapter 11 in the same court. The Chapter
11 proceedings are being jointly administered, with the Company managing the
business in the ordinary course as a debtor-in-possession under the supervision
of the Bankruptcy Court. Vitro and the Company concluded that the Chapter 11
filing was necessary in order to preserve the value of its assets and to ensure
that the business has sufficient cash resources to continue operations while it
completed the sale of the business discussed in Note 2.
Under Chapter 11 proceedings, litigation and actions by creditors to
collect certain claims existing at the Petition Date are stayed, without
specific Bankruptcy Court authorization to pay such claims. The Company had
received authorization, pursuant to first day orders, to pay certain claims
related to wages, salaries, vacation, sick pay and other claims. As a
debtor-in-possession, the Company has the right, subject to Bankruptcy Court
approval, and certain other limitations, to assume or reject certain executory
contracts, including unexpired leases. Any claim for damages resulting from the
rejection of an executory contract or an unexpired lease is treated as a general
unsecured claim in the Chapter 11 proceedings.
On September 26, 1996 the United States Trustee appointed a single
unsecured creditors' committee (the "Creditors Committee"). The Creditors
Committee has the right to review and object to certain business transactions
and has participated in the negotiation of the Company's plan of reorganization.
The Creditors Committee has retained the firm of Wachtell, Lipton, Rosen & Katz
as its counsel and Smith Barney Inc. as its financial advisors.
The Company obtained debtor-in-possession ("DIP") financing from Foothill
Capital Corporation, as agent, and Congress Financial Corporation, as co-agent,
(the "Lender Group") which provided for a $130,000 DIP Credit Facility (the "DIP
Facility"), and was approved by the Bankruptcy Court on November 15, 1996. The
DIP Facility, which would have expired September 12, 1997, provided up to
$130,000 under a borrowing
H-11
<PAGE> 187
base formula, less prepetition advances under the Company's then existing New
Senior Credit Facility (the "Prepetition Credit Facility") with the Lender
Group, on terms substantially the same as the Prepetition Credit Facility. On
February 5, 1997, the DIP Facility was repaid in full with proceeds from the
sale as discussed in Note 2.
The DIP Facility and prepetition secured claims are collateralized by
substantially all of the assets of the Company including accounts receivable,
inventories and property, plant and equipment. The Company has continued to
accrue interest on its prepetition secured debt obligations. Because of the
Chapter 11 filing, there has been no accrual of interest on prepetition
unsecured debt subsequent to the Petition Date.
Of the cash proceeds received from the sale of substantially all the assets
and business of the Company (see Note 2), approximately $109,000 was used to
repay in full the DIP Facility and approximately $11,000 was applied to the
prepayment of real estate taxes, certain costs related to the Company's
partnership with Coors (see Note 8) and the termination fee payable to
Ball-Foster (see Note 2). The balance of the net proceeds of the sale remaining
after application to the costs of the winddown and to other administrative and
priority claims will be distributed to the creditors of the Company, including
the holders of approximately $158,000 principal amount of the Company's Senior
Secured Notes and holders of other secured and unsecured claims, pursuant to a
Plan of Reorganization which is being developed by the Company in conjunction
with the Creditors Committee.
NOTE 4 -- PREPETITION LIABILITIES
Prepetition liabilities subject to compromise at December 31, 1996 include
the following:
<TABLE>
<S> <C>
$100,000 10.25% Senior Notes...................................... $100,000
$200,000 9.875% Senior Subordinated Debentures.................... 200,000
Other debt........................................................ 4,368
Trade payables.................................................... 68,701
Accrued interest.................................................. 6,925
--------
$379,994
========
</TABLE>
Because of the Chapter 11 proceedings, there has been no accrual of
interest on the $100,000 10.25% Senior Notes or the $200,000 9.875% Senior
Subordinated Debentures since September 12, 1996. If accrued, interest expense
would have increased $9,167 during the year ended December 31, 1996.
Additionally, the amounts reflected as prepetition liabilities do not include
amounts related to potential claims, which are substantially in excess of the
recorded liabilities at December 31, 1996.
NOTE 5 -- LONG-TERM DEBT
At December 31, 1996, all debt which, by its terms was previously
classified as long-term at the Petition Date, is classified as prepetition
liabilities in the accompanying balance sheet.
As a result of the Bankruptcy Proceedings (See Note 3), the Company is in
default of various covenants relating to its outstanding prepetition debt.
However, under Chapter 11 proceedings, litigation or actions by creditors
related to these defaults are stayed. In addition, the DIP Facility required
that the Company's collateral value and availability, as defined, could not be
less than a specified amount and the outstanding credit facility balance could
not be more than a specified amount as measured on a rolling four-week period
throughout the term of the DIP Facility. Prior to the repayment of the DIP
Facility, the Company was in full compliance with these covenants.
H-12
<PAGE> 188
Long-term debt at December 31, 1995, giving affect to the Noteholder
Restructuring Agreement discussed below, consisted of the following:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Floating Rate Series A Senior Secured Notes, variable interest rate,
payable monthly......................................................... $ 38,000
Series B Senior Secured Notes, interest at 9.91%, payable monthly......... 202,000
Floating Rate Series C Senior Secured Notes, variable interest rate,
payable monthly......................................................... 10,000
$100,000 Senior Notes, Series A, interest at 10.25%, payable
semi-annually........................................................... 100,000
$200,000 Senior Subordinated Debentures, interest at 9.875%, payable
semi-annually........................................................... 200,000
Other..................................................................... 4,450
--------
554,450
Less current maturities................................................... 1,770
--------
$552,680
========
</TABLE>
Effective January 12, 1996, the Company and the holders of the Senior
Secured Notes entered into a Noteholder Restructuring Agreement which provides
for, among other things, consent by the holders to the replacement of the then
current Credit Agreement with a new $130,000 credit facility (subsequently
replaced by the DIP Facility) and waiver by the holders of identified defaults
or events of default existing on the effective date or which may occur during
the waiver period which was to expire not later than January 31, 1998. The
restructuring period was defined as the period between the effective date and
the termination date, which would have occurred no later than June 30, 1998 (the
"Restructuring Period"). The following events occurred in connection with the
effectiveness of the Noteholder Restructuring Agreement:
- execution of the $130,000 Prepetition Credit Facility
- mandatory prepayment on January 12, 1996 of the aggregate principal
amount of the Senior Secured Notes as follows:
-- Series A $12,160; Series B $64,640 and Series C $3,200;
- payment of a restructuring fee of approximately $4,100, or 1.75% of the
principal amount of the consenting noteholders' Senior Secured Notes
outstanding prior to giving effect to the prepayments above, and
- $40,000 capital contribution from Vitro and a commitment from Vitro to
contribute an additional $25,000 on or before January 31, 1997. Capital
contributions in 1996 amounted to $92,484.
Compliance with the financial maintenance tests as defined in the
amendments to the Note Purchase Agreement, including fixed charge coverage, net
worth, current ratio and debt to equity were waived through the period ending
January 31, 1998. However, the Company was required to maintain capital
expenditures and net worth in amounts not less than those defined in the
Noteholder Restructuring Agreement.
During the Restructuring Period, the Series A Notes and Series C Notes bore
a floating rate of interest at the one-month LIBOR rate, as defined, plus 2.0%.
The interest rate was adjusted monthly. Interest on the Series B Notes is fixed
at 9.91% per annum. Interest during the Restructuring Period is payable on the
15th of each month.
Effective January 12, 1996, and concurrent with the Noteholder
Restructuring Agreement, the Company entered into a Loan Agreement with Foothill
Capital Corporation, as agent, and Congress Financial Corporation, as co-agent,
to provide for the $130,000 Prepetition Credit Facility. $80,000 of proceeds
from the Prepetition Credit Facility were used to prepay at closing a
significant portion of certain payments of the Senior Secured Notes originally
scheduled to be made in July 1996 and July 1997 and the remaining $50,000 was
used to finance working capital and other general corporate purposes. Advances
outstanding at any one
H-13
<PAGE> 189
time are not to exceed an amount equal to the Borrowing Base as defined in the
Prepetition Credit Facility. Interest, at prime plus 1.125%, as defined, is
payable monthly. A commitment fee of .5% of the unused portion of the
Prepetition Credit Facility is payable monthly. The Prepetition Credit Facility
(which was subsequently replaced with the DIP Facility) was repaid February 5,
1997 with proceeds from the sale discussed in Note 2.
Through February 5, 1997 the Company had borrowings outstanding under the
DIP Facility. At December 31, 1996, advances outstanding under the DIP Facility
were $90,455. At December 31, 1996, the weighted average interest rate on
borrowings outstanding was 9.375%.
In March 1994, Vitro provided a one year, $20,000 letter of credit facility
on behalf of the Company, thereby effectively increasing the Company's letter of
credit availability by $20,000. Outstanding letters of credit under this
facility at December 31, 1996 were $15,000. In February 1997, the Company
received an additional capital contribution of $8,400 in satisfaction of
obligations outstanding under the letter of credit facility, which was
terminated at that time.
The Senior Secured Notes are collateralized by the property, plant and
equipment of the Company with a secondary interest in inventories and accounts
receivable. The DIP Facility is collateralized by inventories and accounts
receivable with a secondary interest in the property, plant and equipment of the
Company. Both the Note Purchase Agreement and the DIP Facility provide for
various covenants that restrict the Company's ability to incur additional
indebtedness, sell or transfer assets, make investments, enter into transactions
with or make distributions to affiliates and pay dividends or make other
distributions in respect of its capital stock, as well as require it to meet
various financial maintenance tests. Effective with the Noteholder Restructuring
Agreement, the holders of the Senior Secured Notes waived compliance with the
financial maintenance covenants through January 31, 1998. However, the Company
must maintain capital expenditures and net worth in amounts not less than those
defined in the Noteholder Restructuring Agreement.
Effective June 18, 1992, the Company issued $100,000 aggregate principal
amount of 10.25% Senior Notes due June 30, 2002 (the "Exchange Notes"). The
Company then completed an exchange offer with the exchange of all Exchange Notes
for a like principal amount of 10.25% Senior Notes due 2002, Series A (the
"Senior Notes"), issued under an Indenture dated as of October 15, 1992 between
the Company and Continental Bank, National Association, as Trustee. The Senior
Notes are unsecured obligations of the Company ranking senior in right of
payment to the Debentures (described below) and pari passu with all other
existing and future senior indebtedness of the Company. Interest is payable
semi-annually in arrears on each June 30 and December 31. Interest has not been
paid or accrued following the Petition Date.
Effective December 2, 1993, the Company completed a public offering of
$200,000 aggregate principal amount of 9.875% Senior Subordinated Debentures due
December 15, 2008 (the "Debentures") under an Indenture dated December 1, 1993
between the Company and Chemical Bank, as Trustee. The Debentures are unsecured
obligations, subordinate in right of payment to all existing and future senior
debt, as defined, of the Company. Interest on the Debentures is payable
semi-annually on June 15 and December 15. Interest has not been paid or accrued
following the Petition Date.
All of the Company's debt agreements contain cross-default provisions.
NOTE 6 -- RESTRUCTURING AND OTHER CHARGES
In January 1996, formal plans were approved to further restructure certain
of the Company's operations to respond to the continued decline in the industry
sales volume combined with the loss of a significant portion of the business of
the Company's largest customer. Restructuring charges of approximately $50,000,
$10,300 and $79,500 were recorded in the 1996, 1995 and 1994 Consolidated
Statements of Operations for the closure of various plants and other
restructuring obligations.
H-14
<PAGE> 190
The following represents information regarding amounts charged against the
restructuring liability for the Company's restructuring plans.
<TABLE>
<CAPTION>
AMOUNT
CHARGED
AGAINST
LIABILITY
AS OF
RESTRUCTURING DECEMBER 31,
CHARGES 1996
------------- ------------
<S> <C> <C>
1996 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and pension
curtailment losses............................................... $25,100 $ 20,100
Writedown of certain manufacturing assets to net realizable
value............................................................ 24,900
1994/1995 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and pension
curtailment losses............................................... $39,200 $ 33,700
Writedown of certain manufacturing assets to net realizable
value............................................................ 36,600
Writedown of previously shutdown manufacturing facilities to net
realizable value................................................. 14,000
</TABLE>
During the year ended December 31, 1996, the Company recorded an adjustment
to the carrying value of certain idled facilities held for sale. These assets
were previously written down to an estimated net realizable value. Upon a
current evaluation of quotes and offers on these properties in 1996, the Company
increased their net carrying value by approximately $9,000.
NOTE 7 -- CAPITAL CONTRIBUTION
As a condition of closing to the Noteholder Restructuring Agreement, as
discussed in Note 5, in January 1996, the Company received a $40,000 cash
capital contribution from Vitro and received a commitment from Vitro to
contribute an additional $25,000 on or before January 31, 1997. During 1996,
Vitro provided capital contributions of $92,484.
NOTE 8 -- INVESTMENT IN JOINT VENTURE
In March 1995, the Company and Coors entered into a long-term partnership
(the "Partnership") to produce glass bottles at the Coors glass manufacturing
facility in Wheat Ridge, Colorado. The Partnership employed the Company's
technology, along with capital contributions from both companies, to increase
the efficiency, capacity and volume of the Coors facility. Coors has
contributed, as its capital contribution, the facility's machinery, equipment
and certain personal property. The Company's required capital contribution was
approximately $54,000 in cash for capital spending needs over the first three
years of the partnership, of which approximately $36,015 has been contributed
through capital expenditures through December 31, 1996. The Partnership has an
initial term of ten years, which can be extended for additional terms of two
years each, and the partners will share the cost benefit of achieved operational
efficiencies. In addition, Coors has entered into a separate long-term preferred
supplier agreement with the Company. The preferred supplier agreement has an
initial term of ten years, which can be extended for additional terms of two
years each. This agreement allowed the Company to supply 100% of Coors' glass
container requirements (exceeding the Partnership's production) beginning
January 1, 1996.
As discussed in Note 2, effective February 5, 1997, OI purchased the
Company's investment in the joint venture (including the assumption of related
obligations) and the preferred supplier agreement.
NOTE 9 -- SALE AND LEASEBACK
In July and August 1995, the Company entered into sale and leaseback
transactions of certain manufacturing equipment located at four of the Company's
manufacturing facilities. Under the sale agreements, the Company sold the
equipment at an aggregate net selling price of approximately $48,300. In
addition, the Company entered into agreements to lease back the equipment for a
nine year term at an average
H-15
<PAGE> 191
annual rental of approximately $7,600. The deferred gain of approximately
$14,200, representing the excess of the selling price over the net book value of
the equipment, is being amortized at approximately $1,600 annually over the nine
year operating lease term.
NOTE 10 -- RELATED PARTY INFORMATION
Container
There have been no material transactions between the Company and Container
or its subsidiaries for the two years ended December 31, 1996. During 1996, the
Company sold a previously closed manufacturing facility to Container for
proceeds of approximately $750 of cash and a note receivable of $2,800.
Vitro
Related party transactions with Vitro and its consolidated subsidiaries are
summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Purchases of equipment................................. $ 7,183 $ 6,662 $7,170
Payable for equipment.................................. 2,078 22 38
Purchases of inventory................................. 6,978 2,115 1,298
Payable for inventory.................................. 1,582 9 25
Sales of inventory..................................... 23,376 14,534 4,699
Receivable from sales of inventory..................... 3,100 2,211 3,201
Other income........................................... -- -- 573
Other receivables...................................... -- 221 668
Equipment deposits..................................... 2,187 2,187 2,900
</TABLE>
Sale of Accounts Receivable
In December 1995, approximately $30,700 of eligible trade receivables was
sold to Factoraje Serfin, S.A. de C.V., a wholly-owned subsidiary of Grupo
Financiero Serfin, S.A. de C.V., an associated company in which Vitro owns a
minority interest. This transaction resulted in net proceeds to the Company of
$30,000. These receivables were sold without recourse and the proceeds were used
to fund working capital needs.
NOTE 11 -- INCOME TAXES
The consolidated group of companies, of which the Company is a member,
applies SFAS 109 under which the liability method is used in accounting for
income taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Under SFAS 109, if on the basis of
available evidence, it is more likely than not that all or a portion of the
deferred tax asset will not be realized, the asset must be reduced by a
valuation allowance.
The Company had previously recognized approximately $1,825 as a deferred
tax asset, net of the valuation allowance. As a result of continuing losses,
management has determined it is no longer more likely than not that the value of
the remaining deferred tax asset would be realized. As a result, the Company
recorded an additional valuation allowance of $1,825, which is reflected as a
provision for income taxes in the Consolidated Statement of Operations for the
year ended December 31, 1996. The company recorded a current state income tax
provision of $250 in 1995 and 1994.
H-16
<PAGE> 192
The significant components of the deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
1996 1995
--------- --------
<S> <C> <C>
Deferred tax assets:
Acquired tax benefits....................................... $ 27,700 $ 28,300
Post acquisition loss carryforwards......................... 106,000 50,700
Pension and postretirement liabilities...................... 55,300 62,100
Accruals and reserves....................................... 50,300 55,900
--------- --------
239,300 197,000
Valuation allowance......................................... (152,400) (84,900)
--------- --------
86,900 112,100
--------- --------
Deferred tax liabilities:
Property, plant and equipment............................... 55,000 68,900
Inventories................................................. 22,300 24,300
Receivables and other assets................................ 9,600 17,100
--------- --------
86,900 110,300
--------- --------
Net deferred tax asset........................................ $ -- $ 1,800
========= ========
</TABLE>
At December 31, 1996, the Company had unused net operating losses and
investment tax credit carryforwards of approximately $325,000 and $5,200,
respectively, expiring at various dates through 2011. Of these amounts, $260,000
and $0, respectively, are not restricted as to use and expire at various dates
through 2011. The balance of the carryforwards amounting to $65,000 and $5,200,
respectively, expire at various dates through 2004, and are restricted to
offsetting future taxable income of the respective companies which generated the
carryforwards.
NOTE 12 -- PENSION PLANS
The Company has defined benefit retirement plans for salaried and
hourly-paid employees. Benefits are calculated on a salary-based formula for
salaried plans and on a service-based formula for hourly plans. Effective
December 31, 1994, the Company changed its defined benefit plans for salaried
employees resulting in the freezing of benefits, as discussed below. Pension
costs for 1996, 1995 and 1994 are summarized below.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Service cost-benefits earned during the year............... $ 5,266 $ 6,731 $ 9,507
Interest cost on projected benefit obligation.............. 28,646 29,429 28,302
Return on plan assets...................................... (28,270) (22,550) (23,108)
Net amortization and deferral.............................. 2,442 2,757 3,995
Curtailment (gain) loss.................................... 964 -- (3,588)
-------- -------- --------
Total pension cost............................... $ 9,048 $ 16,367 $ 15,108
======== ======== ========
</TABLE>
The Company has substantial unfunded obligations related to its employee
pension plans. The Retirement Protection Act of 1994 requires the Company to
make significant additional funding contributions into its underfunded defined
benefit retirement plans and will increase the premiums paid to the PBGC.
Subsequent to the Petition Date, the Company did not make scheduled
contribution payments to its employee pension plans. Scheduled plan contribution
payments not made as of December 31, 1996, amounted to $16,330. Of the scheduled
January 15, 1997 contribution, $3,599 was not paid.
As an objection to the sale, the PBGC entered a determination to terminate
the Company's qualified defined benefit pension plans. However, in conjunction
with the sale, New Anchor assumed all liabilities of the
H-17
<PAGE> 193
plans and funded approximately $9,100 of plan contributions, previously unfunded
following the Company's filing of Chapter 11 (see Note 3). Additionally, New
Anchor issued $9,000 face amount of mandatorily redeemable 10% cumulative
convertible preferred stock and Vitro has guaranteed to fund qualified defined
benefit plan obligations up to $70,000, should New Anchor default on its
obligations. Consequently, the PBGC agreed not to terminate the plans as a
result of the Agreement and the assumption of the plans by New Anchor.
Effective December 31, 1994, the Company changed its salaried retirement
and savings programs, resulting in the freezing of benefits under its three
defined benefit pension plans for salaried employees and amending its defined
contribution savings plan for salaried employees. The freezing of benefits under
the defined benefit pension plans for salaried employees resulted in a
curtailment gain of $3,588. Effective December 31, 1996, the Company merged the
Latchford Glass Company Salaried Employees' Pension Plan into the Anchor Glass
Container Corporation Retirement Plan for Salaried Employees. Also effective
December 31, 1994, the Company merged the Diamond Bathurst Salaried Employees
Retirement Plan into the Anchor Glass Container Corporation Retirement Plan for
Salaried Employees. Under the amended savings plan, the Company will match,
beginning in 1995, employees' basic contributions to the plan in an amount equal
to 150% of the first 4% of an employee's compensation.
The funded status of the Company's pension plans at December 31, 1996 and
1995 follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------- -------------------------------
ACCUMULATED ASSETS EXCEED ACCUMULATED ASSETS EXCEED
BENEFITS ACCUMULATED BENEFITS ACCUMULATED
EXCEED ASSETS BENEFITS EXCEED ASSETS BENEFITS
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested benefit obligation............ $ 290,589 $ 107,015 $ 280,370 $ 105,605
======== ======== ======== ========
Accumulated benefit obligation....... $ 301,349 $ 107,015 $ 298,533 $ 105,605
======== ======== ======== ========
Projected benefit obligation........... $ 301,349 $ 107,015 $ 299,304 $ 105,605
Plan assets at fair value.............. 218,013 116,139 201,061 111,297
-------- -------- -------- --------
Projected benefit obligation in excess
of (less than) plan assets........... 83,336 (9,124) 98,243 (5,692)
Amounts not recognized --
Subsequent losses...................... (22,394) (3,817) (27,612) (3,907)
Prior service cost..................... (17,140) -- (21,773) --
Additional minimum liability........... 39,534 -- 48,613 --
-------- -------- -------- --------
Accrued (prepaid) pension cost......... $ 83,336 $ (12,941) $ 97,471 $ (9,599)
======== ======== ======== ========
</TABLE>
Significant assumptions (weighted average rates) used in determining net
pension cost and related pension obligations for the benefit plans for 1996,
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Discount rate.................................................. 7.50% 7.50% 8.50%
Expected long-term rate of return on plan assets............... 9.0 9.0 9.0
Rate of increase on compensation level......................... 5.0 5.0 5.0
</TABLE>
The Company recognized an additional minimum liability that is equal to the
difference between the accumulated benefit obligation over plan assets in excess
of accrued (prepaid) pension cost. A corresponding amount is recognized as
either an intangible asset or a reduction of equity. Pursuant to this
requirement, the Company recorded, as of December 31, 1996 and 1995, an
additional liability of $39,534 and $48,613, respectively, an intangible pension
asset of $17,140 and $21,773, respectively, and an equity reduction of $22,394
and $26,840, respectively. Plan assets are held by independent trustees and
consist principally of investments in equities, fixed income and government
securities.
H-18
<PAGE> 194
The Company also sponsors two defined contribution plans covering
substantially all salaried and hourly employees. Expenses under these programs
for the years ended December 31, 1996, 1995 and 1994 were approximately $2,817,
$3,045 and $1,743, respectively.
NOTE 13 -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides benefits to substantially all salaried, and certain
hourly employees, under several plans. SFAS 106 requires accrual of
postretirement benefits (such as healthcare benefits) during the years an
employee provides services. Currently, the Company funds these healthcare
benefits on a pay-as-you-go basis. The Company also contributes to a
multi-employer trust, and under the requirements of SFAS 106, recognizes as
postretirement benefit cost the required annual contribution.
SFAS 106 allows recognition of the cumulative effect of this liability in
the year of adoption or the amortization of the net initial transition
obligation over a period of up to twenty years. The Company elected to recognize
the net initial transition obligation of approximately $3,400 on a straight-line
basis over a period of twenty years. The Company's cash flows are not affected
by implementation of SFAS 106.
The accumulated postretirement benefit obligation at December 31, 1996 and
1995 is as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
Retirees................................................. $38,403 $38,161
Eligible plan participants............................... 8,743 10,636
Other active plan participants........................... 14,273 18,672
------- -------
61,419 67,469
Unrecognized gain or (loss).............................. 4,698 (4,082)
Unrecognized transition obligation....................... (2,695) (2,863)
------- -------
Accrued postretirement benefit costs..................... $63,422 $60,524
======= =======
</TABLE>
Net postretirement benefit costs for the years ended December 31, 1996,
1995 and 1994 consist of the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.......... $1,052 $1,191 $1,805
Interest cost on accumulated postretirement benefit
obligation............................................. 4,200 4,641 4,980
Net amortization and deferral............................ 168 168 859
------ ------ ------
$5,420 $6,000 $7,644
====== ====== ======
</TABLE>
The assumed healthcare cost trend used in measuring the accumulated
postretirement benefit obligation as of December 31, 1996 was 9.0% declining
gradually to 5.5% by the year 2003, after which it remains constant. A one
percentage point increase in the assumed healthcare cost trend rate for each
year would increase the accumulated post-retirement benefit obligation as of
December 31, 1996 by approximately 12% and the net postretirement healthcare
cost for the year ended December 31, 1996 by approximately 13%. The assumed
discount rate used in determining the accumulated postretirement benefit
obligation was 7.25% for 1996 and 1995.
The Company also contributes to a multi-employer trust which provides
certain other postretirement benefits to retired hourly employees. Expenses
under this program for the years ended December 31, 1996, 1995 and 1994, were
$4,990, $5,033 and $4,882, respectively.
H-19
<PAGE> 195
NOTE 14 -- LEASES
The Company leases distribution and office facilities, machinery,
transportation, data processing and office equipment under non-cancelable leases
which expire at various dates through 2004. These leases generally provide for
fixed rental payments and include renewal and purchase options at amounts which
are generally based on fair market value at expiration of the lease. The Company
has no material capital leases.
Future minimum lease payments under non-cancelable operating leases are as
follows:
<TABLE>
<S> <C>
1997............................................................... $22,100
1998............................................................... 17,600
1999............................................................... 13,300
2000............................................................... 9,700
2001............................................................... 8,600
After 2001......................................................... 20,300
-------
$91,600
=======
</TABLE>
Rental expense for all operating leases for the years ended December 31,
1996, 1995 and 1994 was $19,770, $21,670 and $17,302, respectively.
NOTE 15 -- COMMITMENTS AND CONTINGENCIES
The Company is a respondent in various environment-related cases. The
Company is not otherwise party to, and none of its assets are subject to any
other pending legal proceedings, other than ordinary routine litigation
incidental to its business and against which the Company is adequately insured
and indemnified or which is not material. The Company believes that the ultimate
outcome of these cases will not materially affect future operations.
H-20
<PAGE> 196
ANCHOR RESOLUTION CORP.
(DEBTOR IN POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and equivalents......................................................... $ 4,343
Accounts receivable, net..................................................... 85,130
Inventories:
Raw materials and manufacturing supplies.................................. 35,523
Semi-finished and finished products....................................... 131,004
Other current assets......................................................... 18,179
----------
Total current assets................................................. 274,179
Property, plant and equipment, net........................................... 343,084
Other assets................................................................. 55,604
Intangible pension asset..................................................... 21,773
Deferred taxes............................................................... --
Investment in joint venture.................................................. 40,249
Excess of cost over fair value of net assets acquired........................ 460,712
----------
$1,195,601
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
DIP Facility/Credit Facility advances........................................ $ 113,312
Current maturities of long-term debt......................................... --
Accounts payable............................................................. 12,721
Accrued expenses............................................................. 19,608
Accrued interest............................................................. 979
Accrued compensation and employee benefits................................... 27,204
----------
Total current liabilities............................................ 173,824
Long-term debt................................................................. --
Pension liabilities............................................................ --
Other long-term liabilities.................................................... 35,459
Prepetition liabilities not subject to compromise.............................. 158,683
Prepetition liabilities subject to compromise.................................. 574,401
----------
Total liabilities.................................................... 942,367
Commitments and contingencies.................................................. --
Stockholder's equity:
Common stock -- $.10 par value............................................... --
Capital in excess of par value............................................... 576,300
Accumulated deficit.......................................................... (296,226)
Amount related to minimum pension liability.................................. (26,840)
----------
253,234
----------
Total stockholder's equity........................................... $1,195,601
==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
H-21
<PAGE> 197
ANCHOR RESOLUTION CORP.
(DEBTOR IN POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Net sales...................................................................... $ 640,049
Costs and expenses:
Cost of products sold........................................................ 636,917
Selling and administrative expenses.......................................... 30,736
Restructuring charges........................................................ 49,973
--------
Loss from operations........................................................... (77,577)
Reorganization expenses........................................................ (1,576)
Other expense, net............................................................. (3,379)
Interest expense............................................................... (42,160)
--------
Loss before income taxes and extraordinary item................................ (124,692)
Income taxes................................................................... 1,825
--------
Loss before extraordinary item................................................. (126,517)
Extraordinary item -- write-off of deferred financing fees..................... (2,336)
--------
Net loss....................................................................... $ (128,853)
========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
H-22
<PAGE> 198
ANCHOR RESOLUTION CORP.
(DEBTOR IN POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Loss before extraordinary item................................................. $ (126,517)
Adjustments to reconcile loss before extraordinary item to net cash used in
operating activities:
Deferred taxes............................................................ 1,825
Restructuring charges..................................................... 49,973
Depreciation and amortization............................................. 75,239
Other..................................................................... 882
Decrease in cash resulting from changes in assets and liabilities......... (60,148)
-------
(58,746)
Cash flows from investing activities:
Expenditures for property, plant and equipment............................... (36,144)
Investment in joint venture.................................................. (22,210)
Proceeds from sales of property, plant and equipment......................... 11,776
Other........................................................................ (10,438)
-------
(57,016)
Cash flows from financing activities:
Capital contributions from Vitro, S.A........................................ 92,484
Net draws (repayments) on DIP/Credit Facility................................ 30,313
Principal payments on long-term debt......................................... (92,126)
Proceeds from issuance of long-term debt..................................... 80,000
Other........................................................................ (8,881)
-------
101,790
Cash and equivalents:
Increase (decrease) in net cash position..................................... (13,972)
Balance, beginning of year................................................... 18,315
-------
Balance, end of period....................................................... $ 4,343
-------
Supplemental disclosure of cash flow information:
Interest payments, net....................................................... $ 44,860
-------
Income tax payments (refunds), net........................................... $ (170)
=======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
H-23
<PAGE> 199
ANCHOR RESOLUTION CORP.
(DEBTOR IN POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN THOUSANDS)
NOTE 1 -- MANAGEMENT'S RESPONSIBILITY
The accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the ordinary course of
business. Under the reorganization and anticipated sale of assets discussed in
Notes 2 and 3 below, the Company will sell or otherwise realize assets, and
liquidate or settle liabilities, for amounts substantially less than those
reflected in the condensed consolidated financial statements. Due to the
pervasive nature of the uncertainties regarding the ultimate outcome of the
reorganization, which may include the sale of substantially all of the Company's
assets as discussed in Notes 2 and 3, the Company cannot reasonably estimate the
related impairment to the reported assets and the amount of liabilities as of
November 21, 1996. Therefore, the amounts reported in the condensed consolidated
financial statements do not give effect to the adjustments to the carrying value
of assets or amounts and classifications of liabilities that will be necessary
pursuant to a plan of reorganization and sale of substantially all of the
Company's assets.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The results of operations for the interim
periods are not necessarily indicative of the results of the full fiscal year.
NOTE 2 -- BANKRUPTCY PROCEEDINGS
The Company incurred a loss of $128,853 for the nine months ending
September 30, 1996 and has an accumulated deficit of $296,226 at September 30,
1996. As a result of the continued decline in the Company's results of
operations from the effect of the highly competitive glass container market and
the Company's high debt level, on September 13, 1996 (the "Petition Date"), the
Company filed a voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). On September 30,
1996, Anchor Recycling Corporation, a wholly-owned subsidiary of the Company,
also filed a voluntary petition to reorganize under Chapter 11 in the same
court. The Chapter 11 proceedings are being jointly administered, with the
Company managing the business in the ordinary course as a debtor-in-possession
under the supervision of the Bankruptcy Court. The Company concluded that the
Chapter 11 filing was necessary in order to preserve the value of its assets and
to ensure that the business has sufficient cash resources to continue operations
while it completed the sale of the business discussed in Note 3.
Under Chapter 11 proceedings, litigation and actions by creditors to
collect certain claims existing at the Petition Date are stayed, without
specific Bankruptcy Court authorization to pay such claims. The Company has
received authorization, pursuant to first day orders, to pay certain claims
related to wages, salaries, vacation, sick pay and other claims. As a
debtor-in-possession, the Company has the right, subject to Bankruptcy Court
approval, and certain other limitations, to assume or reject certain executory
contracts, including unexpired leases. Any claim for damages resulting from the
rejection of an executory contract or an unexpired lease is treated as a general
unsecured claim in the Chapter 11 proceedings.
On September 26, 1996 the United States Trustee appointed a single
unsecured creditors' committee (the "Creditors Committee"). The Creditors
Committee has the right to review and object to certain business transactions
and is expected to participate in the negotiation of the Company's plan of
reorganization. The Creditors' Committee has retained the firm of Wachtell,
Lipton, Rosen & Katz as its counsel and Smith Barney Inc. as financial advisors.
The Company has obtained debtor-in-possession ("DIP") financing from
Foothill Capital Corporation, as agent and Congress Financial Corporation, as
co-agent, (the "Lender Group") which provides for a
H-24
<PAGE> 200
$130,000 DIP Credit Facility (the "DIP Facility"), which was approved by the
Bankruptcy Court on November 15, 1996. The DIP Facility, which expires September
30, 1997, provides up to $130,000 under a borrowing base formula, less
prepetition advances under the Company's then existing New Senior Credit
Facility (the "Prepetition Credit Facility") with the Lender Group, on terms
substantially the same as the Prepetition Credit Facility.
The DIP Facility and prepetition secured claims are collateralized by
substantially all of the assets of the Company including accounts receivable,
inventories and property, plant and equipment. The Company has continued to
accrue interest on its prepetition secured debt obligations. Because of the
Chapter 11 filing, there has been no accrual of interest on Prepetition
unsecured debt subsequent to the Petition Date.
Without the timely completion of the sale of the Company's assets discussed
in Note 3, the factors described above raise substantial doubt about the ability
of the Company to continue as a going concern and there can be no assurance that
the Company can continue to generate sufficient cash flow to maintain
operations. These financial statements do not include any adjustments that might
be necessary should the Company be unable to continue as a going concern.
NOTE 3 -- ASSET PURCHASE AGREEMENT
On October 4, 1996, the Company entered into an asset purchase agreement
(the "Agreement") with Ball-Foster Glass Container Co. L.L.C., ("Ball-Foster") a
limited liability company organized under the laws of the State of Delaware.
Pursuant to the Agreement, Ball-Foster will acquire substantially all of the
assets of the Company for $365 million in cash at closing, subject to
adjustment, which may be substantial, as set forth in the Agreement. In
addition, Ball-Foster will assume specified liabilities of the Company. Payment
of the purchase price is guaranteed by Saint-Gobain Corporation, parent company
of Ball-Foster. Closing under the Agreement is subject to several conditions,
including compliance with the Hart-Scott-Rodino Antitrust Improvements Act,
approval by the United States Bankruptcy Court for the State of Delaware as a
sale free and clear of liens, and a closing prior to December 31, 1996. On
November 13, 1996 filings under Hart-Scott-Rodino were made with the Federal
Trade Commission and the Department of Justice with requests for early
termination of the 30 day waiting period.
Also on October 4, 1996, the Company filed a motion with the Bankruptcy
Court seeking an order (i) authorizing the sale to Ball-Foster, subject to
higher and better bids, of substantially all of the Company's assets free and
clear of certain liens, claims and encumbrances and (ii) authorizing assumption
and assignment of certain unexpired leases and executory contracts (the "Sale
Motion"). The Court has entered several amended scheduling orders which
establish the following timetable for the sale process. The deadline for
submissions of higher and better bids is December 2, 1996 at 3:00 pm Eastern
Standard Time. If other bids are submitted, an auction will be held on December
4, 1996 at the office of Stroock & Stroock & Lavan, counsel to the Company. The
sale hearing itself is scheduled for December 9, 1996 at 3:00 pm. Other
adjourned dates have been set for certain objections to the sale and responses
to objections. A number of objections have been filed in connection with the
Sale Motion, some of which assert that the sale cannot proceed without the
consent of the objecting parties, notably Owens-Brockway Glass Container, Inc.,
a party to a technology license agreement with the Company and Coors Brewing
Company, a customer and joint venture partner with the Company in the Rocky
Mountain Bottle Company joint venture. Another party claiming to be a potential
bidder for the assets of the Company, Consumers Packaging Inc. ("Consumers"),
has filed an objection alleging that the Ball-Foster deal cannot be consummated.
To date, Consumers has not submitted a bid to the Company.
Based on the pervasive nature of the uncertainties that exist around the
ultimate resolution of the bankruptcy proceedings discussed in Note 2, which may
include the sale of the Company's assets, management cannot determine the extent
to which the Company's assets have been impaired. Accordingly, no provision for
loss has been reflected in the accompanying condensed consolidated financial
statements for asset impairment.
The Company is actively engaged, together with its Creditors Committee,
Ball-Foster and other interested parties, in reviewing the objections filed and
negotiating with the significant objectors in an effort to
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consensually resolve all objections. The Company believes all interested parties
are working to resolve objections and meet the deadline of a year-end closing as
set forth in the Agreement. However, there can be no assurance that such
objections will be resolved or that certain conditions to closing will be
satisfied or waived.
NOTE 4 -- INCOME TAXES
As a result of continuing losses, management has determined it was no
longer more likely than not that the value of the remaining deferred tax asset
would be realized. As a result, the Company recorded an additional valuation
allowance of $1,825, which is reflected as a provision for income taxes in the
consolidated statement of operations for the quarter ended September 30, 1996.
NOTE 5 -- RESTRUCTURING AND OTHER CHARGES
A summary of activity related to the Company's 1996 and 1995 restructuring
plans follows:
<TABLE>
<CAPTION>
AMOUNT CHARGED
AGAINST LIABILITY
RESTRUCTURING AS OF
LIABILITY SEPTEMBER 30, 1996
------------- ------------------
<S> <C> <C>
1996 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and
pension curtailment losses............................ $25,100 $ 13,100
Writedown of certain manufacturing assets to net
realizable value...................................... 24,900 --
1995 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and
pension curtailment losses............................ 39,200 33,500
Writedown of certain manufacturing assets to net
realizable value...................................... 36,600 12,000
Writedown of previously shutdown manufacturing
facilities to net realizable value.................... 14,000 500
</TABLE>
NOTE 6 -- PREPETITION LIABILITIES
Prepetition liabilities subject to compromise at September 30, 1996 include
the following:
<TABLE>
<S> <C>
$100,000 10.25% Senior Notes...................................... $100,000
$200,000 9.875% Senior Subordinated Debentures.................... 200,000
Insurance related liabilities..................................... 93,189
Pension related liabilities....................................... 82,487
Trade payables.................................................... 60,946
Other miscellaneous claims........................................ 21,242
Vacation and severance............................................ 9,628
Accrued interest.................................................. 6,909
--------
$574,401
--------
</TABLE>
Prepetition liabilities not subject to compromise at September 30, 1996
include the following:
<TABLE>
<S> <C>
Senior Secured Notes.............................................. $158,025
Accrued interest.................................................. 658
--------
$158,683
--------
</TABLE>
Because of the Chapter 11 proceedings, there has been no accrual of
interest on the $100,000 10.25% Senior Unsecured Notes or the $200,000 9.875%
Senior Subordinated Notes since September 12, 1996. If accrued, interest expense
would have increased $1,500 during the nine months ended September 30, 1996.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain historical financial information of
Old Anchor. The selected financial data for the five years ended December 31,
1996 has been derived from Old Anchor's consolidated financial statements. The
selected financial data for the nine months ended September 30, 1996 have been
derived from Old Anchor's unaudited condensed consolidated financial statements.
The following information should be read in conjunction with Old Anchor's
consolidated financial statements, unaudited condensed consolidated financial
statements and the related Old Anchor Management's Discussion and Analysis of
Financial Condition and Results of Operations for Old Anchor, included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996(1) 1996
---------- ---------- ---------- ---------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $1,161,925 1,126,037 $1,089,317 $ 956,639 $ 814,370 $ 640,049
Cost of products sold.............. 1,037,329 1,028,332 996,780 906,393 831,612 636,917
Selling and administrative
expenses......................... 45,785 51,137 52,371 48,998 39,570 30,736
Restructuring and other
charges(1)....................... -- -- 79,481 10,267 49,973 49,973
Impairment of long-lived
assets(2)........................ -- -- -- -- 490,232 --
Write-up of assets held for
sale(1).......................... -- -- -- -- (8,967) --
---------- ---------- ---------- ---------- --------- --------
Income (loss) from operations...... 78,811 46,568 (39,315) (9,019) (588,050) (77,577)
Other income (expense), net........ (523) 500 (2,385) 171 (10,020) (3,379)
Interest expense(3)................ (64,659) (62,535) (56,070) (56,871) (48,601) (42,160)
---------- ---------- ---------- ---------- --------- --------
Income (loss) before reorganization
items, income taxes,
extraordinary items and
cumulative effect of accounting
change........................... 13,629 (15,467) (97,770) (65,719) (646,671) (123,116)
Reorganization items............... -- -- -- -- (5,008) (1,576)
Income taxes(4).................... (1,300) (2,400) (250) (250) (1,825) (1,825)
Extraordinary items(5)............. (9,026) (18,152) -- -- (2,336) (2,336)
Cumulative effect of accounting
change(4)........................ -- 1,776 -- -- -- --
---------- ---------- ---------- ---------- --------- --------
Net income (loss).................. $ 3,303 $ (34,243) $ (98,020) $ (65,969) $(655,840) $ (128,853)
========== ========== ========== ========== ========= ========
OTHER FINANCIAL DATA:
EBITDA(6).......................... $ 181,495 $ 150,617 $ 138,257 $ 101,334 $ 34,824 $ 44,256
Depreciation and amortization...... 103,207 103,549 100,476 99,915 101,656 75,239
Capital expenditures............... 77,580 89,901 93,833 70,368 46,254 36,144
Ratio of earnings to fixed
charges(7)....................... 1.19x -- -- -- -- --
BALANCE SHEET DATA (AT END OF
PERIOD):
Accounts receivable................ $ 58,079 $ 58,128 $ 66,618 $ 40,965 $ 55,851 $ 85,130
Inventories........................ 196,827 173,204 176,769 180,574 144,419 166,527
Total assets....................... 1,321,733 1,347,201 1,264,488 1,208,348 643,468 1,195,601
Total debt(8)...................... 526,405 555,222 584,671 557,450 552,848 575,732
Total stockholder's equity
(deficiency in assets)........... 462,063 412,752 324,554 289,603 (269,307) 253,234
</TABLE>
- ---------------
(1) Restructuring and other charges reflects Old Anchor's implementation of a
series of restructuring plans in an effort to respond to the continued
decline in the industry sales volume combined with, in 1996, the loss of a
significant portion of the business of Old Anchor's largest customer. The
following represents
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<PAGE> 203
information regarding the amounts charged against the restructuring
liability for Old Anchor's restructuring plans:
<TABLE>
<CAPTION>
AMOUNT CHARGED
AGAINST
LIABILITY
AS OF
RESTRUCTURING DECEMBER 31,
CHARGES 1996
------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1996 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and
pension curtailment losses.............................. $25,100 $ 20,100
Writedown of certain manufacturing assets to net
realizable value........................................ 24,900
1994/1995 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and
pension curtailment losses.............................. $39,200 $ 33,700
Writedown of certain manufacturing assets to net
realizable value........................................ 36,600
Writedown of previously shutdown manufacturing facilities
to net realizable value................................. 14,000
</TABLE>
During the year ended December 31, 1996, the Company recorded an adjustment
to the carrying value of certain idled facilities held for sale. These
assets were previously written down to an estimated net realizable value.
Upon a current evaluation of quotes and offers on these properties in 1996,
Old Anchor increased their net carrying value by approximately $9.0 million.
The balance of the restructuring liability is anticipated to be expended and
charged against the liability over the next three years.
(2) Impairment of long-lived assets reflects the adjustment for the write-off of
goodwill and other long-lived assets. As a result of the declining
profitability, diminishing cash flow and the bankruptcy proceedings, the
recoverable value of the carrying amount of long-lived assets and
intangibles was reviewed for impairment. Based upon this review, the amount
of remaining excess of the purchase price over the fair value of net assets
acquired at December 31, 1996, of $457.2 million and other long-lived assets
of $33.0 million were written off. The excess cost over fair value of net
assets acquired had been amortized on a straight line basis over a 40 year
period. Amortization expense, included as a component of cost of products
sold, was approximately $13.9 million for each of the years ended December
31, 1996, 1995 and 1994. See Old Anchor's Notes to the Consolidated
Financial Statements, included elsewhere in this Prospectus.
(3) Because of the Chapter 11 proceedings, there has been no accrual of interest
on the $100.0 million 10.25% Senior Notes or the $200.0 million 9.875%
Senior Subordinated Debentures since September 12, 1996. If accrued,
interest expense would have increased $9.2 million during the year ended
December 31, 1996.
(4) Income tax provision reflects any additional valuation allowances required
to be recorded under SFAS 109. The adoption of SFAS 109 effective January 1,
1993 resulted in an increase in the cumulative net deferred tax asset by
$1.8 million. Under SFAS 109, deferred income taxes reflect the net tax
effects of temporary differences between carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes, and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse. If on the
basis of available evidence, it is more likely than not that all or a
portion of the deferred tax asset will not be realized, the asset must be
reduced by a valuation allowance.
(5) Extraordinary items in the three years ended December 31, 1992, 1993 and
1996, result from the write-off of financing costs related to debt
extinguished during the relevant periods, net of taxes.
(6) EBITDA (earnings before interest, taxes, depreciation and amortization)
("EBITDA") is an amount equal to income (loss) before income taxes,
extraordinary items and cumulative effect of accounting change plus the
amounts of restructuring charges, reorganization items, the impairment of
long-lived assets, interest, depreciation and amortization and less the
amount of the write-up of assets held for sale included in the determination
of income (loss) before income taxes, extraordinary items and cumulative
effect of accounting change. EBITDA is a measure of the Company's debt
service ability. It is not an alternative to net income as a measure of the
Company's results of operations (as interest, taxes,
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<PAGE> 204
depreciation and amortization are included in the determination of net
income) or to cash flows as a measure of liquidity (as cash flows include
the cash effects of all operating, financing and investing activities).
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes and extraordinary items plus fixed
charges. Fixed charges consist of interest and amortization of debt expense
plus a portion of operating lease expense representative of the interest
factor. There was a deficiency of earnings to fixed charges in 1993, 1994,
1995 and 1996 of $15.5 million, $97.8 million, $65.7 million and $651.7
million, respectively. For the nine months ended September 30, 1996, there
was a deficiency of earnings to fixed charges of $124.7 million.
(8) Total debt as of December 31, 1996 includes $462.3 million of pre-petition
liabilities and $90.5 million outstanding under Old Anchor's
debtor-in-possession credit facility.
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<PAGE> 205
ANCHOR RESOLUTION CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
RESULTS OF OPERATIONS
Introduction
The following table sets forth certain information derived from the
Consolidated Financial Statements of Anchor Resolution Corp., formerly named
Anchor Glass Container Corporation and currently a debtor-in-possession under
Chapter 11 of the Bankruptcy Code ("Old Anchor"), for the three years ended
December 31, 1996. The following discussion should be read in conjunction with
the Consolidated Financial Statements of Old Anchor and notes thereto, included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1994 1995 1996
------------------ ---------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- ------- ------ ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales.................................... $1,089.3 100.0% $956.6 100.0% $ 814.4 100.0%
Cost of products sold........................ 996.8 91.5 906.4 94.8 831.6 102.1
Selling and administrative expenses.......... 52.4 4.8 49.0 5.1 39.6 4.9
Restructuring and other charges.............. 79.5 7.3 10.3 1.1 50.0 6.1
Impairment of long-lived assets.............. -- -- -- -- 490.2 60.2
Write-up of assets held for sale............. -- -- -- -- (9.0) (1.1)
Loss from operations......................... (39.4) (3.6) (9.1) (1.0) (588.0) (72.2)
Interest expense............................. 56.1 5.2 56.8 5.9 48.6 6.0
Loss before reorganization items, income
taxes and extraordinary item............... (97.8) (9.0) (65.7) (6.9) (651.7) (76.0)
Loss before extraordinary item............... (98.0) (9.0) (66.0) (6.9) (653.5) (80.0)
Net loss..................................... (98.0) (9.0) (66.0) (6.9) (655.8) (80.5)
</TABLE>
The net loss for the year ended December 31, 1996 was $655.8 million
compared to a net loss of $66.0 million for 1995. Included in the loss for 1996
is the impairment of long-lived assets of $490.2 million. Included in the 1996
and 1995 results were first quarter charges of $50.0 million and $10.3 million,
respectively, for Old Anchor's 1996 and 1995 restructuring programs. Excluding
the effect of these items, net loss would have been $115.6 million compared to
$55.7 million for 1995.
The decline in Old Anchor's operations is a direct result of Old Anchor's
high debt levels and industry-wide volume declines that have led to severe
competitive pricing pressures, negatively impacting operating results. Net sales
for 1996 decreased 14.9% compared to 1995, on a volume decline of approximately
14%, primarily in the beer, iced tea and soft drink markets. As an example, Old
Anchor's 1996 volume allocation from its largest customer in 1995,
Anheuser-Busch, has been significantly reduced. The softness in overall industry
volume shipments has led to severe competitive pricing pressures, negatively
impacting operating margins. In accordance with its restructuring plans, Old
Anchor closed its Cliffwood, New Jersey plant in January 1996, and closed its
Waukegan, Illinois, Los Angeles, California and Keyser, West Virginia plants in
1995.
NET SALES
Net sales for 1996 were $814.4 million, a decrease of 14.9% compared to
$956.6 million for 1995. The decrease in net sales principally reflects the
softening in 1996 of the year-to-year demand for glass containers which has
resulted in increased competition for market share and lower pricing trends. In
addition, as described above, Anheuser-Busch has significantly reduced its
purchases from Old Anchor.
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<PAGE> 206
Net sales for 1995 were $956.6 million, a decrease of 12.2% compared to
$1,089.3 million for 1994. The decrease in net sales principally reflects the
softening in 1995 of the year-to-year demand for glass containers in the iced
tea and beer segments and year-to-year reduction of unit shipments in the soft
drink segment, as discussed above. The softness in demand has resulted in
increased competition for market share and lower pricing trends.
COST OF PRODUCTS SOLD
Cost of products sold as a percentage of net sales was 102.1% for 1996
compared to 94.8% for 1995. This increase principally reflects the impact of
reduced shipping volumes and lower pricing trends, as described above. Partially
offsetting this increase is the impact of Old Anchor's strategic initiatives and
cost savings derived from Old Anchor's restructuring plans and re-engineering
program.
Cost of products sold as a percentage of net sales was 94.8% for 1995
compared to 91.5% for 1994. This increase principally reflects the impact of
reduced shipping volumes and lower pricing trends. Additionally, Old Anchor's
gross profit margin was negatively impacted by cost increased in certain raw
materials, specifically packaging materials.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses declined $9.4 million, or 19.2%, in
1996 compared to 1995. This decrease principally reflects lower personnel and
fringe benefit costs as a result of headcount reductions associated with Old
Anchor's re-engineering and cost reduction programs.
Selling and administrative expenses declined $3.4 million, or 6.4%, in 1995
compared to 1994, because of lower personnel and fringe benefit costs as a
result of headcount reductions in that year.
RESTRUCTURING AND OTHER CHARGES
During 1994, formal plans were approved to significantly reduce Old
Anchor's cost structure and to improve productivity. This restructuring program
related primarily to consolidation of underutilized manufacturing operations and
provided for the closure of three of Old Anchor's 17 manufacturing plants. In
the 1994 fourth quarter, Old Anchor recorded a restructuring charge of $79.5
million and in the 1995 first quarter, an additional $10.3 million charge was
recorded to reflect the benefit arrangements for employees affected by this
plan. In January 1996, formal plans were approved to further restructure certain
of Old Anchor's operations to respond to the continued decline in the industry
sales volume combined with the loss of a significant portion of the business of
Old Anchor's largest 1995 customer. A restructuring charge of approximately
$50.0 million has been recorded in the 1996 Consolidated Statement of Operations
for the closure of the Cliffwood, New Jersey plant and other restructuring
obligations.
IMPAIRMENT OF LONG-LIVED ASSETS
As a result of declining profitability, diminishing cash flows and the
bankruptcy proceedings, the entire $457.2 million of goodwill and $33.0 million
of other long-lived assets were written off.
WRITE-UP OF ASSETS HELD FOR SALE
In December 1996, Old Anchor wrote up the value of certain assets held for
sale by $9.0 million.
INTEREST EXPENSE
Interest expense was $48.6 million for 1996 compared to $56.8 million for
1995. Because of the Bankruptcy Proceedings, there has been no accrual of
interest on the $100.0 million 10.25% Senior Notes or the $200.0 million 9.857%
Senior Subordinated Debentures since September 12, 1996. If accrued, interest
expense would have increased by $9.1 million in 1996.
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<PAGE> 207
Interest expense was $56.8 million for the year ended December 31, 1995
compared to $56.1 million for the corresponding period of 1994. The increase
reflected higher prevailing interest rates, and higher average working capital
borrowings outstanding during 1995, as compared to 1994.
LIQUIDITY AND CAPITAL RESOURCES
As a result of the continued decline in Old Anchor's results of operations
from the effect of the highly competitive glass container market, and Old
Anchor's high debt level, on September 13, 1996 (the "Petition Date"), Old
Anchor filed a voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). On September 30,
1996, Anchor Recycling Corporation, a wholly-owned subsidiary of Old Anchor,
also filed a voluntary petition to reorganize under Chapter 11 in the same
court. The Chapter 11 proceedings are being jointly administered, with Old
Anchor managing the business in the ordinary course as a debtor-in-possession
under the supervision of the Bankruptcy Court. Old Anchor concluded that the
Chapter 11 filing was necessary in order to preserve the value of its assets and
to ensure that the business had sufficient cash resources to continue operations
while it completed the sale of the business discussed in Note 2 to the Notes to
the Consolidated Financial Statements, appearing elsewhere herein.
Old Anchor obtained debtor-in-possession ("DIP") financing from Foothill
Capital Corporation, as agent and Congress Financial Corporation, as co-agent
(the "Lender Group") to provide for a $130.0 million DIP Credit Facility (the
"DIP Facility"), which was approved by the Bankruptcy Court on November 15,
1996. The DIP Facility, which would expire September 30, 1997, provided up to
$130.0 million under a borrowing base formula, less prepetition advances under
Old Anchor's then existing Prepetition Credit Facility with the Lender Group, on
terms substantially the same as the Prepetition Credit Facility.
Advances outstanding at any one time were not to exceed an amount equal to
the Borrowing Base, consisting of accounts receivable and finished product
inventory, as defined in the Prepetition Credit Facility, and amended by the DIP
Facility. At December 31, 1996, Old Anchor's available borrowing base, as
defined under the DIP Facility was approximately $113.7 million against which
$90.5 was outstanding. Interest, at prime plus 1.125%, as defined, was payable
monthly. A commitment fee of 0.5% of the unused portion of the DIP Facility was
payable monthly.
On February 5, 1997, Anchor Glass Acquisition Corporation ("New Anchor"), a
wholly-owned subsidiary of Consumers Packaging Inc. ("CPI"), and Owens-Brockway
Glass Container Inc. ("OI") acquired substantially all of the assets and
business of Old Anchor in accordance with the terms of the Asset Purchase
Agreement, dated December 18, 1996 (the "Agreement") as discussed in Note 2 to
the Notes to Consolidated Financial Statements. The total purchase price
approximated $387.9 million, excluding fees of approximately $9.9 million. The
purchase price received from OI amounted to approximately $128.4 million and was
received in cash. The remaining purchase price of approximately $250.0 million
from New Anchor was comprised of approximately $200.5 million in cash, $47.0
million face amount (1,879,320 shares) of mandatorily redeemable 10% cumulative
convertible preferred stock and $2.5 million of common stock (490,898 shares
with an estimated value of $5.00 per share) of New Anchor. The purchase price is
subject to adjustment as defined in the Agreement.
Proceeds from the sale were used to repay the outstanding balance of the
DIP Facility and accrued interest thereon, at February 5, 1997, of approximately
$109.0 million. The remainder of the proceeds will be used to satisfy
prepetition liabilities, as to be determined under Old Anchor's Plan of
Reorganization. Old Anchor's principal sources of liquidity through February 5,
1997 were funds derived from operations and borrowings under the DIP Facility.
In 1996, operating activities consumed $28.4 million in cash compared to
$0.4 million and $27.9 million of cash provided in 1995 and 1994, respectively.
These increases in cash consumed reflect the increase in losses and the changes
in working capital items during the periods compared.
Capital expenditures in 1996 were $46.3 million compared to $70.4 million
and $93.8 million in 1995 and 1994, respectively. In addition, in 1996, Old
Anchor invested approximately $18.6 million in the joint venture
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<PAGE> 208
with Coors Brewing Company ("Coors"). Old Anchor invested $20.0 million in the
joint venture in 1995. Also in 1995, Old Anchor entered into sale and leaseback
transactions, with respect to certain of its glass manufacturing equipment, with
an aggregate net selling price of approximately $48.3 million.
Cash flows from financing activities for the years ended December 31, 1996,
1995 and 1994 were $78.9 million, $52.2 million and $28.5 million, respectively.
The 1996 cash flows from financing activities principally reflects a $92.5
million capital contribution received from Vitro, Sociedad Anonima and
borrowings under the Prepetition Credit Facility, modified by the DIP Facility.
In February 1997, Old Anchor received an additional capital contribution of $8.4
million in satisfaction of obligations outstanding under the $20.0 million
letter of credit facility, which was terminated at that time.
As a result of the Bankruptcy Proceedings, Old Anchor is in default of
various covenants relating to Old Anchor's outstanding prepetition debt.
However, under Chapter 11 proceedings, litigation or actions by creditors
related to these defaults are stayed. In addition, the DIP Facility required
that Old Anchor's collateral value and availability, as defined, could not be
less than a specified amount as measured on a rolling four-week period
throughout the term of the DIP Facility. Prior to the repayment of the DIP
Facility, Old Anchor was in full compliance with these covenants.
IMPACT OF INFLATION
The impact of inflation on the costs of Old Anchor, and the ability to pass
on cost increases in the form of increased sales prices, is dependent upon
market conditions. While the general level of inflation in the domestic economy
has been at relatively low levels since Old Anchor's formation in 1983, Old
Anchor has generally been unable, since the end of 1991, to fully pass on
inflationary cost increases as a result of competitive pricing pressures. This
has negatively impacted Old Anchor's operating results.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and soft
drink industries, in which demand is stronger during the summer months, Old
Anchor's shipment volume is typically highest in the second and third quarters.
Consequently, Old Anchor historically builds inventory during the first quarter
in anticipation of seasonal demands during the second and third quarters.
However, industry patterns existing over the last 18 months have somewhat
altered the normal seasonal trends. In addition, Old Anchor generally schedules
shutdowns of its plants for furnace rebuilds and machine repairs in the first
and fourth quarters of the year to coincide with scheduled holiday and vacation
time under its labor union contracts. These shutdowns and seasonal sales
patterns adversely affect profitability during the first and fourth quarters.
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<PAGE> 209
ANNEX A
SUMMARIZATION LETTER OF AAA
At the request of the Initial Purchasers, AAA was engaged to appraise
certain property exhibited to us as that of Anchor Glass Container Corporation.
Our services were provided in accordance with the Uniform Standards of
Professional Appraisal Practice, (USPAP) as promulgated by The Appraisal
Foundation, an organization founded by Congress in 1986.
We made our investigation to express an opinion, as of December 31, 1996,
of the market value of the real estate and personal property. The real
property's fee simple estate was appraised, while the personal property was
valued on the premise of liquidation-in-place. It was understood that our
opinion would provide a basis for effectuating financing arrangements.
Appraisals are time and use specific so it is entirely inappropriate to use our
appraisal for any purpose other than that specified.
The term market value is equivalent to open market and is defined as the
most reasonable price a property should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as of a
specified date and the passing of title from seller to buyer under conditions
whereby: (1) buyer and seller are typically motivated; (2) both parties are well
informed or well advised, and acting in what they consider their best interests;
(3) a reasonable time is allowed for exposure in the open market; (4) payment is
made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and (5) the price represents the normal consideration for
the property sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale. It was assumed the real
estate was held in fee simple, except for the real property located in Salem,
New Jersey which was a leasehold interest, and clear of any liens and
encumbrances.
Fair market value is defined as the estimated amount at which the assets
might be expected to exchange between a willing buyer and a willing seller,
neither being under compulsion, each having reasonable knowledge of all relevant
facts. When fair market value is established on the premise of
liquidation-in-place, it is assumed that the buyer and seller would be
contemplating retention of the personal property at its present location for
continued use of like operations. This value premise represents the estimated
amount a property should realize if sold on a negotiated basis given a
reasonable amount of time in which to find a buyer, the property would not be
operating or producing a product at the time of its sale, but would be capable
of operation and production. TO UNDERSTAND THE APPRAISAL PROCESS AND THE
ASSUMPTIONS IMPLICIT IN THE ABOVE DEFINITIONS, THE READER IS URGED TO STUDY THE
APPRAISAL IN ITS ENTIRETY.
Our investigation included real estate, including land, land improvements,
and buildings; and personal property, comprising machinery and equipment, office
furniture and equipment, licensed vehicles, and construction in progress.
Excluded from the investigation were supplies, materials on hand, inventories,
company records, and any current or intangible assets that might exist.
We personally inspected the designated assets and studied market
conditions. We considered all three traditional approaches to value and applied
the most appropriate techniques, considering the use of the appraisal.
Therefore, we conducted a complete appraisal according to USPAP guidelines as we
understand them. No consideration was given to the impact of any environmental
concerns which are associated with the subject properties. No investigation was
made of the title to or any liabilities against the appraised property.
We appraised real and personal property at the following locations:
Glass Container Plants at Winchester, IN; Connellsville, PA; Salem, NJ;
Jacksonville, FL; Shakopee, MN; Warner Robins, GA; Henryetta, OK; Elmira,
NY; and Lawrenceburg, IN.
The Mold Repair Shop at Zanesville, OH, and the Central Machine Repair Shop
at Streator, IL.
Based on the investigation described, we concluded that as of December 31,
1996, the designated properties' market value on the premises of open market and
liquidation-in-place is reasonably represented by the amount of TWO HUNDRED
FORTY-TWO MILLION NINE HUNDRED SIXTY-FIVE THOUSAND DOLLARS ($242,965,000).
The value stated above is based upon the premise and for the purpose stated
and is defined and further detailed in the appraisal reports, exhibits and
general service conditions provided to BT Securities Corporation.
A-1
<PAGE> 210
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE GUARANTORS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN
THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF NOR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................... 1
Risk Factors............................. 15
The Exchange Offer....................... 25
The Anchor Acquisition and The Note
Offering............................... 32
Use of Proceeds.......................... 33
Capitalization........................... 34
Unaudited Pro Forma Financial
Statements............................. 35
Management's Discussion and Analysis of
Pro Forma Financial Condition and
Results of Operations.................. 44
Selected Financial Data.................. 46
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 49
Industry................................. 51
Business................................. 53
Management............................... 65
Principal Stockholders................... 68
Certain Transactions..................... 71
Description of Capital Stock............. 72
Description of Revolving Credit
Facility............................... 73
Description of the Notes................. 74
Certain U.S. Federal Income Tax
Considerations......................... 109
Outstanding Notes Registration Rights.... 110
Book Entry; Delivery and Form............ 111
Plan of Distribution..................... 113
Legal Matters............................ 114
Experts.................................. 114
Index to Financial Statements............ F-1
Index to Financial Information for Old
Anchor................................. H-1
Summarization Letter of AAA Appraisal.... A-1
</TABLE>
------------------------
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
[ANCHOR LOGO]
ANCHOR GLASS CONTAINER CORPORATION
OFFER TO EXCHANGE UP TO $150,000,000 OF ITS NEW 11 1/4% FIRST MORTGAGE NOTES DUE
2005, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF ITS OUTSTANDING 11 1/4% FIRST
MORTGAGE NOTES DUE 2005
------------------------
PROSPECTUS
------------------------
NOVEMBER 12, 1997
======================================================
<PAGE> 211
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ANCHOR GLASS CONTAINER CORPORATION
Certificate of Incorporation
Article VIII of the Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") for Anchor Glass Container Corporation (the
"Company") provides for the indemnification of directors and officers of the
Company and any persons serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan, to the fullest extent permitted by the General Corporate
Law of the State of Delaware (the "DGCL"). The Certificate of Incorporation also
allows the Company, by action of the Board of Directors, to indemnify other
officers, employees and agents of the Company. These rights to indemnification
(i) are contract rights; (ii) cannot be changed by any amendment to the
Certificate of Incorporation to adversely affect any person being indemnified
with respect to any alleged action or inaction occurring prior to such
amendment; (iii) subject to any rights imposed by law and the By-Laws of the
Company, include the right to have the Company advance expenses incurred in
defending any such action, suit or proceeding prior to the final disposition;
and (iv) are not exclusive of any other right which any person may have or may
acquire under the Certificate of Incorporation, or any statute, by-law or
agreement, or by any vote of the stockholders or disinterested directors of the
Company, or otherwise. In addition to the indemnification provided by Article
VIII, Article IX limits the personal liability of directors for monetary damages
arising out of a breach of fiduciary duty to the fullest extent permitted by the
DGCL.
The Certificate of Incorporation generally prohibits the Company from
indemnifying any person in connection with an action, suit or proceeding (or
portion thereof) initiated by such person unless such action, suit or proceeding
(or portion thereof) was authorized by the Board of Directors. However, this
prohibition does not apply to a counterclaim, cross-claim or third party claim
brought by an indemnitee in any action, suit or proceeding. In addition, persons
claiming a right to indemnification or advancement may bring suit against the
Company if the claim is not paid in full by the Company within sixty days, in
the case of a claim for indemnification, or thirty days, in the case of a claim
for advancement, after receipt of the written claim.
By-laws
The By-laws of the Company contain no provision for indemnification.
CONSUMERS U.S., INC.
Certificate of Incorporation
The Certificate of Incorporation of Consumers U.S., Inc. (the "Parent
Guarantor") provides that the personal liability of the directors of the Parent
Guarantor is limited to the fullest extent permitted by the DGCL and that the
Parent Guarantor shall indemnify the directors, officers, employees and agents
to the fullest extent permitted by the DGCL. The right to indemnification is not
exclusive of any other right which any person may have or may acquire under the
Certificate of Incorporation, or any statute, by-law or agreement, or by any
vote of the stockholders or disinterested directors of the Parent Guarantor, or
otherwise.
By-laws
The By-laws of the Parent Guarantor contain no provision for
indemnification.
II-1
<PAGE> 212
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Under the DGCL, directors, officers, employees, and other individuals may
be indemnified against expenses (including attorneys' fees), judgements, fines,
and amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action")
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of care is applicable in the case of a
derivative action, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense or settlement of
such an action and Delaware law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to the corporation.
Delaware corporations may limit the personal liability of their directors
for monetary damages for a breach of fiduciary duty, provided, however, that the
directors can still be held personally liable (i) for a breach of the duty of
loyalty to the corporation and its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL (described below), and (iv) for any
transaction from which the director derived an improper personal benefit.
Section 174 of the DGCL makes directors personally liable for unlawful dividends
or unlawful stock repurchases or redemptions in certain circumstances and
expressly sets forth a negligence standard with respect to such liability.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
2.1* Asset Purchase Agreement dated as of December 18, 1996 among Anchor Glass Container
Corporation, now known as Anchor Resolution Corp. ("Old Anchor"), Consumers
Packaging Inc. and Owens-Brockway Glass Container Inc.
2.2* Amendment to Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of
February 5, 1997 by and among Old Anchor, Consumers Packaging Inc. and
Owens-Brockway Glass Container Inc.
2.3* Order of United States Bankruptcy Court for the District of Delaware approving (i)
the Asset Purchase Agreement and (ii) the assumption and assignment of certain
related executory contracts
2.4* Order of United States Bankruptcy Court for the District of Delaware approving the
Amendment to the Asset Purchase Agreement
2.5* Memorandum of Understanding dated February 5, 1997 among Old Anchor, Consumers
Packaging Inc., and the Company
3.1* Amended and Restated Certificate of Incorporation of the Company
3.2* Certificate of Incorporation of the Parent Guarantor
3.3* Certificate of Amendment to Certificate of Incorporation of the Parent Guarantor
3.4* Bylaws of the Company
3.5* Bylaws of the Parent Guarantor
3.6* Certificate of Designation for Series A 10% Cumulative Convertible Preferred Stock
3.7* Certificate of Designation for Series B 8% Cumulative Convertible Preferred Stock
4.1* Indenture dated as of April 17, 1997 among the Company, the Parent Guarantor and
The Bank of New York, as trustee
4.2* Form of Initial Notes (included in Exhibit 4.1)
4.3* Form of Exchange Notes (included in Exhibit 4.1)
</TABLE>
II-2
<PAGE> 213
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
4.4* Security Agreement dated as of February 5, 1997 among the Company and Bankers Trust
Company, as agent under the Revolving Credit Agreement
4.5* Assignment of Security Agreement dated as of April 17, 1997 among the Company,
Bankers Trust Company, as assignor, and The Bank of New York, as assignee and as
trustee under the Indenture
4.6* Pledge Agreement dated as of April 17, 1997 among the Parent Guarantor and The Bank
of New York, as trustee under the Indenture
4.7* Intercreditor Agreement dated as of February 5, 1997 among The Bank of New York, as
Note Agent, and BT Commercial Corporation, as Credit and Shared Collateral Agent
4.8* Amendment No. 1 to the Intercreditor Agreement, dated as of April 17, 1997 among
The Bank of New York, as Note Agent, and BT Commercial Corporation, as Credit and
Shared Collateral Agent
4.9* Registration Rights Agreement dated as of April 17, 1997 among the Company, the
Parent Guarantor, BT Securities Corporation and TD Securities (USA) Inc.
5.1** Opinion of Eckert Seamans Cherin & Mellott, LLC
5.2** Opinion of Jones, Day, Reavis & Pogue
10.1* Credit Agreement (the "Credit Agreement") dated as of February 5, 1997 among the
Company, Bankers Trust Company, as Issuing Bank, BT Commercial Corporation, as
Agent and Co-Syndication Agent, PNC Bank, National Association, as Co-Syndication
Agent and Issuing Bank, and the various financial institutions party thereto
10.2* First Amendment to the Credit Agreement dated as of March 11, 1997 among the
Company, Bankers Trust Company, BT Commercial Corporation, and PNC Bank, National
Association
10.3* Second Amendment to the Credit Agreement dated as of April 9, 1997 among the
Company, Bankers Trust Company, BT Commercial Corporation, and PNC Bank, National
Association
10.4* Third Amendment and Waiver to the Credit Agreement dated as of May 23, 1997 among
the Company, Bankers Trust Company, BT Commercial Corporation, PNC Bank, National
Association and the various financial institutions party to the Credit Agreement
10.5** Fourth Amendment to the Credit Agreement dated as of September 15, 1997 among the
Company, Bankers Trust Company, PNC Bank, National Association and the various
financial institutions party to the Credit Agreement
10.6* Assignment of Security Interest in U.S. Trademarks and Patents dated February 5,
1997 by the Company to BT Commercial Corporation, as Collateral Agent under the
Credit Agreement
10.7* Assignment of Security Interest in U.S. Copyrights dated February 5, 1997 by the
Company to BT Commercial Corporation, as Collateral Agent under the Credit
Agreement
10.8* Guaranty dated February 5, 1997, by the Parent Guarantor in favor of BT Commercial
Corporation and the other financial institutions party to the Credit Agreement Plan
10.9* Termination Agreement dated February 3, 1997 by and between Consumers Packaging
Inc., the Company and the Pension Benefit Guaranty Corporation
10.10* Release Agreement among Old Anchor, the Company, the Official Committee of
Unsecured Creditors of Anchor Glass Container Corporation (Old Anchor) and Vitro,
Sociedad Anonima
10.11* Agreement (the "Vitro Agreement") dated as of December 18, 1996 between Vitro,
Sociedad Anonima, Consumers Packaging Inc., on behalf of itself, and Consumers
Packaging Inc., on behalf of the Company
10.12* First Amendment to the Vitro Agreement dated as of February 4, 1997 among Vitro,
Sociedad Anonima, Consumers Packaging Inc. and the Company
10.13* Waiver Agreement dated as of February 5, 1997 by and between Old Anchor and
Consumers Packaging Inc.
</TABLE>
II-3
<PAGE> 214
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
10.14* Assignment and Assumption Agreement dated as of February 5, 1997 by and between
Consumers Packaging Inc. and the Company
10.15* Assignment and Assumption Agreement dated as of February 5, 1997 between Consumers
Packaging Inc. and the Company relating to certain employee benefit plans
10.16* Assignment and Assumption Agreement dated as of February 5, 1997 between Consumers
Packaging Inc. and the Company relating to certain commitment letters
10.17* Bill of Sale, Assignment and Assumption Agreement dated as of February 5, 1997 by
and between Old Anchor and the Company
10.18* Assignment of Patent Property and Design Property from Old Anchor to the Company
10.19* Trademark Assignment from Old Anchor to the Company
10.20* Foreign Trademark Assignment from Old Anchor to the Company
10.21* Copyright Assignment from Old Anchor to the Company
10.22* Agreement dated as of February 5, 1997 between The Travelers Indemnity Company and
its Affiliates, including The Aetna Casualty and Surety Company and their
predecessors, and the Company
10.23* Allocation Agreement dated as of February 5, 1997 between Consumers Packaging Inc.
and Owens-Brockway Glass Container Inc.
10.24* Supply Agreement dated as of February 5, 1997 by and between the Company and Owens-
Brockway Glass Container Inc.
10.25* Transition Agreement dated as of February 5, 1997 between Consumers Packaging Inc.,
the Company and Owens-Brockway Glass Container Inc.
10.26** Technical Assistance and License Agreement executed December 18, 1996 by
Owens-Brockway Glass Container Inc. and Consumers Packaging Inc.
10.27* Assurance Agreement (the "Assurance Agreement") dated as of February 5, 1997 among
Owens-Brockway Glass Container Inc., Consumers Packaging Inc., the Company, BT
Commercial Corporation, Bankers Trust Company and The Bank of New York
10.28* Letter agreement relating to Assurance Agreement dated April 17, 1997 addressed to
Owens-Brockway Glass Container Inc. and signed by Bankers Trust Company and The
Bank of New York
10.29* Intercompany Agreement dated as of April 17, 1997 among G&G Investments, Inc.,
Glenshaw Glass Company, Inc., Hillsboro Glass Company, I.M.T.E.C. Enterprises,
Inc., Consumers Packaging Inc., Consumers International Inc., the Parent Guarantor,
the Company, BT Securities Corporation and The Bank of New York, as trustee under
the Indenture
10.30* Management Agreement dated as of February 5, 1997 by and between the Company and
G&G Investments, Inc.
10.31* Anchor Glass Container Corporation/Key Executive Employee Retention Plan
10.32* Lease Agreement -- Anchor Place at Fountain Square (the "Lease Agreement") dated
March 31, 1988, by and between Old Anchor and Fountain Associates I Ltd. relating
to the Company's headquarters in Tampa, Florida
10.33* First Amendment to Lease Agreement effective as of June 16, 1992, by and between
Fountain Associates I Ltd. and Old Anchor
10.34* Second Amendment to Lease Agreement effective as of September 30, 1993, by and
between Fountain Associates I Ltd. and Old Anchor
10.35* Third Amendment to Lease Agreement effective as of February 22, 1995, by and
between Fountain Associates I Ltd. and Old Anchor
10.36* Agreement dated as of March 31, 1996 by and between Fountain Associates I Ltd.,
Citicorp Leasing, Inc. and Old Anchor
</TABLE>
II-4
<PAGE> 215
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
10.37* Amended and Restated Agreement effective as of September 12, 1996, by and between
Fountain Associates I Ltd., Citicorp Leasing Inc. and Old Anchor
10.38* Sixth Amendment to Lease and Second Amendment to Option Agreement dated as of
February 5, 1997, by and between Fountain Associates I Ltd., Citicorp Leasing Inc.
and Old Anchor
10.39* Building Option Agreement dated March 31, 1988, by and between Fountain Associates
I, Ltd. and Old Anchor
10.40* First Amendment to Building Option Agreement effective as of June 16, 1992, by and
between Fountain Associates I, Ltd. and Old Anchor
10.41** Supply Agreement effective as of June 17, 1996 between The Stroh Brewery Company
and the Company
10.42** Supply Agreement between Bacardi International Limited and the Company
10.43* Warrant Agreement dated as of February 5, 1997 between the Company and Bankers
Trust Company
10.44* Form of Warrant issued pursuant to the Warrant Agreement
10.45** American Appraisal Associates, Inc. appraisal of certain property of the Company
12.1* Statement re: computation of ratio of earnings to fixed charges for the period from
February 5, 1997 to September 30, 1997
12.2* Statement re: computation of ratio of earnings to fixed charges for the years ended
December 31, 1992, 1993, 1994, 1995 and 1996
21.1 List of Subsidiaries of the Company
21.2 List of Subsidiaries of the Parent Guarantor
23.1* Consent of Arthur Andersen LLP
23.2** Consent of Eckert Seamans Cherin & Mellott, LLC, included in Exhibit 5.1
23.3** Consent of Jones, Day, Reavis & Pogue, included in Exhibit 5.2
23.4 Consent of American Appraisal Associates, Inc.
24.1 Power of Attorney of the Company
24.2 Power of Attorney of the Parent Guarantor
25.1* Statement on Form T-1 of the eligibility of the Trustee with respect to the Company
25.2* Statement on Form T-1 of the eligibility of the Trustee with respect to the Parent
Guarantor
27.1* Financial Data Schedule of Old Anchor
27.2* Financial Data Schedule of the Company
27.3* Financial Data Schedule of the Parent Guarantor
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to DTC Participants
99.4* Form of Letter to Clients and Form of Instruction to Book-Entry Transfer
Participants
</TABLE>
- ---------------
* Filed herewith
** To be filed by amendment.
All other exhibits were filed previously.
II-5
<PAGE> 216
(b) FINANCIAL STATEMENT SCHEDULES
SCHEDULE II
ANCHOR RESOLUTION CORP.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------------------------------------- -------- -------- -------- ---------- --------
ADDITIONS
---------------------
BALANCE CHARGED
AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
- -------------------------------------- -------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996
Allowance for doubtful accounts..... $1,826 $1,126 $ -- $1,449(A) $1,503
Year ended December 31, 1995
Allowance for doubtful accounts..... $3,447 $ 656 $ -- $2,277(A) $1,826
Year ended December 31, 1994
Allowance for doubtful accounts..... $3,615 $ 50 $ -- $ 218(A) $3,447
</TABLE>
- ---------------
(A) Accounts written off
SCHEDULE II
ANCHOR GLASS CONTAINER CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
PERIOD FROM FEBRUARY 5, 1997 TO SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ------------------------------------------ -------- -------- -------- ---------- ----------
ADDITIONS
--------------------
BALANCE
AT CHARGED
BEGINNING TO COSTS CHARGED BALANCE AT
OF AND TO OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------ -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Period from February 5, 1997 to September
30, 1997
Allowance for doubtful accounts......... $1,630(B) $225 -- $ 65(A) $1,790
</TABLE>
- ---------------
(A) Accounts written off
(B) Amount recognized as part of Anchor Acquisition.
II-6
<PAGE> 217
ITEM 22. UNDERTAKINGS.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission (the "Commission") pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-7
<PAGE> 218
SIGNATURES
Pursuant to the requirements of the Securities Act, Anchor Glass Container
Corporation has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Pittsburgh, in the Commonwealth of Pennsylvania, on November 12, 1997.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ M. WILLIAM LIGHTNER, JR.
------------------------------------
M. William Lightner, Jr.
Senior Vice President -- Finance
Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed by the following persons in the
capacities indicated on November 12, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>
* Chairman, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
John J. Ghaznavi
/s/ M. WILLIAM LIGHTNER, JR. Senior Vice President -- Finance, Chief
- --------------------------------------------- Financial Officer, Treasurer and Director
M. William Lightner, Jr. (Principal Financial Officer)
* Controller (Principal Accounting Officer)
- ---------------------------------------------
Edward M. Jonas
* Director
- ---------------------------------------------
David T. Gutowksi
* Director
- ---------------------------------------------
C. Kent May
* Director
- ---------------------------------------------
Paul H. Farrar
</TABLE>
*By: /s/ M. WILLIAM LIGHTNER, JR.
-----------------------------------
M. William Lightner, Jr.
Pursuant to Powers of Attorney
filed herewith or previously with
the Securities and Exchange
Commission
II-8
<PAGE> 219
SIGNATURES
Pursuant to the requirements of the Securities Act, Consumers U.S., Inc.
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Pittsburgh, in the Commonwealth of Pennsylvania, on November 12, 1997.
CONSUMERS U.S., INC.
BY: /s/ M. WILLIAM LIGHTNER, JR.
------------------------------------
M. William Lightner, Jr.
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed by the following persons in the
capacities indicated on November 12, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>
* Chairman, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
John J. Ghaznavi
/s/ M. WILLIAM LIGHTNER, JR. Vice President and Chief Financial Officer
- --------------------------------------------- (Principal Financial and Accounting
M. William Lightner, Jr. Officer)
* Director
- ---------------------------------------------
David T. Gutowksi
* Director
- ---------------------------------------------
C. Kent May
</TABLE>
*By: /s/ M. WILLIAM LIGHTNER, JR.
-----------------------------------
M. William Lightner, Jr.
Pursuant to Powers of Attorney
filed herewith or previously with
the Securities and Exchange
Commission
II-9
<PAGE> 220
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
2.1* Asset Purchase Agreement dated as of December 18, 1996 among Anchor Glass Container
Corporation, now known as Anchor Resolution Corp. ("Old Anchor"), Consumers
Packaging Inc. and Owens-Brockway Glass Container Inc.
2.2* Amendment to Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of
February 5, 1997 by and among Old Anchor, Consumers Packaging Inc. and
Owens-Brockway Glass Container Inc.
2.3* Order of United States Bankruptcy Court for the District of Delaware approving (i)
the Asset Purchase Agreement and (ii) the assumption and assignment of certain
related executory contracts
2.4* Order of United States Bankruptcy Court for the District of Delaware approving the
Amendment to the Asset Purchase Agreement
2.5* Memorandum of Understanding dated February 5, 1997 among Old Anchor, Consumers
Packaging Inc., and the Company
3.1* Amended and Restated Certificate of Incorporation of the Company
3.2* Certificate of Incorporation of the Parent Guarantor
3.3* Certificate of Amendment to Certificate of Incorporation of the Parent Guarantor
3.4* Bylaws of the Company
3.5* Bylaws of the Parent Guarantor
3.6* Certificate of Designation for Series A 10% Cumulative Convertible Preferred Stock
3.7* Certificate of Designation for Series B 8% Cumulative Convertible Preferred Stock
4.1* Indenture dated as of April 17, 1997 among the Company, the Parent Guarantor and
The Bank of New York, as trustee
4.2* Form of Initial Notes (included in Exhibit 4.1)
4.3* Form of Exchange Notes (included in Exhibit 4.1)
4.4* Security Agreement dated as of February 5, 1997 among the Company and Bankers Trust
Company, as agent under the Revolving Credit Agreement
4.5* Assignment of Security Agreement dated as of April 17, 1997 among the Company,
Bankers Trust Company, as assignor, and The Bank of New York, as assignee and as
trustee under the Indenture
4.6* Pledge Agreement dated as of April 17, 1997 among the Parent Guarantor and The Bank
of New York, as trustee under the Indenture
4.7* Intercreditor Agreement dated as of February 5, 1997 among The Bank of New York, as
Note Agent, and BT Commercial Corporation, as Credit and Shared Collateral Agent
4.8* Amendment No. 1 to the Intercreditor Agreement, dated as of April 17, 1997 among
The Bank of New York, as Note Agent, and BT Commercial Corporation, as Credit and
Shared Collateral Agent
4.9* Registration Rights Agreement dated as of April 17, 1997 among the Company, the
Parent Guarantor, BT Securities Corporation and TD Securities (USA) Inc.
5.1** Opinion of Eckert Seamans Cherin & Mellott, LLC
5.2** Opinion of Jones, Day, Reavis & Pogue
</TABLE>
<PAGE> 221
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
10.1* Credit Agreement (the "Credit Agreement") dated as of February 5, 1997 among the
Company, Bankers Trust Company, as Issuing Bank, BT Commercial Corporation, as
Agent and Co- Syndication Agent, PNC Bank, National Association, as Co-Syndication
Agent and Issuing Bank, and the various financial institutions party thereto
10.2* First Amendment to the Credit Agreement dated as of March 11, 1997 among the
Company, Bankers Trust Company, BT Commercial Corporation, and PNC Bank, National
Association
10.3* Second Amendment to the Credit Agreement dated as of April 9, 1997 among the
Company, Bankers Trust Company, BT Commercial Corporation, and PNC Bank, National
Association
10.4* Third Amendment and Waiver to the Credit Agreement dated as of May 23, 1997 among
the Company, Bankers Trust Company, BT Commercial Corporation, PNC Bank, National
Association and the various financial institutions party to the Credit Agreement
10.5** Fourth Amendment to the Credit Agreement dated as of September 15, 1997 among the
Company, Bankers Trust Company, BT Commercial Corporation, PNC Bank, National
Association, and the various financial institutions party to the Credit Agreement
10.6* Assignment of Security Interest in U.S. Trademarks and Patents dated February 5,
1997 by the Company to BT Commercial Corporation, as Collateral Agent under the
Credit Agreement
10.7* Assignment of Security Interest in U.S. Copyrights dated February 5, 1997 by the
Company to BT Commercial Corporation, as Collateral Agent under the Credit
Agreement
10.8* Guaranty dated February 5, 1997, by the Parent Guarantor in favor of BT Commercial
Corporation and the other financial institutions party to the Credit Agreement Plan
10.9* Termination Agreement dated February 3, 1997 by and between Consumers Packaging
Inc., the Company and the Pension Benefit Guaranty Corporation
10.10* Release Agreement among Old Anchor, the Company, the Official Committee of
Unsecured Creditors of Anchor Glass Container Corporation (Old Anchor) and Vitro,
Sociedad Anonima
10.11* Agreement (the "Vitro Agreement") dated as of December 18, 1996 between Vitro,
Sociedad Anonima, Consumers Packaging Inc., on behalf of itself, and Consumers
Packaging Inc., on behalf of the Company
10.12* First Amendment to the Vitro Agreement dated as of February 4, 1997 among Vitro,
Sociedad Anonima, Consumers Packaging Inc. and the Company
10.13* Waiver Agreement dated as of February 5, 1997 by and between Old Anchor and
Consumers Packaging Inc.
10.14* Assignment and Assumption Agreement dated as of February 5, 1997 by and between
Consumers Packaging Inc. and the Company
10.15* Assignment and Assumption Agreement dated as of February 5, 1997 by and between
Consumers Packaging Inc. and the Company relating to certain employee benefit plans
10.16* Assignment and Assumption Agreement dated as of February 5, 1997 between Consumers
Packaging Inc. and the Company relating to certain commitment letters
10.17* Bill of Sale, Assignment and Assumption Agreement dated as of February 5, 1997 by
and between Old Anchor and the Company
10.18* Assignment of Patent Property and Design Property from Old Anchor to the Company
10.19* Trademark Assignment from Old Anchor to the Company
10.20* Foreign Trademark Assignment from Old Anchor to the Company
10.21* Copyright Assignment from Old Anchor to the Company
</TABLE>
<PAGE> 222
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
10.22* Agreement dated as of February 5, 1997 between The Travelers Indemnity Company and
its Affiliates, including The Aetna Casualty and Surety Company and their
predecessors, and the Company
10.23* Allocation Agreement dated as of February 5, 1997 between Consumers Packaging Inc.
and Owens-Brockway Glass Container Inc.
10.24* Supply Agreement dated as of February 5, 1997 by and between the Company and Owens-
Brockway Glass Container Inc.
10.25* Transition Agreement dated as of February 5, 1997 between Consumers Packaging Inc.,
the Company and Owens-Brockway Glass Container Inc.
10.26** Technical Assistance and License Agreement executed December 18, 1996 by
Owens-Brockway Glass Container Inc. and Consumers Packaging Inc.
10.27* Assurance Agreement (the "Assurance Agreement") dated as of February 5, 1997 among
Owens-Brockway Glass Container Inc., Consumers Packaging Inc., the Company, BT
Commercial Corporation, Bankers Trust Company and The Bank of New York
10.28* Letter agreement relating to Assurance Agreement dated April 17, 1997 addressed to
Owens-Brockway Glass Container Inc. and signed by Bankers Trust Company and The
Bank of New York
10.29* Intercompany Agreement dated as of April 17, 1997 among G&G Investments, Inc.,
Glenshaw Glass Company, Inc., Hillsboro Glass Company, I.M.T.E.C. Enterprises,
Inc., Consumers Packaging Inc., Consumers International Inc., the Parent Guarantor,
the Company, BT Securities Corporation and The Bank of New York, as trustee under
the Indenture
10.30* Management Agreement dated as of February 5, 1997 by and between the Company and
G&G Investments, Inc.
10.31* Anchor Glass Container Corporation/Key Executive Employee Retention Plan
10.32* Lease Agreement -- Anchor Place at Fountain Square (the "Lease Agreement") dated
March 31, 1988, by and between Old Anchor and Fountain Associates I Ltd. relating
to the Company's headquarters in Tampa, Florida
10.33* First Amendment to Lease Agreement effective as of June 16, 1992, by and between
Fountain Associates I Ltd. and Old Anchor
10.34* Second Amendment to Lease Agreement effective as of September 30, 1993, by and
between Fountain Associates I Ltd. and Old Anchor
10.35* Third Amendment to Lease Agreement effective as of February 22, 1995, by and
between Fountain Associates I Ltd. and Old Anchor
10.36* Agreement dated as of March 31, 1996 by and between Fountain Associates I Ltd.,
Citicorp Leasing, Inc. and Old Anchor
10.37* Amended and Restated Agreement effective as of September 12, 1996, by and between
Fountain Associates I Ltd., Citicorp Leasing Inc. and Old Anchor
10.38 Sixth Amendment to Lease and Second Amendment to Option Agreement dated as of
February 5, 1997, by and between Fountain Associates I Ltd., Citicorp Leasing Inc.
and Old Anchor
10.39* Building Option Agreement dated March 31, 1988, by and between Fountain Associates
I, Ltd. and Old Anchor
10.40* First Amendment to Building Option Agreement effective as of June 16, 1992, by and
between Fountain Associates I, Ltd. and Old Anchor
10.41** Supply Agreement effective as of June 17, 1996 between The Stroh Brewery Company
and the Company
</TABLE>
<PAGE> 223
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ------- -----------------------------------------------------------------------------------
<C> <S>
10.42** Supply Agreement between Bacardi International Limited and the Company
10.43* Warrant Agreement dated as of February 5, 1997 between the Company and Bankers
Trust Company
10.44* Form of Warrant issued pursuant to the Warrant Agreement
10.45** American Appraisal Associates, Inc. appraisal of certain property of the Company
12.1* Statement re: computation of ratio of earnings to fixed charges for the period from
February 5, 1997 to September 30, 1997
12.2* Statement re: computation of ratio of earnings to fixed charges for the years ended
December 31, 1992, 1993, 1994, 1995 and 1996
21.1 List of Subsidiaries of the Company
21.2 List of Subsidiaries of the Parent Guarantor
23.1* Consent of Arthur Andersen LLP
23.2** Consent of Eckert Seamans Cherin & Mellott, LLC, included in Exhibit 5.1
23.3** Consent of Jones, Day, Reavis & Pogue, included in Exhibit 5.2
23.4 Consent of American Appraisal Associates, Inc.
24.1 Power of Attorney of the Company
24.2 Power of Attorney of the Parent Guarantor
25.1* Statement on Form T-1 of the eligibility of the Trustee with respect to the Company
25.2* Statement on Form T-1 of the eligibility of the Trustee with respect to the Parent
Guarantor
27.1* Financial Data Schedule of Old Anchor
27.2* Financial Data Schedule of the Company
27.3* Financial Data Schedule of the Parent Guarantor
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to DTC Participants
99.4* Form of Letter to Clients and Form of Instruction to Book-Entry Transfer
Participants
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
All other exhibits have been filed previously.
<PAGE> 1
Exhibit 2.1
ASSET PURCHASE AGREEMENT
AMONG
ANCHOR GLASS CONTAINER CORPORATION
AND
CONSUMERS PACKAGING INC.
AND
OWENS-BROCKWAY GLASS CONTAINER INC.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS............................................................2
1.01. Definitions......................................................2
ARTICLE 2.
PURCHASE AND SALE......................................................7
2.01. Purchase and Sale................................................7
2.02. Excluded Assets..................................................8
2.03. Assumption of Liabilities........................................9
2.04. Excluded Liabilities............................................10
2.05. Assignment of Contracts and Rights..............................10
2.06. Purchase Price; Allocation of Purchase Price....................10
2.07. Closing. .......................................................12
2.08. Closing Balance Sheet...........................................12
2.09. Adjustment of Purchase Price....................................14
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER..............................15
3.01. Authority. ....................................................15
3.02. No Conflicts; Consents. ........................................15
3.03. Sufficiency of and Title to the Purchased Assets. ..............15
3.04. Organization and Standing; Books and Records....................16
3.05. SEC Documents; Financial Statements; Undisclosed Liabilities....16
3.06. Contracts. ....................................................17
3.07. Absence of Changes or Events....................................18
3.08. Litigation. ....................................................19
3.09. Compliance with Laws and Court Orders...........................19
3.10. Employees.......................................................20
3.11. Properties......................................................20
3.12. Environmental Matters...........................................22
3.13. Employee Benefit Plans..........................................23
3.14. Licenses and Permits............................................26
3.15. Insurance Coverage..............................................26
3.16. Intellectual Property...........................................26
3.17. Customers.......................................................27
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYERS..............................28
4.01. Authority-Consumers.............................................28
4.02. No Conflicts; Consents-Consumers................................28
4.03. Actions and Proceedings, etc....................................28
4.04. Availability of Funds...........................................29
4.05. New Anchor......................................................29
i
<PAGE> 3
4.06. Authority-OI....................................................31
4.07. No Conflicts; Consents-OI.......................................31
4.08. Actions and Proceedings, etc-OI.................................32
4.09. Availability of Funds-OI........................................32
ARTICLE 5.
COVENANTS OF SELLER...................................................33
5.01. Conduct of the Business.........................................33
5.02. Access to Information...........................................33
5.03. Notices of Certain Events.......................................34
5.04. Environmental Covenants.........................................35
5.05. Bankruptcy Court Approval.......................................35
5.06. Use of the Anchor Name..........................................35
ARTICLE 6.
COVENANTS OF BUYERS...................................................36
6.01. Confidentiality.................................................36
6.02. No Additional Representations...................................36
6.03. Supplemental Disclosure.........................................36
6.04. Access..........................................................36
6.05. Assignment to New Anchor........................................36
6.06. Financings......................................................37
6.07. Composition of New Anchor Board.................................37
6.08. Stock Market Listing............................................37
6.09. Exchange Act Registration.......................................37
6.10. Affiliate Transactions..........................................37
ARTICLE 7.
COVENANTS OF ALL PARTIES..............................................38
7.01. Best Efforts; Further Assurances................................38
7.02. Certain Filings.................................................38
7.03. Public Announcements............................................38
7.04. WARN Act........................................................38
ARTICLE 8.
TAX MATTERS
.....................................................................39
8.01. Tax Definitions.................................................39
8.02. Tax Matters.....................................................39
8.03. Tax Cooperation; Allocation of Taxes............................40
ARTICLE 9.
EMPLOYEES.............................................................41
9.01. Retirement Plans................................................41
ii
<PAGE> 4
9.02. Other Employee Plans and Benefit Arrangements...................42
9.03. Employee Communications.........................................43
9.04. Third Party Beneficiaries.......................................43
9.05. Union Employees.................................................43
9.06. Non-Union Employees.............................................43
ARTICLE 10.
CONDITIONS TO CLOSING.................................................45
10.01.Conditions to Buyers' Obligations...............................45
10.02.Conditions to Obligations of Seller.............................49
10.03.Frustration of Conditions.......................................50
ARTICLE 11.
SURVIVAL..............................................................50
11.01.Survival........................................................50
ARTICLE 12.
TERMINATION...........................................................51
12.01.Grounds for Termination.........................................51
12.02.Effect of Termination...........................................51
ARTICLE 13.
MISCELLANEOUS.........................................................52
13.01.Notices.........................................................52
13.02.Amendments and Waivers..........................................53
13.03.Fees and Expenses...............................................53
13.04.Successors and Assigns..........................................54
13.05.Governing Law...................................................54
13.06.Counterparts; Effectiveness.....................................54
13.07.Entire Agreement: Third Party Beneficiaries.....................54
13.08.Bulk Sales Laws.................................................54
13.09.Captions........................................................54
13.10.Severability....................................................54
13.11.Consent to Jurisdiction.........................................55
13.12.WAIVER OF JURY TRIAL............................................55
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
AGREEMENT dated as of December ___, 1996 among Anchor Glass Container
Corporation, a Delaware corporation ("Seller"), Consumers Packaging Inc., a
corporation organized under the federal laws of Canada ("Consumers"), and
Owens-Brockway Glass Container Inc., a Delaware corporation ("OI"), "Consumers
and OI being sometimes collectively referred to as the "Buyers."
W I T N E S E T H:
WHEREAS, Seller and its subsidiaries conduct a business which
manufactures, sells and distributes a diverse line of glass containers of
various types, designs and sizes, which are sold principally to customers in the
food and beverage industries (the "Business");
WHEREAS, OI desires to purchase from Seller certain of the assets of the
Business described on Appendix A (the "OI Assets"), and Seller desires to sell
the OI Assets to OI, upon the terms and subject to the conditions hereinafter
set forth;
WHEREAS, Consumers desires to purchase substantially all of the assets of
the Business (other than the OI Assets) and Seller desires to sell substantially
all of the assets of the Business to Consumers (other than the OI Assets) upon
the terms and subject to the conditions hereinafter set forth;
WHEREAS, on September 13, 1996, Seller filed a voluntary petition (the
"Petition") for reorganization relief pursuant to Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. Sections 301 et seq. (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of Delaware and such case is
presently pending under Case No. 96-1434 PJW;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:
<PAGE> 6
ARTICLE 1.
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
other Person.
"Balance Sheet Date" means June 30, 1996.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware.
"Citicorp" means Citicorp Leasing, Inc., a Delaware corporation and the
current holder of the Citicorp Loan.
"Citicorp Loan" means the loan evidenced and secured by the Renewal First
Mortgage Note dated as of June 16, 1992 by Landlord to Citicorp, the Amended and
Restated Mortgage and Security Agreement dated as of June 16, 1992 by Landlord
to Citicorp and the Amended Assignment of Leases and Rents dated as of June 16,
1992 by Landlord to Citicorp.
"Closing Balance Sheet" means a statement of the Purchase Assets and the
Assumed Liabilities as at the close of business on the Closing Date (or on the
date otherwise specified in Section 2.08(a)), together with the notes thereto,
prepared in accordance with the provisions of Section 2.08 and Exhibit A hereto.
"Closing Date" means the date of the Closing.
"Closing Net Assets" means the excess of the value of the Purchased Assets
over the amount of the Assumed Liabilities as reflected on the Closing Balance
Sheet.
"Excluded Contracts" means (i) (A) all purchase or supply agreements of
Seller or any of its subsidiaries, (B) all agreements relating to the
disposition of assets of Seller or any of its subsidiaries, the consummation of
which has occurred prior to the date hereof, and (C) all agreements of Seller or
any of its subsidiaries relating to indebtedness for borrowed money, in each
case, other than those designated in writing by Buyers to Seller within 10 days
of the date hereof and (ii) all other contracts, agreements or instruments of
Seller or any of its subsidiaries that are designated in writing by Buyers to
Seller within 10 days of the date hereof as "Excluded Contracts" pursuant to
Section 2.01 (iv).
"Final June 30 Net Assets" means the June 30 Net Assets as the same may be
adjusted and finally determined pursuant to Section 2.08.
"Final Post-Filing Trade Payables" means the trade payables of Seller
incurred subsequent to the filing of the Petition and in existence on the
Closing Date, as the same is finally determined pursuant to Section 2.08.
2
<PAGE> 7
"Final Net Assets" means Closing Net Assets (i) as shown in Buyers'
calculation delivered pursuant to Section 2.08(a) if no notice of disagreement
with respect thereto is delivered pursuant to Section 2.08(b) or (ii) if such a
notice of disagreement is delivered, (A) as agreed by the parties pursuant to
Section 2.08(c) or (B) in the absence of such agreement, as shown in the
Accounting Referee's calculation delivered pursuant to Section 2.08(c); provided
that Final Net Assets shall not in any event be less than Buyers' calculation of
Closing Net Assets delivered pursuant to Section 2.08(a) nor more than Seller's
calculation of Closing Net Assets delivered pursuant to Section 2.08(c).
"Financing Letters" means the letter of Bankers Trust Company dated
December 2, 1996, the letter of BT Securities Corporation dated December 2,
1996, the letter of BT Commercial Corporation dated December 2, 1996, the letter
of PNC Capital Markets, Inc. dated November 22, 1996 and the letter of The
Toronto-Dominion Bank dated November 26, 1996.
"Headquarters Lease" means the Lease dated March 31, 1988 between Landlord
and Seller, as modified by the First Amendment to Lease dated June 16, 1992, the
Letter Agreement dated as of April 27, 1992 attached as Schedule 1 to said First
Amendment to Lease, the Agreement dated as of June 16, 1992 attached as Schedule
1 to the First Amendment to Building Option Agreement, the Second Amendment to
Lease dated as of September 30, 1993 and the Third Amendment to Lease dated as
of February 22, 1995, that certain Agreement dated as of March 31, 1996 among
Seller, Landlord and Citicorp Leasing, Inc., which provided for the waiver of
the default under the Lease pursuant to Section 9(a)(13) of the Lease (the
"Lease Default") through September 15, 1996, and that certain Amended and
Restated Agreement dated as of September 12, 1996 among Seller, Landlord and
Citicorp Leasing, Inc., which provided for the waiver of the Lease Default
through January 15, 1997, and the Memorandum of Lease, the Building Option
Agreement (as modified by Amendment No. 1 to Building Option Agreement), the
Memorandum of Building Option Agreement, the Land Option Agreement, the
Memorandum of Land Option Agreement, the Option Agreement for Parking Easement
and Memorandum of Option for Parking Agreement (referred to therein).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Included Insurance Policies" means the policies of Seller and its
subsidiaries maintained under or in connection with any Benefit Arrangement or
Employee Plan, to the extent (i) the Seller's obligations under such Benefit
Arrangement or Employee Plan are an Assumed Liability, (ii) such policies have
been identified to Buyers pursuant to the provisions of Section 3.13(n) and
(iii) Buyers will have, within 10 days from the date hereof, expressly
identified such policies as "Included Insurance Policies" by written notice to
Seller.
"June 30 Net Assets" means the excess of the value of the Purchased Assets
over the amount of the Assumed Liabilities as reflected on the Reference Balance
Sheet.
"June 30 Trade Payables" means the trade payables of Seller and its
subsidiaries at June 30, 1996 as agreed to by Buyers and Seller or as finally
determined pursuant to Section 2.06(i).
"Landlord" means Fountain Associates I, Ltd., a Florida limited
partnership and the current holder of the landlord's interest under the
Headquarters Lease.
3
<PAGE> 8
"Lenders" means Bankers Trust Company, BT Securities Corp., BT Commercial
Corporation, PNC Capital Markets, Inc. and The Toronto-Dominion Bank, as lenders
pursuant to the Financing Letters.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For the purposes of this Agreement, a
person shall be deemed to own subject to a Lien any property or asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Material Adverse Effect" means a material adverse effect on the condition
(financial or otherwise), business, assets or results of operations of the
Business, taken as a whole.
"New Anchor" means the subsidiary of Consumers to be formed under Delaware
law, to which Consumers shall assign its interest and obligations under this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Purchase Option" has the meaning assigned to it in the Headquarters
Lease.
"Reference Balance Sheet" means the pro forma adjusted statement of the
Purchased Assets and Assumed Liabilities, and the notes thereto, as of June 30,
1996 and attached hereto as Exhibit A.
"Renewal Option" has the meaning assigned to it in the Headquarters Lease.
"Residual Value Guaranty Amount" has the meaning assigned to it in the
Headquarters Lease.
"Sale Order" means an order issued by the Bankruptcy Court substantially
in the form of Exhibit B hereto, authorizing the assumption of this Agreement
and approving this Agreement and all of the transactions contemplated hereby.
"Seller Defined Benefit Plans" means the Anchor Glass Container
Corporation Service Retirement Plan, the Pension Plan for Hourly Employees of
Latchford Glass Company and Associated Companies, the Anchor Glass Container
Corporation Retirement Plan for Salaried Employees, and the Retirement Plan for
Salaried Employees of Latchford Glass Company and Associated Companies.
"Seller Defined Contribution Plans" means the Anchor Glass Container
Corporation Salaried Employees Savings Plan and the Anchor Glass Container
Corporation Hourly Employees Supplemental Retirement Plan.
"Termination Option" has the meaning assigned to it in the Headquarters
Lease.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
4
<PAGE> 9
Term Section
- --------------------------------------------------------------------------------
Accounting Referee 2.06
- --------------------------------------------------------------------------------
Actual Balance Sheet 3.05
- --------------------------------------------------------------------------------
Allocation Statement 2.06
- --------------------------------------------------------------------------------
Apportioned Obligations 8.03
- --------------------------------------------------------------------------------
Assumed Liabilities 2.03
- --------------------------------------------------------------------------------
Bankruptcy Code Preamble
- --------------------------------------------------------------------------------
Benefit Arrangement 3.13
- --------------------------------------------------------------------------------
Books and Records 5.02
- --------------------------------------------------------------------------------
Business Preamble
- --------------------------------------------------------------------------------
Business Union Employees 9.05
- --------------------------------------------------------------------------------
CERCLA 3.12
- --------------------------------------------------------------------------------
Closing 2.07
- --------------------------------------------------------------------------------
Code 8.01
- --------------------------------------------------------------------------------
Confidentiality Agreements 6.01
- --------------------------------------------------------------------------------
Contracts 3.06
- --------------------------------------------------------------------------------
Coors 10.01
- --------------------------------------------------------------------------------
Employee Plan 3.13
- --------------------------------------------------------------------------------
Environmental Laws 3.12
- --------------------------------------------------------------------------------
ERISA 3.13
- --------------------------------------------------------------------------------
ERISA Affiliate 3.13
- --------------------------------------------------------------------------------
Estimated Final Net Assets 2.06
- --------------------------------------------------------------------------------
Estimated Purchase Price 2.06
- --------------------------------------------------------------------------------
Estimated Post-Filing Trade Payables 2.06
- --------------------------------------------------------------------------------
Exchange Act 3.02
- --------------------------------------------------------------------------------
Excluded Assets 2.02
- --------------------------------------------------------------------------------
Excluded Liabilities 2.04
- --------------------------------------------------------------------------------
Fee Properties 3.11
- --------------------------------------------------------------------------------
Governmental Entity 10.01
- --------------------------------------------------------------------------------
5
<PAGE> 10
- --------------------------------------------------------------------------------
Hazardous Substances 3.12
- --------------------------------------------------------------------------------
Headquarters Property 3.11
- --------------------------------------------------------------------------------
Included Contracts 2.01
- --------------------------------------------------------------------------------
Intellectual Property Rights 3.16
- --------------------------------------------------------------------------------
Interim Order 5.05
- --------------------------------------------------------------------------------
Leased Properties 3.11
- --------------------------------------------------------------------------------
Multiemployer Plan 3.13
- --------------------------------------------------------------------------------
OI Assets Preamble
- --------------------------------------------------------------------------------
OI Assumed Obligations 2.03
- --------------------------------------------------------------------------------
Permit 3.14
- --------------------------------------------------------------------------------
Permitted Lien 3.11
- --------------------------------------------------------------------------------
Petition Preamble
- --------------------------------------------------------------------------------
Petty Cash 2.01
- --------------------------------------------------------------------------------
Post-Closing Tax Period 8.03
- --------------------------------------------------------------------------------
Pre-Closing Tax Period 8.01
- --------------------------------------------------------------------------------
Predecessor Entity 3.05
- --------------------------------------------------------------------------------
Purchased Assets 2.01
- --------------------------------------------------------------------------------
Purchase Price 2.06
- --------------------------------------------------------------------------------
Real Properties 3.11
- --------------------------------------------------------------------------------
Real Property Leases 3.06
- --------------------------------------------------------------------------------
SEC 3.05
- --------------------------------------------------------------------------------
SEC Documents 3.05
- --------------------------------------------------------------------------------
Securities Act 3.05
- --------------------------------------------------------------------------------
Seller Products and Services 3.17
- --------------------------------------------------------------------------------
Shares 2.06
- --------------------------------------------------------------------------------
Strohs 10.01
- --------------------------------------------------------------------------------
Tax 8.01
- --------------------------------------------------------------------------------
Vitro 3.06
- --------------------------------------------------------------------------------
Vitro Agreement 10.01
- --------------------------------------------------------------------------------
6
<PAGE> 11
- --------------------------------------------------------------------------------
WARN Act 7.04
================================================================================
ARTICLE 2.
PURCHASE AND SALE
Section 2.01. Purchase and Sale. Except as otherwise provided below,
upon the terms and subject to the conditions of this Agreement, Buyers agree
(OI's undertaking being limited to the OI Assets) to purchase from Seller and
Seller agrees to sell, transfer, assign and deliver, or cause to be sold,
transferred, assigned and delivered, the Buyers (OI's interest being limited to
the OI Assets) at Closing, free and clear of all Liens, other than Permitted
Liens, all of Seller's and its subsidiaries' right, title and interest in, to
and under the assets, properties and business, of every kind and description,
wherever located, real, personal or mixed, tangible or intangible, owned, held
or used primarily in the conduct of the Business by Seller and its subsidiaries
as the same shall exist on the Closing Date, including all assets shown on the
Reference Balance Sheet and not disposed of in the ordinary course of business,
and all assets of the Business thereafter acquired by Seller and its
subsidiaries (the "Purchased Assets"), and including, without limitation, all
right, title and interest of Seller in, to and under:
(i) all real property and leases of, and other interests in, real
property used or owned or held for use in the conduct of the Business, in
each case together with all buildings, fixtures, and improvements erected
thereon, including without limitation the items listed on Schedule
3.11(b), but excluding all residential real property leases;
(ii) all personal property and interests therein, including
machinery, equipment, furniture, office equipment, communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel and
other tangible property;
(iii) all raw materials, work-in-process, finished goods, supplies
and other inventories;
(iv) all rights under (A) all collective bargaining agreements,
employment and severance agreements, leases (other than all residential
real property leases), non-governmental licenses or franchises, sales
agreements, joint venture agreements, sales and purchase orders, and the
Included Insurance Policies, and (B) all other contracts, agreements and
instruments of Seller or any of its subsidiaries (other than Excluded
Contracts) relating to the Purchased Assets or the Business, including
without limitation the items listed on Schedule 3.06(a), other than those
contracts, agreements or instruments in this Clause B that are designated
in writing by Buyers to Seller within 10 days of the date hereof as
"Excluded Contracts" (the items referred to in clauses (A) and (B),
collectively, the "Included Contracts");
(v) all accounts, notes and other receivables;
(vi) all prepaid expenses, including but not limited to ad valorem
taxes, leases and rentals;
(vii) all petty cash located at operating facilities of the Business
("Petty Cash");
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(viii)all of Seller's and its subsidiaries' rights, claims, credits,
causes of action or rights of set-off against third parties relating to
the Purchased Assets, including, without limitation, unliquidated rights
under manufacturers' and vendors, warranties and rebates;
(ix) all patents, copyrights, trademarks, trade names, service
names, technology, knowhow, processes, trade secrets, inventions,
proprietary data, formulae, research and development data, computer
software programs and other intangible property, in each case owned or
licensed by Seller or any Affiliate of Seller and used or held for use in
the Business, and any applications for the same, including without
limitation the items listed on Schedule 3.16(a);
(x) all transferable licenses, permits or other governmental
authorization affecting, or relating in any way to, the Business,
including without limitation the transferable items listed on Schedule
3.14(a);
(xi) all books, records, files and papers, whether in hard copy or
computer format, used in the Business, including, without limitation,
engineering information, sales and promotional literature, manuals and
data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records, and any information relating to Tax imposed on the Purchased
Assets;
(xii) all computer software programs and data used in connection
with the Business;
(xiii)all goodwill associated with the Business or the Purchased
Assets, together with the rights to represent to third parties that Buyers
are the successors to the Business;
(xiv) all employee salary or bonus deferrals under any employee
benefit plan the obligations under which are an Assumed Liability, to the
extent the amount of such deferrals have not, as of the Closing Date, been
disbursed in accordance with such plan, contributed to an employee benefit
trust or paid as an insurance premium; and
(xv) all air emissions Seller has, is entitled to or applied for,
including any air emissions where Seller has credit for or has banked,
applied to bank or agreed to sell or trade.
2.02. Excluded Assets. Notwithstanding anything to the contrary
herein or otherwise, Buyers expressly understand and agree that the following
assets and properties of Seller (the "Excluded Assets") shall be excluded from
the Purchased Assets:
(i) all of Seller's cash and cash equivalents on hand and in banks
except for Petty Cash;
(ii) insurance policies, other than the Included Insurance Policies;
(iii) the Excluded Contracts;
(iv) Capital Stock of subsidiaries of sellers;
(v) minute and stock books of Seller and its subsidiaries;
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(vi) any Purchased Assets sold or otherwise disposed of in the
ordinary course of business and not in violation of any provisions of this
Agreement during the period from the date hereof until the Closing Date;
and
(vii) claims and causes of action to recover preferences, fraudulent
conveyances, to avoid liens and other similar rights under the Bankruptcy
Code belonging to Seller and its subsidiaries.
2.03. Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyers agree, OI's obligations being limited to
the assumption of the liabilities listed on Appendix B hereto (the "OI Assumed
Liabilities"), effective at the time of Closing, to assume the following
liabilities (the "Assumed Liabilities"):
(i) all liabilities of the types set forth on the Reference Balance
Sheet to the extent (except as otherwise provided herein) included or
reflected on the Closing Balance Sheet;
(ii) all liabilities and obligations of Seller arising from and
after the Closing Date under all Included Contracts (other than
liabilities or obligations attributable to any failure by Seller to comply
with the terms thereof);
(iii) all liabilities and obligations under the Anchor Glass
Container Corporation Executive/Key Employee Retention Plan as such Plan
is in effect on the date hereof (other than liabilities and obligations
arising under such Plan prior to the Closing, which shall remain
liabilities and obligations of Seller);
(iv) all liabilities under Seller Defined Benefit Plans (but
excluding any and all liabilities for excise tax or related taxes or
penalties to the Internal Revenue Service arising out of the failure of
Seller to contribute to Seller Defined Benefit Plans) and all liabilities
to the PBGC in connection with Seller Defined Benefit Plans, which
liabilities shall be paid by the applicable Buyer in full on the Closing
Date to the extent due and owing on the Closing Date;
(v) all environmental liabilities relating to the Purchased Assets
or Business (but excluding any liabilities resulting from or arising out
of any (i) claim, action, suit, investigation, proceeding or judgment
relating to property disposed of by Seller or any of its subsidiaries
prior to the Closing Date or (ii) asbestos-related claims, actions, suits,
investigations, proceedings or judgments arising out of any event or
condition existing on or occurring prior to the Closing Date);
(vi) trade payables of Seller which have arisen after the filing of
the Petition and which are in existence on the Closing Date;
(vii) accrued expenses relating to workers' compensation claims;
(viii)all liabilities and obligations of Seller arising under,
related to, or in connection with the Headquarters Lease; and
(ix) all liabilities and expenses in the aggregate relating to
insurance claims arising out of workers' compensation, general liability,
product liability, and automobile liability policies issued to Seller by
The Travelers Indemnity Company and its Affiliates
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including The Aetna Casualty and Surety Company (or any predecessor) for
periods prior to January 1, 1997; provided, however, that the amount of
all such liabilities and expenses in the aggregate shall not exceed the
sum of all amounts shown on the Reference Balance Sheet for all such
insurance liabilities and expenses.
2.04. Excluded Liabilities. Notwithstanding any provision in this
Agreement or any other writing to the contrary, Buyers are assuming only the
Assumed Liabilities (OI's obligations being limited to the OI Assumed
Liabilities) and are not assuming any other liability or obligation of Seller
(or any predecessor owner of all or part of its business and assets) of whatever
nature whether presently in existence or arising hereafter, including, without
limitation, except as set forth in clause (v) of Section 2.03, any liability for
any claim, action, suit or proceeding pending against, or judgment against,
Seller or any of its subsidiaries (including the Purchased Assets) as of the
Closing Date. All such other liabilities and obligations shall be retained by
and remain obligations and liabilities of seller (all such liabilities and
obligations not being assumed being herein referred to as the "Excluded
Liabilities").
2.05. Assignment of Contracts and Rights. Anything in this Agreement
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to assign any Purchased Asset or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of a third party thereto, would constitute a breach or other
contravention thereof or in any way adversely affect the rights of Buyers or
Seller thereunder. Seller and the applicable Buyer will use their best efforts
(but without any payment of money by Seller or Buyers) to obtain the consent of
the other parties to any such Purchased Asset or any claim or right or any
benefit arising thereunder for the assignment thereof to the applicable Buyer as
such Buyer may request. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would adversely affect the rights of
Seller thereunder so that such Buyer would not in fact receive all such rights,
Seller and such Buyer will cooperate in a mutually agreeable arrangement under
which such Buyer would obtain the benefits and assume the obligations thereunder
in accordance with this Agreement, including sub-contracting, sub-licensing, or
sub-leasing to the applicable Buyer, or under which Seller would enforce, for
the benefit of such Buyer, with such Buyer assuming Seller's obligations, any
and all rights of Seller against a third party thereto. Seller will promptly pay
to the applicable Buyer when received all monies received by Seller under any
Purchased Asset intended to be acquired hereunder by such Buyer or any claim or
right or any benefit arising thereunder, except to the extent the same
represents an Excluded Asset.
2.06. Purchase Price; Allocation of Purchase Price. (a) The purchase
price for the Purchased Assets (the "Purchase Price") is (i) an amount in cash
equal to (A) $333.6 million, of which Consumers shall pay $208.6 million and OI
shall pay $125.0 million, plus (B) the June 30 Trade Payables minus (C) the
Final Post-Filing Trade Payables and (ii) 490,000 shares of New Anchor common
stock and 1,876,000 shares of New Anchor 10% preferred stock (collectively, the
"Shares") (the terms of such 10% preferred stock being set forth on Appendix C)
which Consumers shall cause New Anchor to issue and deliver to Seller. Seller
and Consumers each hereby acknowledge and agree that OI has and shall have no
liability or obligation with respect to the Shares. The Purchase Price shall be
subject to adjustment as provided in Section 2.09, and shall be paid as provided
in Section 2.07. On the Closing Date, Buyers shall pay to Seller as provided in
Section 2.07 an aggregate amount in cash (the "Estimated Purchase Price") equal
to (i) $333.6 million (in the proportion specified in the first sentence of this
Section 2.06(a)) plus (ii) the June 30 Trade Payables minus (iii) the Estimated
Post-Filing Trade Payables plus or minus (iv) the amount set forth in Section
2.06(b) below as the adjustment to the Estimated Purchase Price, and Consumers
shall cause New Anchor to issue and deliver to Seller certificates representing
the
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Shares. If the June 30 Trade Payables exceed the Estimated Post-Filing Trade
Payables, the amount of such excess shall be paid by the Buyers in such
proportion as they may jointly specify to seller; provided that if Buyers fail
to so specify, Buyers shall be jointly liable for the payment of the full amount
of such excess.
(b) Not less than three business days prior to the Closing Date,
Seller shall deliver to Buyers a certificate, signed by the Chief
Financial Officer of Seller, setting forth Seller's good faith estimate of
trade payables incurred subsequent to filing of the Petition and estimated
to be in existence on the Closing Date (the "Estimated Post-Filing Trade
Payables"), together with reasonable information supporting such estimate.
Not less than three business days prior to the Closing Date, Seller shall
deliver to Buyers a certificate signed by the Chief Financial Officer of
Seller, setting forth Seller's good faith estimate of Final Net Assets of
Seller using Seller's December 31, 1996 Balance Sheet ("Estimated Final
Net Assets"). If June 30 Net Assets exceed Estimated Final Net Assets, the
amount otherwise payable to Seller by Buyers at the Closing shall be
reduced (to be allocated between them in accordance with their joint
instructions), as an adjustment to the Estimated Purchase Price, the
amount of such excess. If Estimated Final Net Assets exceed June 30 Net
Assets, the applicable Buyer or Buyers (in such proportion as Buyers shall
jointly specify to Seller; provided that if Buyers fail to so specify,
Buyers shall be jointly liable for the full amount of such excess) shall
pay to Seller, as an adjustment to the Estimated Purchase Price, the
amount of such excess.
(c) As soon as practicable after the Closing, Buyers shall deliver
to Seller a statement (the "Allocation Statement"), setting forth the
value of the Purchased Assets, which shall be used for the allocation of
the Purchase Price (together with the Assumed Liabilities) among the
Purchased Assets; provided that prior to the Closing Date, if required as
the result of transfer or similar taxes, Buyers and Seller shall agree as
to the allocation for Fee Properties.
(d) Seller shall have a period of 45 days after the delivery of the
Allocation Statement to present in writing to Buyers notice of any
objections Seller may have to the allocation set forth in the Allocation
Statement. Unless Seller timely objects, the Allocation Statement shall be
binding on the parties without further adjustment.
(e) If Seller shall raise any objections within the 45 day period,
Buyers and Seller shall negotiate in good faith and use their best efforts
to resolve such dispute. If the parties fail to agree within 15 days after
the delivery of the notice, then the disputed items shall be resolved by
Price Waterhouse LLP, or if such firm declines to act in such capacity, by
such other firm of independent nationally recognized accountants chosen
and mutually accepted by the parties (the "Accounting Referee"). The
Accounting Referee shall resolve the dispute within 30 days of having the
items referred to it. The costs, fees and expenses of the Accounting
Referee shall be borne equally by Seller on the one hand and Buyers on the
other.
(f) Any adjustment made with respect to the Purchase Price pursuant
to Section 2.09 of this Agreement shall be allocated in accordance with
the determination mutually agreed by Seller and Buyers. In the event that
an agreement is not reached within 15 days after the determination of
Final Net Assets pursuant to Section 2.09(a), the disputed item(s) shall
be resolved pursuant to Section 2.06(e) hereof.
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(g) Seller and Buyers each agree to report an allocation of such
Purchase Price among the Purchased Assets in a manner entirely consistent
with the Allocation Statement (including any adjustment made pursuant to
Section 2.06(f) hereof), and agree to act in accordance with such
Allocation Statement in the filing of all tax returns (including, without
limitation, filing Form 8594 with its Federal income tax return for the
taxable year that includes the date of the Closing) and in the course of
any tax audit, tax review or tax litigation relating thereto.
(h) Not later than 10 days prior to the filing of their respective
Form 8594 relating to this transaction, each party shall deliver to the
other parties a copy of its Form 8594.
2.07. Closing. Subject to the terms and conditions of this
Agreement, the sales and purchases of the Purchased Assets and the assumptions
of the Assumed Liabilities contemplated hereby shall take place at a closing
(the "Closing") to be held at the offices of Stroock & Stroock & Lavan, Seven
Hanover Square, New York, New York 10004 at 9:00 A.M., New York City time, on
the later to occur of (i) the date on which the conditions to Closing set forth
in Article 10 shall have been satisfied or waived and (ii) the first business
day following the day that is ten days after the entry of the Sale Order, or at
such other time or place as Buyers and Seller may agree. At the Closing,
(a) Each Buyer shall deliver to Seller certified or official bank
checks payable to the order of Seller in an amount as to which Buyers
shall jointly notify Seller, which amounts together shall equal the
Estimated Purchase Price, or shall wire transfer such amounts to an
account designated in writing by Seller to Buyers not less than two days
prior to the Closing Date. Consumers shall cause New Anchor to deliver to
Seller certificates representing the Shares, which certificates will be
dated the Closing Date and will be issued and registered in the name of
the Seller, or in the name of such designees of Seller as Seller so
directs in a writing delivered to Consumers not less than two days prior
to the Closing Date.
(b) Seller and each Buyer shall enter into an assignment and
assumption agreement (OI's obligations being limited to the OI Assumed
Obligations) and Seller shall deliver to the applicable Buyer (or
permitted assignees as Buyers shall jointly instruct Seller) such special
warranty deeds (or local equivalents), bills of sale, endorsements,
consents, assignments and other good and sufficient instruments of
conveyance and assignment as the parties and their respective counsel
shall deem reasonably necessary or appropriate to vest in the applicable
Buyer all right, title and interest in, to and under the Purchased Assets
being acquired by such Buyer.
2.08. Closing Balance Sheet. (a) As promptly as practicable but no
later than 90 days, after the Closing Date, Buyers will cause to be prepared and
delivered to Seller (a) the Closing Balance Sheet and (b) the Final Post-Filing
Trade Payables, together with an unqualified report of Arthur Andersen L.L.P.
thereon, and a certificate based on such Closing Balance Sheet setting forth
Buyers' calculation of Closing Net Assets and Final Post-Filing Trade Payables.
The Closing Balance Sheet shall include the Purchased Assets and Assumed
Liabilities as at the close of business on the Closing Date presented fairly in
accordance with generally accepted accounting principles through the application
of the accounting methods and such other procedures applied in the preparation
of the Reference Balance Sheet and without giving effect to any writedown of
non-current assets to reflect the sale of the Purchased Assets pursuant to this
Agreement
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otherwise required by generally accepted accounting principles. Notwithstanding
anything to the contrary contained herein, if the Closing Date shall occur on or
after January 10, 1997, the Closing Balance Sheet with respect to the
calculation of Closing Net Assets and Final Net Assets only shall include the
Purchased Assets and Assumed Liabilities as at the close of business on January
10, 1997, but in all other respects shall be prepared on the basis set forth
above. In preparing the Closing and Reference Balance Sheets, consistent account
definitions, analytical procedures, and valuation methods should be applied in
determining the account balances. Except as provided below for accruals for
pension and other post-retirement benefit obligations, if, in connection with
the preparation of the Closing Balance Sheet or the calculation of Closing Net
Assets, any errors are discovered that affect the value of the Purchased Assets
or the Assumed Liabilities set forth on the Reference Balance sheet, the
Reference Balance Sheet shall be adjusted to correct for the effect of such
errors. With regard to accruals for pension and other post-retirement benefit
obligations. If an error is discovered in the Reference Balance Sheet that
remains applicable at the Closing Balance Sheet date, then the Closing Balance
Sheet only, not the Reference Balance Sheet, shall be adjusted to correct for
the effect of such errors. For purposes of this Section 2.08, in determining
whether any corrections are to be made as a result of errors or inconsistencies,
corrections will not be made unless an individual item exceeds $50,000 and the
aggregate net amount of all such items exceeds $500,000. In preparing the
Reference Balance Sheet certain "excess" reserves were applied and reallocated
to cover reserve requirements for other accounts. Attached as part of Exhibit A
is the final June 30, 1996 reserve allocation of Seller. In the preparation of
the Closing Balance Sheet, the reallocation of such "excess" reserves shall be
applied consistent with Exhibit A. Exhibit A sets forth the Reference Balance
Sheet including explanatory notes as to the use of the Reference Balance Sheet
in the determination of Purchased Assets and Assumed Liabilities, and in
determining a purchase price adjustment (if any), pursuant to the provisions of
this Agreement.
(b) If Seller disagrees with Buyers' calculation of Closing Net
Assets or Final Post-Filing Trade Payables delivered pursuant to Section
2.08(a), Seller may, within 45 days after delivery of the documents referred to
in Section 2.08(a), deliver a notice to Buyers disagreeing with such
calculations and setting forth Seller's calculations of such amounts. Any such
notice of disagreement shall specify those items or amounts as to which Seller
disagrees and the basis for such disagreement, and Seller shall be deemed to
have agreed with all other items and amounts contained in the Closing Balance
Sheet and Final Post-Filing Trade Payables and the calculation of Closing Net
Assets and Final Post-Filing Trade Payables delivered pursuant to Section
2.08(a).
(c) If a notice of disagreement shall be duly delivered pursuant to
Section 2.08(b), Buyers and Seller shall, during the 15 days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amounts of Closing Net
Assets and Final Post-Filing Trade Payables, which amounts shall not be less
than the amounts thereof shown in Buyers' calculation delivered pursuant to
Section 2.08(a) nor more than the amounts thereof shown in Seller's calculations
delivered pursuant to Section 2.09(b). If during such period, Buyers and Seller
are unable to reach such agreement, they shall promptly thereafter cause the
Accounting Referee promptly to review this Agreement and the disputed items or
amounts for the purpose of calculating Closing Net Assets and Final Post-Filing
Trade Payables. In making such calculations, the Accounting Referee shall
consider only those items or amounts as to which Seller has disagreed. The
Accounting Referee shall deliver to Seller and Buyers, as promptly as
practicable, a report setting forth such calculations. Such report shall be
final and binding upon the parties hereto. The cost of such review and report
shall be borne (i) by Buyers if the difference between Final Net Assets and
Closing Net Assets as set forth in Buyers' calculation of Closing Net Assets
delivered pursuant to Section 2.08(a) is greater than the difference between
Final Net Assets and Closing Net Assets as set forth in Seller's
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calculation of Closing Net Assets delivered pursuant to Section 2.08(b), (ii) by
Seller if the first such difference is less than the second such difference and
(iii) otherwise one-half by Seller and one-half by Buyers.
(d) Buyers and Seller agree that they will, and agree to cause their
respective independent accountants and actuaries to, cooperate and assist in the
preparation of the Closing Balance Sheet and the calculation of Closing Net
Assets and Final Post-Filing Trade Payables and in the conduct of the audits and
reviews referred to in this Section 2.08, including without limitation, the
making available to the extent necessary of books, records, work papers and
personnel.
2.09. Adjustment of Purchase Price. (a) If Estimated Final Net
Assets exceed Final Net Assets, Seller shall pay to Buyers (to be allocated
between them in accordance with their joint instructions), as an adjustment to
the Purchase Price, in the manner and with interest as provided in Section
2.09(c), the amount of such excess. If Final Net Assets exceed Estimated Final
Net Assets, the applicable Buyer or Buyers (in such proportion as Buyers shall
jointly specify to Seller; provided that if Buyers fail to so specify, Buyers
shall be jointly liable for the payment of the full amount of such excess) shall
pay to Seller, as an adjustment to the Purchase Price, in the manner and with
interest as provided in Section 2.09(c), the amount of such excess.
(b) If Final Post-Filing Trade Payables exceeds Estimated
Post-Filing Trade Payables, Seller shall pay to Buyers (to be allocated between
them in accordance with their joint instructions), as an adjustment to the
Purchase Price, in the manner and with the interest as provided in Section
2.09(c) the amount of such excess. If Estimated Post-Filing Trade Payables
exceeds Final Post-Filing Trade Payables, the applicable Buyer or Buyers (in
such proportion as Buyers shall jointly specify to Seller; provided that if
Buyers fail to so specify, Buyers shall be jointly liable for the payment of the
full amount of such excess) shall pay to Seller, as an adjustment to the
Purchase Price, in the manner and with interest as provided in Section 2.09(c),
the amount of such excess.
(c) Method of Payment. Any payments pursuant to Sections 2.09(a) or
(b) shall be added together or netted against each other, as appropriate, and
shall be made at a mutually convenient time and place within 10 days after the
same have been determined. Any payments pursuant to this Section 2.09 shall be
made by delivery by the applicable Buyer or Buyers, or Seller, as the case may
be, of certified or official bank checks payable to the appropriate party or by
wire transfer of such funds to an account designated by such party or by causing
such payment to be credited to such account of such other parties as may be
designated by such party. The amount of any payment to be made pursuant to this
Section 2.09 shall bear interest from and including the Closing Date to but
excluding the date of payment at a rate per annum equal to the rate publicly
announced from time to time by Citibank, N.A. in New York City as its prime rate
in effect from time to time during the period from the Closing Date to the date
of payment. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of 365
days and the actual number of days elapsed.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyers as follows:
3.01. Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller
has all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Subject to approval by the Bankruptcy Court, (a) all
corporate and stockholder acts and other proceedings required to be taken by
Seller to authorize the execution, delivery and performance of this Agreement
and the completion of the transactions contemplated hereby have been duly and
properly taken and (b) this Agreement has been duly executed and delivered by
Seller and constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
3.02. No Conflicts; Consents. (a) Except as set forth in Schedule
3.02(a), the execution and delivery of this Agreement by Seller do not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation under, or
loss of a benefit relating to the Business under or result in the creation of
any Lien (other than Permitted Liens) upon any of the Purchased Assets under,
any provision of (i) the Certificate of Incorporation or By-laws of Seller or
any of its subsidiaries, (ii) assuming the obtaining of all required consents,
any agreement or obligation to which Seller or any of its subsidiaries is a
party or by which any of the Purchased Assets are bound or (iii) any applicable
judgment, injunction, order or decree, or statute, law, ordinance, rule or
regulation, in each case other than such as, individually or in the aggregate,
would not have a Material Adverse Effect.
(b) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Seller or any of
its subsidiaries in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby,
other than (i) compliance with and filings under the HSR Act, if applicable,
(ii) compliance with and filings under Section 13(a) or 15(d), as the case may
be, of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(iii) compliance with and filings and notifications under applicable
Environmental Laws, (iv) compliance with any notices, motions, orders or
approvals required by the Bankruptcy Court or the Bankruptcy Code and the rules
thereunder, (v) those set forth on Schedule 3.02(a) and (vi) those that may be
required solely by reason of Buyers' participation in the transactions
contemplated hereby.
3.03. Sufficiency of and Title to the Purchased Assets. (a) The
Purchased Assets constitute, and on the Closing Date will constitute, all of the
assets or property used or held for use primarily in the Business, except for
the Excluded Assets.
(b) upon consummation of the transactions contemplated hereby,
Buyers will have acquired good and marketable title (which in the case of Fee
Properties are insurable at regular rates by a reputable title company) in and
to, or a valid leasehold interest in, each of the Purchased Assets to be
acquired by each of them, respectively, free and clear of all Liens, except for
Permitted Liens.
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3.04. Organization and Standing; Books and Records. All subsidiaries
of Seller and their respective jurisdictions of incorporation are set forth on
schedule 3.04(a). Each of Seller's subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Except as set forth on Schedule 3.04(b), each of seller and its
subsidiaries has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its assets and to carry
on its business as presently conducted, other than such the lack of which would
not, individually or in the aggregate, have a Material Adverse Effect. Each of
Seller and its subsidiaries is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the conduct or
nature of its business or the ownership, leasing or holding of its properties
makes such qualification necessary, except such jurisdictions where the failure
to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect
Seller has prior to the execution of this Agreement delivered to
Buyers true and complete copies of the Certificate of Incorporation and By-laws,
each as amended to date and as currently in effect, of Seller and each of its
subsidiaries. The minute books of Seller and each of its subsidiaries (which
have been made available for inspection by Buyers prior to the date hereof) are
true and complete in all material respects.
3.05. SEC Documents; Financial Statements; Undisclosed Liabilities.
(a) Seller (and any entity to which it is a successor issuer for purposes of
Rule 12g-3 under the Exchange Act, each such entity being a "Predecessor
Entity") has filed all required reports, schedules, forms, statements and other
documents with the Securities and Exchange Commission (the "SEC") since June 30,
1993 (the "SEC Documents"). Seller has delivered to Buyers (i) Seller's annual
reports on Form 10-K for its fiscal years ended December 31, 1995, 1994 and
1993, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
March 31, 1996 and June 30, 1996, and (iii) all of the other SEC documents filed
since December 31, 1995. The audited consolidated balance sheets of Seller and
its subsidiaries (including the notes thereto) set forth in the most recent SEC
Document of Seller filed prior to the date hereof on Form 10-K, as updated or
modified by the consolidated balance sheet and the notes thereto set forth in
the June 30, 1996 Form 10-Q filed subsequently thereto, shall be hereinafter
referred to as the "Actual Balance Sheet." As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Seller and each Predecessor Entity
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of Seller and its subsidiaries and of each
Predecessor Entity and its subsidiaries, as the case may be, as of the dates
thereof and the consolidated results of operations and statements of cash flows
of Seller and its subsidiaries and of each Predecessor Entity and its
subsidiaries, as the case may be, for the periods then ended (subject, in the
case of any unaudited statements, to the absence of footnotes and to normal
year-end audit adjustments).
(b) There are no material liabilities or obligations relating to the
Purchased Assets or the Business of any nature (whether accrued, absolute,
contingent or unasserted), except (l) as disclosed, reflected or fully reserved
against in the Actual Balance Sheet, (2) for
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items set forth in Schedule 3.05 and (3) for other liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
the Balance Sheet Date which, individually or in the aggregate, are not material
to the Purchased Assets and the Business taken as a whole.
3.06. Contracts. Except as set forth in Schedule 3.06(a), with
respect to the Business neither the Seller nor any of its subsidiaries is a
party to or bound by:
(a) (i) any lease of real property ("Real Property Leases") under
which Seller or any subsidiary of Seller uses or occupies or has the right
to use or occupy, now or in the future, any real property, in each case
providing for annual rentals of more than $90,000 per annum or $1,000,000
in the aggregate or (ii) any lease of personal property under which Seller
or any subsidiary of Seller uses or has the right to use, now or in the
future, any personal property. in each case providing for annual rentals
of more than $50,000 per annum or $100,000 in the aggregate;
(b) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets that provides for either (i) annual
payments by Seller and its subsidiaries of $500,000 or more or (ii)
aggregate payments by Seller and its subsidiaries of $500,000 or more, or
any agreement for the purchase of real property;
(c) any sales, distribution or other similar agreement providing for
the sale by Seller or any of its subsidiaries of materials, supplies,
goods, services, equipment or other assets that provides for either (i)
annual payments to Seller and its subsidiaries of $5,000,000 or more or
(ii) aggregate payments to Seller and its subsidiaries of $10,000,000 or
more, or any agreement for the sale of real property or granting to a
third party an option to purchase or lease, or a right of first refusal to
purchase or lease, any real property of Seller or any of its subsidiaries;
(d) any partnership, joint venture or other similar agreement or
arrangement;
(e) any agreement relating to the acquisition or disposition of any
business that provides for aggregate payments by or to Seller or any of
its subsidiaries of $10,000,000 or more (whether by merger, sale of stock,
sale of assets or otherwise);
(f) any option, license, franchise or similar agreement that
provides for either (i) annual payments by Seller and its subsidiaries of
$100,000 or more or (ii) aggregate payments by Seller and its subsidiaries
of $200,000 or more;
(g) any agency, dealer, sales representative, marketing,
distribution or other similar agreement that provides for either (i)
annual payments by Seller and its subsidiaries of $500,000 or more or (ii)
aggregate payments by Seller and its subsidiaries of $1,000,000 or more;
(h) any agreement that limits the freedom of Seller or any of its
subsidiaries to compete in any line of business or with any person or in
any area or to own, operate, sell, transfer, pledge or otherwise dispose
of or encumber any Purchased Asset or which would so limit the freedom of
Buyers after the Closing Date;
(i) any agreement with or for the benefit of (i) any stockholder,
officer or director of Seller or any of its subsidiaries, (ii) Vitro, S.A.
or any of its subsidiaries
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("Vitro") or (iii) any employee of Seller or any of its subsidiaries
(other than Seller and its subsidiaries), other than, (x) in each case,
agreements set forth on Schedule 3.13(b), and (y) with respect to clause
(iii) compensatory arrangements with employees in general and agreements
entered into in the ordinary course of Business; or
(j) any other agreement or commitment not made in the ordinary
course of business that is material to he Business taken as a whole.
Except as set forth in Schedule 3.06(b), all such agreements listed in such
Schedule (collectively, the "Contracts") are valid and binding agreements of
Seller or one of its subsidiaries and are in full force and effect in all
material respects. Except as set forth in Schedule 3.06(c), each of Seller and
its subsidiaries has performed all material obligations required to be performed
by it to date under the Contracts and it is not in breach or default in any
material respect thereunder; to the knowledge of Seller, no condition exists
that with notice or lapse of time or both would constitute a material default
thereunder; and, to the knowledge of Seller, no other party to any of the
Contracts is in material breach or default thereunder. Seller has delivered or
made available true and complete copies of each of the Contracts (including all
modifications, amendments and supplements) to Consumers and to OI, those
specific Contracts requested by OI, prior to the date hereof.
3.07. Absence of Changes or Events. Except as set forth in Schedule
3.07(a), since the Balance Sheet Date, the Business has been conducted in the
ordinary course substantially consistent with past practices; provided that
since the filing of the Petition, Seller has been required to subject certain
transactions to Bankruptcy Court approval, has been precluded from paying
pre-petition liabilities except as otherwise authorized by the Bankruptcy Court,
has been granted authority to incur new and replacement liens in favor of its
debtor-in-possession lenders and certain other secured creditors, and has been
subject to set-off, recoupment and reclamation claims by creditors, and to the
alteration of normal trade credit terms by many suppliers. As a result of the
Petition, Seller is in default in many of its obligations to creditors, which
creditors are stayed from proceeding on their claims. In addition, prior to and
after the filing of the Petition, Seller experienced liquidity constraints which
caused it to alter certain normal business practices as set forth on Schedule
3.07(a). The existence of the constraints described herein are acknowledged by
Buyers. Except as set forth above, there has not been:
(a) any material adverse change in the condition of the plant,
property and equipment that constitutes part of the Purchased Assets;
(b) any creation or assumption by Seller or any of its subsidiaries
of any Lien (other than Permitted Liens) on any Purchased Asset other than
in the ordinary course of business consistent with past practices;
(c) any making of any loan, advance or capital contribution to or
investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned subsidiaries of Seller;
(d) any damage, destruction or other casualty loss (whether or not
covered by insurance) or condemnation or other governmental taking or sale
in lieu thereof affecting the Business or any Purchased Asset which,
individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect (it being understood for purposes of
this clause (d) that a material adverse change in the operations of any
operating manufacturing plant shall constitute a Material Adverse Effect);
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(e) any transaction or commitment made, or any contract or agreement
entered into, by Seller or any of its subsidiaries relating to the
Business or any Purchased Asset (including the acquisition or disposition
of any such assets) or any relinquishment by Seller or any of its
subsidiaries of any contract or other right, in any such case, that is
material to the Business, taken as a whole;
(f) any change in any method of accounting or accounting practice
(including consistent application) by Seller or any of its subsidiaries
with respect to the Business;
(g) any (i) individual employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer or employee of Seller or any of its subsidiaries (or any amendment
to any such existing agreement), (ii) grant of any severance or
termination pay to any director, officer or employee of Seller or any of
its subsidiaries, or (iii) change in compensation or other benefits
payable to any director, officer or employee of Seller or any of its
subsidiaries pursuant to any severance or retirement plans or policies
thereof, except in the case of clauses (ii) and (iii), such grants or
changes as may have been on a Seller-wide or subsidiary-wide basis
pursuant to a written Seller or subsidiary policy concurrently in effect,
or in the ordinary course of business consistent with past practices;
(h) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Business, which employees were not subject
to a collective bargaining agreement at the Balance Sheet Date, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees; or
(i) any capital expenditure, or commitment for a capital
expenditure, for additions or improvements to property, plant and
equipment in excess of that set forth on the budget used in connection
with Seller's as debtor-in-possession financing previously furnished by
Seller to Buyers.
3.08. Litigation. Except as set forth on Schedule 3.08(a) or in the
most recent SEC Document of Seller filed prior to the date hereof on Form 10-K,
there are no (i) outstanding judgments, orders, injunctions or decrees of any
Governmental Entity or arbitration tribunal against Seller or any of its
subsidiaries or any Purchased Asset which, individually or in the aggregate,
have had or would reasonably be expected to have a Material Adverse Effect or
which would restrain, prohibit, alter or materially delay the transactions
contemplated by this Agreement or (ii) actions, suits, investigations or
proceedings pending against, or to the knowledge of Seller, threatened against
or affecting, the Business or any Purchased Asset before any court or arbitrator
or any Governmental Entity which, if determined or resolved adversely in
accordance with the plaintiff's demands, would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or which in
any manner challenge or seek to restrain, prohibit, alter or materially delay
the transactions contemplated by this Agreement. The provisions of this Section
do not apply to Environmental Laws, which are covered elsewhere in this
Agreement.
3.09. Compliance with Laws and Court Orders. Except as set forth on
Schedule 3.09(a), neither Seller nor any of its subsidiaries is in violation of,
and has not since January 1, 1994 violated, any law, rule, regulation, judgment,
injunction, order or decree applicable to the Purchased Assets or the conduct of
the Business in any respect that, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect. The
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provisions of this Section do not apply to Environmental Laws, which are covered
elsewhere in this Agreement.
3.10. Employees. Schedule 3.10(a) sets forth a true and complete
list as of a recent date of the names, titles and annual salaries and cash
bonuses of all officers of Seller and its subsidiaries and all other employees
of the Business whose annual base salary exceeds $100,000. Except as set forth
in Schedule 3.10(b), to the actual knowledge of the executive officers of Seller
none of such employees has indicated to Seller or its subsidiaries that he
intends to resign or retire as a result of the transactions contemplated by this
Agreement or otherwise within one year after the Closing Date.
3.11. Properties. (a) (1) As of the date hereof, Seller and its
subsidiaries have (i) good and valid title to all material tangible Purchased
Assets (other than the Real Properties which are covered below) reflected on the
Actual Balance Sheet or acquired after the Balance Sheet Date (except for
property sold or otherwise disposed of since the Balance Sheet Date in the
ordinary course of business consistent with past practices), (ii) good and valid
fee simple title (which is insurable at regular rates by a reputable title
company) to the Fee Properties, and (iii) valid leasehold interests in the
Leased Properties, in the case of each of clauses (i) through (iii) above, free
and clear of all Liens, except for the following:
(v) Liens in favor of Seller Defined Benefit Plans for failure to
make required contributions to Seller Defined Benefit Plans which arose by
operation of law on September 16, 1996;
(w) Those matters relating to each Fee Property and Leased Property
set forth on Schedule 3.11(a);
(x) Liens disclosed on the Actual Balance Sheet or the notes
thereto;
(y) Liens for taxes not yet due or being contested in good faith or
which, though due, may be paid without interest or penalty, in each case
for which adequate accruals or reserves have been established on the
Reference Balance Sheet; or
(z) In the case of the Real Properties, Liens that do not secure any
monetary obligations and that do not materially (individually or in the
aggregate with all other matters) detract from the value of the property
to which they relate as now used or adversely affect the continued use of
the property to which they relate in the conduct of the business of Seller
or its subsidiaries currently conducted thereat, or in the case of
personal property, Liens that do not secure any monetary obligations and
that do not materially (individually or in the aggregate with all other
matters) detract from the value of the property to which they relate, as
now used or adversely affect the continued use of such assets in the
conduct of the business of Seller or its subsidiaries as currently
utilized.
(2) As of the Closing Date, Seller and its subsidiaries shall have
(I) good and valid title to all material tangible Purchased Assets (other than
Real Properties which are covered below) reflected on the Reference Balance
Sheet or acquired after the Balance Sheet Date (except for property sold or
otherwise disposed of since the Balance Sheet Date in the ordinary course of
business consistent with past practices), (II) good and valid fee simple title
(which is insurable at regular rates by a reputable title company) to the Fee
Properties and (III) valid leasehold interests in the Leased Properties, in the
case of each of clauses (I) through (III) above, free and clear of all Liens,
except for the following (collectively, "Permitted Liens"):
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(A) Liens set forth on Schedule 3.11(a) that are in effect as of the
Closing Date and affect the property to which they relate, do not secure
any monetary obligation and do not, individually or in the aggregate with
all other matters, materially detract from the value of the property to
which they relate as now used or materially adversely affect the continued
use of the property to which they relate in the conduct of the business of
Seller or its subsidiaries currently conducted thereat;
(B) Liens disclosed on the Reference Balance Sheet and in effect as
of the Closing Date; or
(C) Liens referred to in paragraphs (v),(y) and (z) of Section
3.11(a)(l) and in effect as of the Closing Date.
Without limiting the foregoing, the items on Schedule 3.11(a) marked "not a
Permitted Lien" shall not be Permitted Liens for purposes of this Agreement.
(b) Schedule 3.11(b) identifies all of the real properties owned
(the "Fee Properties") or leased (the "Leased Properties") by Seller and its
subsidiaries (the Fee Properties and the Leased Properties being collectively
referred to as the "Real Properties").
(c) Except as set forth on Schedule 3.11(c), to the knowledge of
Seller, the buildings and structures constituting part of the Fee Properties and
the Leased Property covered by the Headquarters Lease (the "Headquarters
Property") and related equipment, are in good operating condition and repair and
have been reasonably maintained in a manner consistent with standards generally
followed in the industry (giving due account to the age and length of use of
same, ordinary wear and tear excepted and damage by fire and other casualty
covered by insurance excepted), are structurally sound.
(d) Except as set forth on Schedule 3.11(d), the buildings and
structures constituting part of each of the Fee Properties and the Headquarters
Property currently have access to (i) public roads or valid easements over
private streets or private property for such ingress to and egress from such
property and (ii) water supply, storm and sanitary sewer facilities, telephone,
gas and electrical connections, fire protection, drainage and other public
utilities, in each case as is reasonably necessary for the current use of such
properties.
(e) The installation and construction of the buildings and
structures located on the Fee Properties and the Headquarters Property have been
completed in material compliance with all laws, rules, regulations, judgments,
orders, permits, licenses and other requirements of and agreements with all
Governmental Entities applicable to such properties; and all building permits,
certificates of occupancy, licenses and other authorizations required for
current uses of such properties have been obtained, other than those the failure
of which to obtain would not materially adversely affect the continued use of
the relevant property as now used, and true and complete copies thereof (to the
extent in Seller's or any of its subsidiaries' possession) have been provided to
Buyers. The provisions of this Section do not apply to the requirements under
Environmental Laws, which are covered elsewhere in this Agreement.
(f) Except as set forth in schedule 3.02(a) or Schedule 3.11(f), (i)
each Real Property Lease is in full force and effect and has not been amended,
modified or supplemented, (ii) all rent and other sums and charges payable under
each Real Property Lease are current, (iii) no notice of a material default on
the part of the tenant or termination notice has been served under any Real
Property Lease which remains outstanding, (iv) other than as may exist as of the
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date hereof (but not as of the Closing Date) by reason of filing of the
Petition, no uncured material default or termination event exists (and no
condition exists which with the giving of notice or the passage of time or both
would constitute a material default or termination event) under any Real
Property Lease and (v) the consummation of the transactions provided for herein
will not constitute a material default under any Real Property Lease or grounds
for the termination thereof.
(g) There is no underlying Lien affecting the Seller's Headquarters
Lease (other than arising under the Citicorp Loan) which is superior to the
interest of the tenant under such lease.
(h) There are no encroachments or other facts or conditions
affecting any of the Fee Properties or the Headquarters Property that would be
revealed by an accurate survey or inspection thereof which would, individually
or the aggregate, materially detract from the value of such property as now used
or materially adversely affect the continued use of such property in the conduct
of the business of the Seller or its subsidiaries as currently utilized. None of
the material buildings and structures on the Fee Properties or the Headquarters
Property materially encroaches upon real property of another person or upon the
area of any easement (other than encroachments on utility easements to the
extent such encroachments would not, individually or in the aggregate,
materially detract from the value of such property as now used or materially
adversely affect the continued use of such property in the conduct of the
business of Seller and its subsidiaries as currently utilized) affecting the Fee
Properties or Headquarters Property.
3.12. Environmental Matters. (a) For purposes of this Section, the
following terms shall have the meanings set forth below:
(i) "Environmental Laws" means any applicable federal, state, local
and foreign law, treaty, regulation, rule, judicial decision, judgment,
order, decree, injunction, permit or agreement as in effect on the date
hereof relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes
or materials;
(ii) "Hazardous Substances" means any pollutant, contaminant or
waste or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substance, waste or material, including petroleum its
derivatives, by-products and other hydrocarbons, and any substance,
chemical or material regulated under Environmental Laws; and
(iii) For purposes of this Section 3.12, "Seller" and "subsidiary"
shall include any entity which is, in whole or in part, a predecessor of
Seller or any subsidiary of Seller.
(b) Except as disclosed on Schedule 3.12, to the actual knowledge
(without any independent investigation) of any of Seller's executive officers,
plant managers, corporate environmental personnel or plant personnel with
supervisory responsibility for environmental matters (if any):
(i) except for matters that have been resolved with no obligation,
whether monetary or otherwise, remaining on the part of the Seller or any
of its subsidiaries, no notice, notification, demand, request for
information, citation, summons or order has been issued, and no complaint
has been filed, no penalty has been assessed, no investigation, action,
claim, suit, proceeding or review is pending or threatened by any
Governmental
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Entity or other person with respect to any matters relating to Seller or
any subsidiary of Seller and relating to or arising out of any
Environmental Law;
(ii) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or released
at, on or under any property now or previously owned, leased or operated
by Seller or any subsidiary of Seller except in accordance with
Environmental Laws;
(iii) there are no liabilities of Seller or any subsidiary of Seller
of or relating to the Purchased Assets or the Business arising under or
relating to any Environmental Law;
(iv) no property now or previously owned, leased or operated by
Seller or any subsidiary of Seller nor any property to which Seller or any
subsidiary of Seller has, directly or indirectly, transported or arranged
for the transportation of any Hazardous Substances is listed or proposed
for listing, on the National Priorities List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), on CERCLIS (as defined in CERCLA) or on any similar
federal, state or foreign list of sites requiring investigation or cleanup
(excluding any state lists of leaking underground storage tanks); and
(v) Seller and its subsidiaries are in compliance with all
Environmental Laws and have obtained all permits, licenses and
authorizations of Governmental Entities relating to or required by
Environmental Laws and necessary or proper for the business of Seller or
any subsidiary of Seller as currently conducted.
(c) There has been no written environmental assessment,
investigation, study or audit conducted which seller has in its possession in
relation to the current or prior business of Seller or any subsidiary of Seller
or any property or facility now or previously owned, leased or operated by
Seller or any subsidiary of Seller which has not been made available to Buyers.
3.13. Employee Benefit Plans.
(a) For purposes of this Section, the following terms shall have the
meanings set forth below:
"Benefit Arrangement" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy,
fund, program or contract or arrangement (whether or not written)
providing for compensation, bonus, profit-sharing, stock option, or other
stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, worker's
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that (i) is not an
Employee Plan, (ii) is entered into, maintained, administered or
contributed to, as the case may be, by Seller or any of its subsidiaries
or ERISA Affiliate and (iii) covers any employee or former employee of
Seller or any of its subsidiaries by virtue of the individual's employment
with Seller or any of its subsidiaries.
"Employee Plan" means any material "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by Seller or any
of its subsidiaries or ERISA Affiliate and
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(iii) covers any employee or former employee of Seller or any of its
subsidiaries by virtue of the individual's employment with Seller or any
of its subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity which,
together with such entity, would be treated as a single employer under
Sect ion 414 of the Code.
"Multiemployer Plan" means any plan that is a multiemployer plan, as
defined in Section 3(37) or Section 4001(a) (3) of ERISA.
(b) Schedule 3.13(b) lists each Employee Plan. Prior to the
execution of this Agreement, Seller has delivered or made available to
Buyers complete and accurate copies of the Employee Plans (and, if
applicable, related trust agreements) and all amendments thereto and
written interpretations thereof (including any summary plan description
and summary of material modifications) together with (i) the most recent
annual report prepared in connection with any employee Plan (Form 5500
including, if applicable, Schedule B thereto) and (ii) if applicable, the
most recent actuarial valuation report prepared in connection with any
Employee Plan. Seller has provided or made available to Buyers complete
actuarial data (including age, salary, service and related data) for
employees of Seller and its subsidiaries as of the most recent practicable
date.
(c) Except as set forth on Schedule 3.13(c), neither Seller nor any
of its ERISA Affiliates has incurred, or reasonably expects to incur prior
to the Closing, any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA that is
likely to become, after the Closing Date, an obligation of either Buyer or
any of their ERISA Affiliates. Except as disclosed in Schedule 3.13(c), no
condition exists that is likely to constitute grounds for termination by
the PBGC of any Employee Plan subject to Title IV of ERISA that is
maintained solely by Seller or any of its ERISA Affiliates. Except as set
forth on Schedule 3.13(c), no "reportable event", within the meaning of
Section 4043(c) (5), (6) or (10) of ERISA, has occurred in connection with
any Employee Plan subject to Title IV of ERISA.
(d) Except as disclosed in Schedule 3.13(d), none of the Employee
Plans is a Multiemployer Plan. To Seller's knowledge, no Employee Plan
which is a Multiemployer Plan is or is reasonably expected to become
"insolvent" or in "reorganization," as such terms are defined for purposes
of Title IV of ERISA. Between the date of this Agreement and the Closing
Date, Seller will use reasonable efforts to determine the aggregate amount
of withdrawal liability which would be incurred if Seller were to incur a
complete withdrawal from any of the scheduled Multiemployer Plans on or
before the Closing Date.
(e) Except as disclosed in Schedule 3.13(e), each Employee Plan
which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service that it is so qualified and, to Seller's knowledge, no event has
occurred since the date of such determination letter to adversely affect
the qualified status of such Plan. Prior to the execution of this
Agreement, Seller has furnished or made available to Buyers the most
recent determination letter of the Internal Revenue Service relating to
each such Employee Plan for which such a letter has been received. Except
as set forth on Schedule 3.13(e), each Employee Plan (other than a
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Multiemployer Plan) has been maintained in compliance with its terms and
with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations, including ERISA and the Code, except where
failure to so maintain would not be reasonably likely to have a Material
Adverse Effect.
(f) Schedule 3.13(f) lists each Benefit Arrangement. Prior to the
execution of this Agreement, Seller has furnished or made available to
Buyers copies or descriptions of each Benefit Arrangement. Each Benefit
Arrangement has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules
and regulations other than where the failure to so maintain would not have
a Material Adverse Effect.
(g) Except as disclosed by Seller in writing to Buyers prior to the
date hereof or as set forth on Schedule 3.13(g), there has been no
amendment to, written interpretation of or announcement (whether written
or not written) by Seller or any of its ERISA Affiliates relating to, or
change in employee participation or coverage under, any Employee Plan or
Benefit Arrangement which would increase materially the expense of
maintaining such Plan or Arrangement above the level of the expense
incurred in respect thereof for the most recent fiscal year. Except as set
forth in Schedule 3.13(g), neither Seller nor any Affiliate or employee of
Seller has taken any action or made any statement that could preclude or
interfere with the right of Seller or its successor to reduce or eliminate
any post-retirement welfare benefits provided under any Employee Plan or
Benefit Arrangement.
(h) The accumulated post-retirement benefit obligations as of June
30, 1996, in accordance with the principles of Financial Accounting
Standard No. 106, is fairly presented in the Reference Balance Sheet,
subject to the adjustments and assumptions set for on Exhibit A.
(i) Except as disclosed in Schedule 3.13(i), no legal action, suit
or claim is pending or, to the knowledge of Seller, threatened, with
respect to any Employee Plan or Benefit Arrangement (other than claims for
benefits in the ordinary course). Except as disclosed in Schedule 3.13(i),
no employee of Seller or any of its subsidiaries will become entitled to
any retirement, severance or other benefit solely as a result of the
transactions contemplated hereby.
(j) The obligation for unfunded pension obligations as of June 30,
1996, calculated in accordance with the principles of Financial Accounting
Standard No. 87, under all defined benefit plans maintained by Seller is
fairly presented on the Reference Balance Sheet, subject to the
adjustments and assumptions set forth on Exhibit A.
(k) Except as set forth in Schedule 3.13 (k), (i) neither Seller nor
any subsidiary of Seller is a party to any collective bargaining agreement
or other material labor union contract applicable to any employee thereof;
(ii) there are no material grievances outstanding against Seller or any of
its subsidiaries under any such agreement or contract; (iii) there are no
unfair labor practice charges or complaints pending against Seller or any
of its subsidiaries before the National Labor Relations Board or any
similar state agency; and (iv) there are no strikes, slowdowns, work
stoppages, lockouts, union organizational campaigns or other protected
concerted activity under the National Labor Relations Act or, to Seller's
knowledge, threats thereof, by or with respect to any
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employees of Seller or any of its subsidiaries which are reasonably likely
to have a Material Adverse Effect.
(l) Except as set forth in Schedule 3.13(l), neither Seller nor any
of its subsidiaries employs any person outside the United States, and no
Employee Plan or Benefit Arrangement is maintained principally for
employees of Seller or its subsidiaries outside the United States.
(m) The Purchased Assets include sufficient equipment, books,
records (including personnel and employment records), computer software
programs and data, rights under contracts and other assets necessary to
administer the Benefit Arrangements and Employee Plan without interruption
on and after the Closing Date.
(n) Seller has provided Buyers with a list of each insurance policy
of Seller or its subsidiaries maintained under or in connection with any
Benefit Arrangement or Employee Plan.
3.14. Licenses and Permits. Schedule 3.14(a) correctly describes
each material license, franchise, permit or other similar authorization
affecting, or relating to, the Purchased Assets or Business and issued by a
Governmental Entity (collectively, the "Permits"), together with the name of the
Governmental Entity issuing such Permit. Except as set forth on Schedule 3.14(b)
and except for matters which would not be reasonably likely to have a Material
Adverse Effect, such Permits are valid and in full force and effect and neither
Seller nor any subsidiary of Seller is in default under, and no condition exists
that with notice or lapse of time or both would constitute a default under, any
such Permit. In general, the Permits are not transferable by Seller and all or
substantially all of the Permits will be terminated or impaired or become
terminable as a result of the transactions contemplated by this Agreement. The
provisions of this Section do not apply to the requirements under Environmental
Laws, which are covered elsewhere in this Agreement.
3.15. Insurance Coverage. All material tangible Purchased Assets and
risks of Seller are covered by currently effective insurance policies or binders
of insurance or programs of self-insurance in such types and amounts as are
consistent with customary practices and standards of companies engaged in
businesses and operations similar to the Business. Seller has furnished or made
available to Buyers true and complete copies of all insurance policies and
fidelity bonds relating to the Purchased Assets, the operation of the Business
and the employees, officers and directors of Seller or its subsidiaries. Except
as set forth on Schedule 3.15, to the knowledge of Seller, there is no material
claim by Seller or any subsidiary of Seller pending under any of such policies
or bonds relating to the Purchased Assets, the operation of the Business or the
employees, officers or directors of Seller and its subsidiaries.
3.16. Intellectual Property. (a) Schedule 3.16(a) contains a list of
all trademarks, service marks, trade names, service names, inventions, patents,
trade secrets, know-how, copyright (including any registration or applications
for registration of any of the foregoing) or any other similar type of
proprietary intellectual property rights, in each case which is owned or
licensed by Seller or any of its Affiliates and used or held for use primarily
in the Business (collectively, the "Intellectual Property Rights"). Schedule
3.06(a) lists all licenses, sublicenses and other agreements to which Seller or
any of its Affiliates is a party and pursuant to which any Person's authorized
to use such Intellectual Property Rights.
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(b) (i) Except as set forth on Schedule 3.16(b), neither Seller nor
any of its subsidiaries has been named as a defendant in any pending action,
suit, investigation or proceeding relating to, or otherwise has been notified in
writing of, any alleged claim of material infringement of any patents,
trademarks, trade names, service marks, service names, or copyrights of any
third party and (ii) Seller has no knowledge of any continuing material
infringement by any other person of any Intellectual Property Right. No
Intellectual Property Right is subject to any outstanding judgment, injunction,
order or decree restricting the use thereof by Seller or any of its subsidiaries
or restricting the licensing thereof by Seller or any of its subsidiaries to any
Person.
3.17. Customers. Listed on Schedule 3.17 are the names of each
customer of Seller or any subsidiary of Seller that ordered products, goods or
services from Seller or a subsidiary of Seller (the "Seller Products and
Services") with an aggregate value of $5,000,000 or more during the twelve-month
period ended July 31, 1996. Except as set forth on Schedule 3.17, as of the date
hereof to the actual knowledge of the executive officers of the Seller, Seller
has not received any notice from any such customer that it has (i) ceased or is
planning to cease using the Seller Products and Services or (ii) within the past
30 days substantially reduced, or will substantially reduce, the amount of the
Seller Products and Services to be purchased in the future.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYERS
Consumers represents and warrants to Seller as follows in Sections
4.01 through 4.05, inclusive:
4.01. Authority-Consumers. Consumers is a corporation duly
organized, validly existing and in good standing under the federal laws of
Canada and has all corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted. Consumers has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby to be consummated by
Consumers. All corporate and stockholder or equivalent) acts and other
proceedings required to be taken by Consumers to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby to be consummated by Consumers have been duly
and properly taken. This Agreement has been duly executed and delivered by
Consumers and constitutes a legal, valid and binding obligation of Consumers,
enforceable against Consumers in accordance with its terms.
4.02. No Conflicts; Consents-Consumers. (a) The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby to be consummated by Consumers and compliance with the terms
hereof to be complied with by Consumers shall not, conflict with, or result in
any violation of or default (with or without notice or lapse of time, or both)
under, (i) the certificate of incorporation or by-laws of Consumers or other
comparable governing instruments of Consumers, as the case may be, or the
comparable governing instruments of any subsidiary of Consumers, (ii) any
agreement or obligation to which Consumers or any subsidiary of Consumers is a
party or by which any of their respective assets are bound, or (iii) any
judgment, injunction, order, or decree, or statute, law, ordinance, rule or
regulation applicable to Consumers or any subsidiary of Consumers or their
respective assets, in each case other than such as in the aggregate would not
have a material adverse effect on the ability of Consumers to consummate the
transactions contemplated hereby to be consummated by Consumers.
(b) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Consumers or any
of its subsidiaries or their respective Affiliates in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (i) compliance with and filings
under the HSR Act, if applicable, (ii) compliance with and filings under Section
13(a) or 15(d), as the case may be, of the Exchange Act, (iii) compliance with
and filings and notifications under applicable Environmental Laws, (iv) any
notices, motions, orders or approvals required by the Bankruptcy Court or the
Bankruptcy Code and the rules thereunder and (v) those that may be required
solely by reason of Seller's participation in the transactions contemplated
hereby.
4.03. Actions and Proceedings, etc. There are no (a) outstanding
judgments, orders, injunctions or decrees of any Governmental Entity or
arbitration tribunal against Consumers or any of its respective Affiliates, (b)
lawsuits, actions or proceedings pending or, to the knowledge of Consumers,
threatened against Consumers or any of its Affiliates, or (c)
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investigations by any Governmental Entity which are, to the knowledge of
Consumers, pending or threatened against Consumers or any of its Affiliates, and
which, in the case of each of clauses (a),(b) and (c), have a material adverse
effect on the ability of Consumers to consummate the transactions contemplated
hereby to be consummated by Consumers.
4.04. Availability of Funds. Consumers has cash available or
existing borrowing facilities or firm commitments which together are sufficient
to enable New Anchor to purchase the portion of the Purchased Assets to be
acquired by it and otherwise consummate the transactions contemplated by this
Agreement to be consummated by Consumers.
4.05. New Anchor.
(a) New Anchor will be a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and will
have all corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals necessary or required to enable
it to own, lease or otherwise hold the Purchased Assets to be purchased by
Consumers hereunder and to carry on its business. New Anchor will have all
requisite corporate power and authority to assume the rights, obligations and
liabilities of Consumers under this Agreement and to consummate the transactions
contemplated hereby to be consummated by Consumers. Prior to Closing, Consumers
shall have assigned to New Anchor all of Consumers' rights, and New Anchor shall
have assumed all of Consumers' obligations, under this Agreement as provided in
Section 6.05 hereof and, upon such assignment and assumption, this Agreement
shall constitute a legal, valid and binding obligation of New Anchor, as
successor by assignment to Consumers, enforceable in accordance with its terms
(which assignment and assumption shall not relieve Consumers of its obligations
hereunder). All corporate and stockholder (or equivalent) acts and other
proceedings required to be taken by New Anchor to consummate the transactions
contemplated hereby to be consummated by Consumers will be duly and properly
taken. New Anchor will be duly qualified and in good standing to do business as
a foreign corporation in each jurisdiction in which the conduct or nature of its
business or the ownership, leasing or holding of the Purchased Assets being
purchased by Consumers hereunder make such qualification necessary.
(b) New Anchor shall adopt and file with the Secretary of State of
the State of Delaware prior to Closing a Restated Certificate of Incorporation
(the "Certificate of Incorporation") which shall provide the terms set forth on
Appendix C with respect to the 10% Convertible Preferred Stock of New Anchor and
the terms set forth on Appendix D with respect to the 8% Junior Preferred Stock
and which Certificate of Incorporation shall be the certificate of incorporation
of New Anchor in effect at the Closing until thereafter amended as provided by
law and the Certificate of incorporation. Not less than seven days prior to the
Closing, New Anchor shall furnish to Seller copies of the Certificate of
Incorporation and copies of the by-laws of New Anchor to be in effect at the
Closing until thereafter amended as provided by law, the Certificate of
Incorporation and such by-laws (the "By-laws") which shall be reasonably
satisfactory to Seller and New Anchor.
(c) The authorized capital of New Anchor will consist immediately
prior to the Closing of:
(i) 20,000,000 shares of Preferred Stock, par value $25.00 per
share, of which 2,160,000 shares will be issued and designated 10%
Convertible Preferred Stock, and 2,960,000 shares will be issued and
designated 8% Junior Convertible Preferred Stock, all of which will
be issued to Consumers prior to
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Closing for an aggregate cash purchase price of $74,000,000. The
rights, privileges and preferences of the 10% Convertible Preferred
Stock and the 8% Junior Convertible Preferred Stock will be as
stated in the Certificate of Incorporation; and
(ii) 50,000,000 shares of Common Stock, par value $.10 per
share, of which 490,000 shares shall be issued to Seller at Closing
pursuant to this Agreement and 200,000 shares will be issued to
Consumers prior to Closing for an aggregate cash purchase price of
$1,000,000.
(d) The Shares, when issued and delivered in accordance with the
terms hereof, will be duly authorized, validly issued, fully paid and
non-assessable and will be free of any liens, claims, charges, security
interests, pledges, voting or stockholder agreements, encumbrances or equities
of any kind whatsoever, will not be issued in violation of any preemptive rights
and will vest in Seller full rights with respect thereto, including the right to
vote such Shares on all matters properly presented to the stockholders of New
Anchor or to consent to the taking of certain actions, all to the extent to be
set forth in the Certificate of Incorporation and the By-laws. The shares of 8%
Junior Convertible Preferred Stock and Common Stock to be issued and outstanding
on the Closing date will be duly authorized, validly issued, fully paid and
non-assessable. The Common Stock issuable upon conversion of the 10% Convertible
Preferred Stock will have been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Certificate of Incorporation, will
be duly authorized, validly issued, fully paid and non-assessable and will be
free of any liens, claims, charges, security interests, pledges, voting or
stockholder agreements, encumbrances or equities of any kind whatsoever, will
not be issued in violation of any preemptive rights and will vest in Seller full
rights with respect thereto, including the right to vote such Shares on all
matters properly presented to the stockholders of New Anchor or to consent to
the taking of certain actions, all to the extent to be set forth in the
Certificate of Incorporation and the By-laws. Except for (i) the issuances of
Common Stock, 10% Convertible Preferred Stock and 8% Junior Convertible
Preferred Stock contemplated by this Agreement, (ii) the issuance of Common
Stock upon conversion of the 10% Convertible Preferred Stock and the 8% Junior
Convertible Preferred Stock and (iii) the issuance of Warrants (and Common Stock
issuable upon exercise of the Warrants) to the Lenders as contemplated in the
Financing Letters, on the Closing Date there will be no outstanding options,
warrants, rights (including preemptive rights), calls, commitments, conversion
rights, rights of exchange, plans or other agreements of any character providing
for the purchase, issuance or sale of any shares of the capital stock of New
Anchor or any securities convertible into, or exercisable or exchangeable for,
or evidencing the right to subscribe for any such shares of capital stock or
other equity interests of New Anchor or obligating New Anchor to grant, extend
or enter into any such subscription, option, warrant, call or right.
(e) At the Closing, New Anchor will have no assets, business or
liabilities other than the Purchased Assets being purchased by Consumers
pursuant to this Agreement, the rights of Consumers under this Agreement and the
ancillary agreements contemplated by this Agreement, the liabilities and
obligations of Seller to be assumed by Consumers pursuant to this Agreement and
the ancillary agreements and the liabilities contemplated in the Financing
Letters and the cash consideration received from Consumers in exchange for the
shares of capital stock subscribed for by Consumers pursuant to this Section
4.05(c) (i-ii).
(f) The assignment to New Anchor of the rights of Consumers under
this Agreement and the assumption by New Anchor of the liabilities and
obligations to be assumed by Consumers pursuant to this Agreement shall not
conflict with, or result in any violation of or
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default and the consummation of the transactions contemplated hereby to be then
consummated by New Anchor and the compliance with the terms hereof to be then
complied with by New Anchor (with or without the notice or lapse of time, or
both) under, (i) the Certificate of Incorporation or By-laws of New Anchor or
(ii) any judgment, injunction, order, or decree, or statute, law, ordinance,
rule or regulation applicable to New Anchor, or its assets, in each case other
than such as in the aggregate would not have a material adverse effect on the
ability of New Anchor to consummate the transactions contemplated hereby.
(g) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to New Anchor or
its affiliates in connection with the consummation of the transactions
contemplated hereby, other than (i) compliance with and filings and
notifications under applicable environmental laws, (ii) any notices, motions,
orders or approvals required by the Bankruptcy Court or the Bankruptcy Code and
the rules thereunder and (iii) those that may be required solely by reason of
Seller's participation in the transactions contemplated hereby.
OI represents and warrants to Seller as follows in Sections 4.06
through 4.09, inclusive:
4.06. Authority-OI. OI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted. OI has all requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby to be consummated by OI. All corporate and
stockholder (or equivalent) acts and other proceedings required to be taken by
OI to authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, to be consummated by
OI have been duly and properly taken. This Agreement has been duly executed and
delivered by OI and constitutes a legal, valid and binding obligation of OI,
enforceable against OI in accordance with its terms.
4.07. No Conflicts; Consents-OI. (a) The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby to be consummated by OI and compliance with the terms hereof to be
complied with by OI shall not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, (i) the
certificate of incorporation or by-laws of OI or other comparable governing
instruments of OI, as the case may be, or the comparable governing instruments
of any subsidiary of OI, (ii) any agreement or obligation to which OI or any
subsidiary of OI is party or by which any of their respective assets are bound,
or (iii) any judgment, injunction, order, or decree, or statute, law, ordinance,
rule or regulation applicable to OI or any subsidiary of OI or their respective
assets, in each case other than such as in the aggregate would not have a
material adverse effect on the ability of OI to consummate the transactions
contemplated hereby to be consummated by OI.
(b) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to OI or any of its
subsidiaries or its Affiliates in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than (i) compliance with and filings under the HSR
Act, if applicable, (ii) compliance with and filings under Section 13(a) or
15(d), as the case may be, of the Exchange Act, (iii) compliance with and
filings and notifications under applicable Environmental Laws, (iv)
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any notices, motions, orders or approvals required by the Bankruptcy Court or
the Bankruptcy Code and the rules thereunder and (v) those that may be required
solely by reason of Seller's participation in the transactions contemplated
hereby.
4.08. Actions and Proceedings, etc-OI. There are no (a) outstanding
judgments, orders, injunctions or decrees of any Governmental Entity or
arbitration tribunal against OI or any of its Affiliates, (b) lawsuits, actions
or proceedings pending or, to the knowledge of OI, threatened against OI or any
of its Affiliates, or (c) investigations by any Governmental Entity which are,
to the knowledge of OI, pending or threatened against OI or any of its
Affiliates, and which, in the case of each of clauses (a), (b) and (c), have a
material adverse effect on the ability of OI to consummate the transactions
contemplated hereby to be consummated by OI.
4.09. Availability of Funds-OI. OI has cash available or has
existing borrowing facilities or firm commitments which together are sufficient
to enable it to purchase the portion of the Purchased Assets to be acquired by
it and otherwise consummate the transactions contemplated by this Agreement to
be consummated by OI.
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ARTICLE 5
COVENANTS OF SELLER
Seller agrees that:
5.01. Conduct of the Business. From the date hereof until the
Closing Date, subject to the requirements and restrictions of the Bankruptcy
Court proceedings, Seller shall conduct the business in the ordinary course
consistent with past practice and use its best efforts to preserve intact the
business organizations and relationships with third parties and to keep
available the services of the present employees of the Business. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, Seller will not:
(a) with respect to the Business acquire a material amount of assets
from any other Person;
(b) sell, lease, license or otherwise dispose of (i) property, plant
or equipment constituting part of the Purchased Assets or (ii) any
Purchased Assets (other than property, plant or equipment) other than in
the case of this clause (ii) (A) pursuant to existing contracts or
commitments and (B) in the ordinary course consistent with past practice;
or
(c) agree or commit to do any of the foregoing.
Seller will not (i) take or agree or commit to take any action that would make
any representation and warranty of Seller hereunder inaccurate in any respect
at, or as of any time prior to, the Closing Date or (ii) omit or agree or commit
to omit to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time.
5.02. Access to Information. (a) Subject to the restrictions
contained in the Confidentiality Agreement, from the date hereof until the
Closing Date, Seller (i) will give Buyers, their counsel, financial advisors,
auditors and other authorized representatives access to the offices, properties,
books and records of Seller relating to the Business, (ii) will furnish to
Buyers, their counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information relating
to the Business as such Persons may reasonably request and (iii) will instruct
the employees, counsel and financial advisors of Seller to cooperate with Buyers
in their investigation of the Business; provided that no investigation by Buyers
or other information received by Buyers shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by Seller
hereunder. Any investigation pursuant to this Section shall be conducted in such
manner as not to interfere unreasonably with the conduct of the business of
Seller. Notwithstanding the foregoing, Buyers shall not have access to personnel
records of Seller relating to individual performance or evaluation records,
medical histories or other information which in Seller's good faith opinion is
sensitive or the disclosure of which could subject Seller to risk of liability.
(b) After the Closing Date, the parties agree that they will each
cooperate with and make available to the other parties, during normal business
hours, all books of account and other financial records (including, without
limitation, accountant's work papers) pertaining to the Business (collectively,
"Books and Records"), information and employees (without substantial
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disruption of employment) retained and remaining in existence after the Closing
Date which are necessary or useful in connection with any inquiry relating to
Taxes or any audit, investigation or dispute, any litigation or investigation or
any other matter requiring any such Books and Records, information or employees
for any reasonable business purpose. The party requesting any such Books and
Records, information or employees shall bear all of the out-of-pocket costs and
expenses (including, without limitation, attorneys' fees, but excluding
reimbursement for general overhead, salaries and employee benefits) reasonably
incurred in connection with providing such Books and Records, information or
employees. Seller may require certain financial information relating to the
Business for periods prior to the Closing Date for the purpose of filing
federal, state, local and foreign Tax Returns and other governmental reports,
and Buyers agree to furnish such information to Seller at Seller's request and
expense.
(c) After the Closing, Seller will hold, and will use its best
efforts to cause its Affiliates and its and their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless requested to disclose by judicial or administrative
process or by other requirements of law or if reasonably necessary in connection
with any disputes arising in connection with this Agreement or the transactions
contemplated hereby, all confidential documents and information concerning the
Business, except to the extent that such information can be shown to have been
(A) in the public domain through no fault of Seller or (B) later lawfully
acquired by Seller from sources other than those related to Seller's prior
ownership of the Business and the Purchased Assets. The obligation of Seller and
its Affiliates to hold any such information in confidence shall be satisfied if
they exercise the same care with respect such information as they would take to
preserve the confidentiality of their own similar information.
5.03. Notices of Certain Events. (a) Seller shall promptly notify
Buyers of:
(i) any notice or communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting Seller or the Business that, if pending
on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.08 or that relate to the consummation of
the transactions contemplated by this Agreement;
(iv) the damage or destruction by fire or other casualty of any
Purchased Asset or part thereof or in the event that any Purchased Asset
or part thereof becomes the subject of any proceeding or, to the knowledge
of Seller, threatened proceeding for the taking thereof or any part
thereof or of any right relating thereto by condemnation, eminent domain
or other similar governmental action;
(v) any material changes of the type represented in Section 3.17
which occur from the date hereof until the Closing Date with respect to
customers listed on Schedule 3.17; and
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(vi) any item that would have been required to be described on
Schedule 3.12 if Seller had knowledge of such item on or prior to the date
hereof and any adverse change in any of the items described on Schedule
3.12.
(b) Seller shall promptly notify Buyers of, and furnish Buyers any
information either of them may reasonably request with respect to, the
occurrence to Seller's knowledge of any event or condition or the existence to
Seller's knowledge of any fact that would cause any of the conditions to Buyers'
obligations to consummate the purchase and sale of the Purchased Assets not to
be fulfilled. If between the Balance Sheet Date and the Closing Date, any of the
matters referenced in Section 5.03(a) (iv) shall have occurred, then Seller, at
its option, shall either repair any damage or casualty at its expense or deliver
to Buyers on the Closing Date any insurance proceeds (including but not limited
to condemnation insurance proceeds), or rights to receive insurance proceeds,
with respect thereto or the Purchase Price shall be reduced by such amount.
5.04. Environmental Covenants. Prior to Seller's providing any
documents or other information to the New Jersey Department of Environmental
Protection, the Connecticut Commissioner of Environmental Protection or any
other federal or state environmental agency with respect to this Agreement or
the transactions contemplated hereby, Seller shall afford Consumers the
opportunity to review the form and substance of any such documents and other
information.
5.05. Bankruptcy Court Approval. (a) [Omitted]
(b) Seller agrees to pay a $3 million break-up fee to Ball-Foster
Glass Container Co., L.L.C. upon the terms and conditions contained in the
Interim Order dated October 15, 1996.
(c) Seller shall promptly make any filings, take all actions and use
its best efforts to obtain any and all other approvals and orders necessary or
appropriate for the consummation of the transactions contemplated hereby,
subject to its obligations to comply with any order of the Bankruptcy Court.
(d) In the event an appeal is taken from the Sale Order, Seller
shall immediately notify Buyers of such appeal and shall within one business day
provide Buyers with copies of the related notice of appeal. Seller shall also
provide Buyers with written notice of any motion or application filed in
connection with any appeal from such order.
5.06. Use of the Anchor Name. After the Closing Date, neither Seller
nor any of its subsidiaries shall use the name or mark "Anchor" or "Anchor
Glass" or any derivative thereof, except that during the pendency of Seller's
bankruptcy case (Case No. 96-1434 PJW), Seller shall be permitted to use the
name "Anchor Glass Container Corporation" as its corporate name in connection
with all matters relating to such case, but for no other purpose. Upon
consummation of a plan of reorganization of Seller and its subsidiaries, Seller
and its subsidiaries shall promptly file with the applicable Governmental
Entities all documents necessary to delete from their names the name "Anchor" or
any derivative thereof and shall do or cause to be done all other acts,
including the payment of any fees required in connection therewith, to cause
such documents to become effective.
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ARTICLE 6.
COVENANTS OF BUYERS
Each Buyer individually agrees that:
6.01. Confidentiality. Such Buyer acknowledges that the information
being provided to it in connection with the purchase and sale of the Purchased
Assets and the consummation of the other transactions contemplated hereby is
subject to the terms of a confidentiality agreement dated as of May 9, 1996 as
to OI, and as to Consumers, the agreements dated July l, 1996, September 10,
1996 and October 14, 1996 (collectively, the "Confidentiality Agreements"), the
terms of which are incorporated herein by reference. Effective upon, and only
upon, the Closing, the Confidentiality Agreements shall terminate.
6.02. No Additional Representations. Such Buyer acknowledges and
agrees that none of Seller or any other person has made any representation or
warranty, expressed or implied, with respect to the transactions contemplated
hereby, Seller and its subsidiaries or their assets, liabilities and business,
the accuracy or completeness of any information regarding Seller and its
subsidiaries furnished or made available to such Buyer and its representatives,
except as expressly set forth in this Agreement.
6.03. Supplemental Disclosure. Such Buyer shall promptly after the
occurrence thereof notify Seller of, and furnish Seller any information it may
reasonably request with respect to, the occurrence to the knowledge of such
Buyer of any event or condition or the existence to such Buyer's knowledge of
any fact that would cause any of the conditions to Seller's obligation to
consummate the purchase and sale of the Purchased Assets not to be fulfilled.
6.04. Access. On and after the Closing Date, each Buyer will afford
promptly to Seller and its agents reasonable access to Seller's former
properties, books, records, employees and auditors to the extent necessary to
permit Seller to determine any matter relating to its rights and obligations
hereunder or relating to the continuing administration of Seller's Chapter 11
case, or to any period ending on or before the Closing Date; provided that any
such access by Seller shall not unreasonably interfere with the conduct of the
business of such Buyer. Seller will hold, and will use its best efforts to cause
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning such Buyer or the Business provided to it
pursuant to this Section.
6.05. Assignment to New Anchor. Prior to the Closing, Consumers
shall have assigned to New Anchor all of its rights under this Agreement and
shall have caused New Anchor to assume all of the liabilities and obligations of
Consumers under this Agreement. Such assignment and assumption shall not relieve
Consumers of its liabilities and obligations under this Agreement.
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6.06. Financings. Consumers shall use reasonable commercial efforts
to consummate the financing arrangements described in the Financing Letters,
including the satisfaction of all conditions precedent to such financing
arrangements.
6.07. Composition of New Anchor Board. Consumers will take such
corporate action as is necessary and appropriate such that, upon the Closing,
the Board of Directors of New Anchor (the "Board") will consist of nine persons
serving three year terms and shall include (i) four persons designated by the
Seller (as the holder of the Shares), who will serve as directors of New Anchor
until their successors are duly elected and qualified (each, a "Seller
Director"), and (ii) five persons designated by Consumers, who will serve as
directors of New Anchor until their successors are duly elected and qualified
(each, a "Consumers Director"). Should any director be unwilling or unable to
continue to serve, or otherwise cease to serve (including by reason of their
removal or at the expiration of any applicable term of office), then the
resulting vacancies on the Board shall be filled by the holders of Shares, in
the case of vacancies of the Seller Directors, and by Consumers, in the case of
vacancies of Consumers Directors. At all times prior to three years after the
Closing Date, (i) the holders of the Shares shall be exclusively entitled to
nominate successors to all Seller, Directors and (ii) Consumers shall be
exclusively entitled to nominate successors to all Consumers Directors. The
Board shall meet at least once each quarter.
6.08. Stock Market Listing. Promptly, but in any event prior to
consummation of Seller's plan of reorganization, Consumers will cause New Anchor
to list on a nationally recognized U.S. stock exchange or on the National Market
tier of the Nasdaq Stock Market subject to official notice of issuance, the
Common Stock and the 10% Convertible preferred Stock to be distributed to Seller
pursuant to this Agreement.
6.09. Exchange Act Registration. Consumers will cause New Anchor to
promptly, but in any event prior to the consummation of Seller's plan of
reorganization, register the Shares on a Form 10 Registration Statement filed
with the SEC pursuant to the Exchange Act.
6.10. Affiliate Transactions. For so long as the Seller or its
designees and assignees (including the present holders of unsecured claims
against Seller) own at least 25% of the Shares, New Anchor shall not enter into
any transaction or series of related transactions with Consumers or any
Affiliate of Consumers, and Consumers shall not enter into any transaction or
series of related transactions with New Anchor, unless such transaction or
series of related transactions is previously approved by the Board and is on
terms that are no less favorable to New Anchor than those that would have been
obtainable by New Anchor at the time of such transaction or series of related
transactions in a comparable transaction (or series of comparable related
transactions) with an unrelated Person. Immediately after the Closing Date, New
Anchor shall enter into a management agreement with John Ghaznavi, and a
consulting contract with G&G Investments, Inc., a corporation owned entirely by
John Ghaznavi, which contracts, on an aggregate basis, will not result in
payments by New Anchor in excess of $3,000,000 per annum for a period of three
years after the Closing Date.
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ARTICLE 7.
COVENANTS OF ALL PARTIES
Buyers and Seller agree that:
7.01. Best Efforts: Further Assurances. (a) Subject to the terms and
conditions of this Agreement, Buyers and Seller will each use their best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and Buyers
each agree to execute and deliver such other document, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in each Buyer good and marketable
title to the portion of the Purchased Assets to be acquired by such Buyer.
(b) Seller hereby constitutes and appoints, effective as of the
Closing Date, each Buyer and its successors and assigns as the true and lawful
attorney of Seller with full power of substitution in the name of such Buyer or
in the name of Seller, but for the benefit of such Buyer (i) to collect for the
account of such Buyer any terms of Purchased Assets acquired by such Buyer and
(ii) to institute and prosecute all proceedings which such Buyer may in its sole
discretion deem proper in order to assert or enforce any right, title or
interest in, to or under the Purchased Assets acquired by such Buyer, and to
defend or compromise any and all actions, suits or proceedings in respect of the
Purchased Assets acquired by such Buyer. Such Buyer shall be entitled to retain
for its own account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest in respect thereof.
7.02. Certain Filings. Seller and Buyers shall cooperate with one
another (a) in determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (b) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
7.03. Public Announcements. The parties agree to consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except as
may be required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
7.04. WARN Act. The parties agree to cooperate in good faith to
determine whether any notification may be required under the Worker Adjustment
and Retraining Notification Act (the "WARN Act") or any similar state or local
laws as a result of the transactions contemplated by this Agreement. In
accordance with the WARN Act, or any similar
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state or local law, (i) Seller will be responsible for providing any
notification that may be required under the WARN Act or any similar state or
local law with respect to any employees of the Business up to and including the
Closing and (ii) the applicable Buyer will be responsible for providing any
notification that may be required under the WARN Act or any similar state or
local law with respect to any employees of the Business after the Closing;
ARTICLE 8.
TAX MATTERS
8.01. Tax Definitions. The following terms, as used herein, have the
following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Pre-Closing Tax Period" means any Tax period (or portion thereof) ending
on or before the close of business on the Closing Date.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up
capital, profits, greenmail, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of any such tax.
8.02. Tax Matters. Seller hereby represents and warrants to Buyers
that:
(a) Seller has timely paid all Taxes, and all interest and penalties
due thereon. payable by it for the Pre-Closing Tax Period which will have been
required to be paid on or prior to the Closing Date, the non-payment of which
would result in a Lien on any Purchased Asset, would otherwise adversely affect
the Business or would result in either Buyer becoming liable or responsible
therefor.
(b) Seller has established, in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
periods, adequate reserves for the payment of, and will timely pay all Tax
liabilities, assessments, interest and penalties which arise from or with
respect to the Purchased Assets or the operation of the Business and are
incurred in or attributable to the Pre-Closing Tax Period, the non-payment of
which would result in a Lien on any Purchased Asset, would otherwise adversely
affect the Business or would result in either Buyer becoming liable therefor.
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(c) The Closing Balance Sheet will reflect accrued and unpaid real
and personal property Taxes on all purchased Assets using a ratable daily
accrual method. Seller will furnish Buyers with an analysis of this amount
itemized by property and jurisdiction.
8.03. Tax Cooperation; Allocation of Taxes. (a) Buyers and Seller
agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the
Purchased Assets and the Business as is reasonably necessary for the filing of
all Tax returns, and making of any election related to Taxes, the preparation
for any audit by any taxing authority, and the prosecution or defense of any
claim, suit or proceeding relating to any Tax return. Seller and Buyers shall
cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Business and each shall execute and deliver such
documents as are necessary to carry out the intent of this paragraph (a) of
Section 8.03.
(b) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Purchased Assets for a taxable
period which includes (but does not end on) the Closing Date (collectively, the
"Apportioned Obligations") shall be apportioned between Seller and Buyers as of
the Closing Date based on the number of days of such taxable period included in
the Pre-Closing Tax Period and the number of days of such taxable period after
the Closing Date (such period, the "Post-Closing Tax Period"). Seller shall be
liable for the proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period, and Buyers shall be liable for the proportionate amount
of such taxes that is attributable to the Post-Closing Tax Period. Within 90
days after the Closing, Seller and Buyers shall each present a statement to the
other setting forth the amount of reimbursement to which each is entitled under
this Section 8.03(b) together with such supporting evidence as is reasonably
necessary to calculate the proration amount. The proration amount shall be paid
by the party owing it to the other within 10 days after delivery of such
statement. Thereafter, Seller shall notify Consumers or OI, as appropriate, upon
receipt of any bill for real or personal property taxes relating to the portion
of the Purchased Assets, part or all of which is attributable to the
Post-Closing Tax Period, and shall promptly deliver such bill to Consumers or
OI, as appropriate, who shall pay the same to the appropriate taxing authority,
provided that if such bill covers the Pre-Closing Tax Period, Seller shall also
remit prior to the due date of assessment to Consumers or OI, as appropriate,
payment for the proportionate amount of such bill that is attributable to the
Pre-Closing Tax Period. In the event that either Seller or Consumers or OI, as
appropriate, shall thereafter make a payment for which it is entitled to
reimbursement under this Section 8.03(b), the other party shall make such
reimbursement promptly but in no event later than 30 days after the presentation
of a statement setting forth the amount of reimbursement to which the presenting
party is entitled along with such supporting evidence as is reasonably necessary
to calculate the amount of reimbursement. Any payment required under this
Section and not made within 10 days of delivery of the statement shall bear
interest at the rate per annum determined, from time to time, under the
provisions of Section 6621(a) (2) of the Code for each day until paid.
(c) Any transfer, documentary, sales, use or other Taxes assessed
upon or with respect to the transfer of the Purchased Assets to Buyers and any
recording or filing fees with respect thereto shall be paid by Seller.
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ARTICLE 9.
EMPLOYEES
9.01. Retirement Plans. (a) Effective as of the Closing Date,
Consumers will cause New Anchor to assume sponsorship of the Seller Defined
Benefit Plans, (and shall assume the liability for any required contributions
with respect thereto accrued but not paid as of or prior to the Closing Date)
and the Seller Defined Contribution Plans, as well as the trusts maintained in
connection with such plans. New Anchor shall be entitled to receive from Seller,
within a reasonable time after the Closing Date, such pertinent data or
information as New Anchor may reasonably require to determine the service and
accrued benefits (or account balances, as the case may be) of participants and
former participants in the Seller Defined Benefit Plans and the Seller Defined
Contribution Plans.
(b) Effective as of the Closing Date, Consumers will cause New
Anchor to assume sponsorship of the Anchor Glass Container Corporation
Non-Qualified Additional Credited Service and ERISA Excess Plan and the Diamond
Bathhurst Inc. Preferred Compensation Plan, as well as the "rabbi trust"
maintained in connection therewith. New Anchor shall be entitled to receive from
Seller, within a reasonable time after the Closing Date, such pertinent data or
information as New Anchor may reasonably require to determine the service and
accrued benefits of participants and former participants in such Plans.
(c) Seller contributes to the Multiemployer Plans listed on Schedule
3.13(d). In connection with their assumption of the collective bargaining
agreements, OI will assume and Consumers will cause New Anchor to assume, in
such proportions as Buyers shall jointly advise Seller, effective as of the
Closing Date, Seller's obligations to contribute to the Multiemployer Plans.
Accordingly, to avoid the imposition of any withdrawal liability on Seller, OI
or New Anchor, as the case may be, shall, in the aggregate:
(A) contribute to each Multiemployer Plan for substantially
the same number of contribution base units for which Seller has an
obligation to contribute prior to the Closing Date;
(B) provide to each Multiemployer Plan for a period of five
plan years commencing with the first plan year beginning after the
Closing Date a bond to be obtained by each Buyer or New Anchor
issued by a corporate surety corporation, or a sum to be provided by
each Buyer or New Anchor held in escrow by a bank or similar
financial institution, or an irrevocable letter of credit to be
obtained by each Buyer or New Anchor, equal to the greater of (I)
the average annual contribution required to be made by Seller under
the Multiemployer Plans for the three plan years preceding the plan
year in which the Closing Date occurs or (II) the annual
contribution that Seller was required to make under each
Multiemployer Plan for the last plan year prior to the plan year in
which the Closing Date occurs,
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or shall obtain a waiver of the requirements to provide any of the
foregoing or shall comply with alternatives acceptable to the
Multiemployer Plan or Plans, in order to ensure compliance with
Section 4204 of ERISA. Each Buyer and New Anchor shall cooperate
with Seller to obtain a waiver of the bond, escrow or letter of
credit requirement set forth above. If at any time during the first
five plan years beginning after the Closing Date, the applicable
Buyer or New Anchor withdraws from, or fails to make a required
contribution to one of the Multiemployer Plans, the bond, escrow, or
letter of credit obtained by such Buyer or New Anchor with respect
to such Multiemployer Plan, if any, shall be paid to such
Multiemployer Plan.
Notwithstanding any other provision hereof, the obligations of each
Buyer and New Anchor under this Section 9.01(c) are limited to the extent
necessary to comply with Section 4204 of ERISA. If a Buyer or New Anchor
effects a complete or partial withdrawal from a Multiemployer Plan during the
first five plan years following the Closing Date and such Buyer or New Anchor
fails to make any withdrawal liability payment to the Multiemployer Plan when
due, then Seller shall be secondarily liable to the Multiemployer Plan for any
unpaid withdrawal liability to the extent that Seller would have incurred such
liability following the Closing Date had such Buyer or New Anchor not agreed to
the provisions of this Section. Seller's obligations set forth in this paragraph
shall continue with respect to events that occurred prior to the last bay of the
five plan year period referred to in this Section 9.01(c) (regardless of when
notice of such liability is received by any of the Buyers, New Anchor or
Seller). Any of the Buyers, New Anchor or seller shall promptly notify the other
parties of any demand for payment of withdrawal liability received by any of the
Buyers, New Anchor or Seller within five years from the Closing Date. Buyers and
Seller agree to take, and Consumers agrees to cause New Anchor to take, all such
further action as may be necessary to satisfy the sale of assets exception
requirements set forth in Section 4204 of ERISA.
9.02. Other Employee Plans and Benefit Arrangements.
(a) Effective as of the Closing Date, Consumers will cause New
Anchor to assume sponsorship of (i) all Employee Plans and Benefit arrangements
which provide post-retirement life insurance and health benefits, (ii) any and
all Employee Plans and Benefit Arrangements required to be maintained under or
pursuant to currently existing collective bargaining agreements, (iii) the
Anchor Glass Container Corporation Executive/Key Employee Retention Plan, (iv)
the Anchor Glass Container Corporation Health Care Flexible Spending Account
Plan, (v) the Anchor Glass Container Corporation Dependent Care Flexible
Benefits Plan, (vi) the Anchor Glass Container Medical and Dental Cafeteria
Plan, (vii) the Anchor Glass Container Health Care Flexible Spending Account
Plan for AFGWU Hourly Employees, (viii) the Anchor Glass Container Medical and
Dental Cafeteria Plan for AFGWU and GMP Hourly Employees and (ix) Seller's
short-term and long-term disability plans (but New Anchor may, in its sole
discretion, limit participation therein to persons who are disabled as of the
Closing Date and who remain continuously disabled thereafter). New Anchor shall
be entitled to receive from Seller, within a reasonable time after the Closing
Date, such pertinent data or information as New Anchor may reasonably require to
determine the benefits of participants and former participants in
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the Employee Plans and Benefit Arrangements to be assumed by New Anchor pursuant
to this Section 9.02(a).
(b) Except as expressly provided in Sections 9.01 and 9.02(a),
neither Buyer is obligated to assume (nor is Consumer obligated to cause New
Anchor to assume) the sponsorship of any Employee Plan or Benefit Arrangement;
provided that either Buyer, in it sole discretion, may elect to assume (and
Consumers may elect to cause New Anchor to assume) the sponsorship of Employee
Plans or Benefit arrangements in addition to those subject to Sections 9.01 and
9.02(a) by furnishing written notice thereof to Seller not less than 15 days
prior to the Closing Date.
(c) Notwithstanding anything to the contrary, Consumers, in its sole
discretion, may direct the Seller, by written notice furnished not less than 15
days prior to the Closing Date, to amend any or all of (i) the Anchor Glass
Container Corporation Health Care Flexible Spending Account Plan, (ii) the
Anchor Glass container Corporation Dependent Care Flexible Spending Account
Plan, (iii) the Anchor Glass Container Corporation Flexible Benefits Plan and
(iv) the Anchor Glass Container Medical and Dental Cafeteria Plan, in each case
so as to amend, modify or terminate, effective as of the Closing Date, any
benefit under such Plans other than a "flexible spending account" within the
meaning of Proposed Treasury Regulation 1.125-2, Q&A 7(c).
9.03. Employee Communications. Seller and Buyers shall each use
their best efforts to cooperate in making any required communications with
employees of Seller as they relate to any employee benefits or other matters
described in this Article 9.
9.04. Third Party Beneficiaries. No provision of this Agreement
shall create any third party beneficiary rights in any employee or former
employee of Seller or Buyers (including any beneficiary or dependent thereof) in
respect of continued employment or resumed employment, and no provision of this
Agreement shall create any rights in any such persons in respect of any benefits
that may be provided, directly or indirectly, under any employee benefit plan or
arrangement.
9.05. Union Employees. Employees of the Seller and its subsidiaries
who are covered by collective bargaining agreements are referred to herein as
"Business Union Employees." Effective as of the Closing, OI shall and Consumers
shall cause New Anchor to, subject to Section 10.01(h), (i) assume all of the
currently existing collective bargaining agreements with respect to the
Purchased Assets to be acquired by each such Buyer and (ii) employ all of the
Business Union Employees under said collective bargaining agreements. Without
limiting the generality of the foregoing, Business Union Employees shall be
given credit, for all purposes under their currently existing collective
bargaining agreements and all Employee Plans, Benefit Arrangements and Included
Insurance Policies pursuant thereto, for their service with Seller or its
subsidiaries before the Closing to the same extent such service was credited by
Seller or its subsidiaries.
9.06. Non-Union Employees. Effective as of the Closing, employees of
the Business (other than Business Union Employees) shall continue to be employed
on an "at will"
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basis (other than those who are employed under an employment agreement listed in
Schedule 3.06(a)). For any people who continue to be so engaged, each Buyer
agrees (and Consumers shall cause New Anchor to agree), with respect to those
persons employed by it to provide such employees with salaries and benefits
generally comparable, in the aggregate, to those in effect for such employees as
of the Closing Date for a period of at least nine months after the Closing Date;
provided that notwithstanding the foregoing, neither Buyers nor New Anchor shall
be required to continue in effect any Employee Plan or Benefit Arrangement after
the Closing Date in order to fulfill the requirements of this Section 9.06.
Without limiting the generality of the foregoing the applicable Buyer or New
Anchor, as the case may be, shall give such employees credit for their service
with Seller or its subsidiaries before the Closing Date, to she same extent that
such service was credited by Seller or its subsidiaries, for all purposes under
all employee benefit plans and arrangements maintained by the applicable Buyer
or New Anchor, as the case may be, for its respective employees or assumed by
such Buyer or New Anchor, as the case may be, pursuant to this Agreement
including, but not limited to, for purposes of determining severance, vacation,
eligibility, participation, and vesting; and provided that neither Buyer nor New
Anchor shall not be obligated to recognize service rendered after December 31,
1994 under any plan (other than the Anchor Glass Container Corporation
Retirement Plan for Salaried Employees and the Retirement Plan for Salaried
Employees of Latchford Glass Company and Associated Companies) for purposes of
pension accruals, including early retirement subsidies, pre-retirement death
benefits, disability benefits, or any other pension benefits which may increase
with service and shall not be obligated to recognize service rendered after
December 31, 1994 for purposes of calculating the amount of accrued benefit
under the Anchor Glass Container Corporation Retirement Plan for Salaried
Employees and the Retirement Plan for Salaried Employees of Latchford Glass
Company and Associated Companies (in accordance with their terms as of the date
hereof).
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ARTICLE 10.
CONDITIONS TO CLOSING
10.01. Conditions to Buyers' Obligations. The obligations of each
Buyer to consummate the Closing are subject to the satisfaction (or waiver by
the applicable Buyer, without further notice to parties in interest or approval
by the Bankruptcy Court) of the following conditions:
(a) Except for the representations and warranties contained in
Section 3.12, the representations and warranties of Seller made in this
Agreement that are qualified as to materiality or Material Adverse Effect
shall be true and correct as of the Closing Date as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects on and as of
such earlier date). The representations and warranties of Seller made in
this Agreement that are not qualified as to materiality or Material
Adverse Effect shall be true and correct in all material respects as of
the time of the Closing as though made as of such time, except to the
extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall be true and
correct in all material respects on and as of such earlier date). Seller
shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Seller by the Closing Date. Seller shall have delivered
to each Buyer a certificate dated the Closing Date and signed by the chief
executive officer or chief financial officer of Seller confirming the
foregoing.
(b) No provision of any applicable statute, rule, regulation,
executive order, decree, temporary restraining order, judgment,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign (a "Governmental Entity") shall be in effect that (x) prevents
the sale and purchase of the purchased Assets or any of the other
transactions contemplated by this Agreement, (y) would adversely affect or
interfere with the operation of the Business as currently conducted after
the Closing, or (z) would require the applicable Buyer or any of its
Affiliates to sell or otherwise dispose of, hold separate or otherwise
divest itself of, or operate in any particular manner, any of the
Purchased Assets to be acquired by such Buyer or any of the assets,
properties or business of such Buyer or any of its Affiliates.
(c) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding, (i) challenging or seeking to
restrain, prohibit, alter or materially delay the sale and purchase of the
Purchased Assets or any of the other transactions contemplated by this
Agreement, or seeking to obtain from the applicable Buyer or any of its
Affiliates in connection with the sale and purchase of the Purchased
Assets to be acquired by such Buyer, any material damages or (ii) seeking
to prohibit the
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applicable buyer or any of its Affiliates from effectively controlling or
operating a material portion of the Business or the Purchased Assets to be
acquired by the applicable Buyer.
(d) The waiting period under the HSR Act relating to the
transactions contemplated by this Agreement shall have expired or been
terminated.
(e) Since the date hereof, there shall not have been any material
adverse change in the condition or operation of the property, equipment or
any plant of Seller.
(f) Vitro S.A. and Buyers shall have entered into a mutually
satisfactory agreement (the "Vitro Agreement") and the conditions to the
effectiveness thereof shall have been satisfied or waived and assuming the
consummation of the transactions contemplated by this Agreement, the Vitro
Agreement shall be in full force and effect.
(g) The Bankruptcy Court shall have issued the Sale Order on or
prior to December 20, 1996, and the Sale Order shall not be subject to any
stay.
(h) (i) The provisions of the master and local collective bargaining
agreements covering employees of Seller and its subsidiaries relating to
work rules shall have been amended to reflect prevailing industry
standards and (ii) any retroactive (but not prospective) payments of wage
increases forfeited in prior periods under such agreements as a result of
the consummation of the transactions contemplated hereby shall have been
waived or the Bankruptcy Court shall have issued an order, not subject to
stay, that Seller may assign and the applicable Buyer may assume such
collective bargaining agreements without any acceleration of the deferred
wage increases negotiated under the current agreements.
(i) Buyers shall have obtained the consent of Coors Brewing Company
("Coors"), and the parties (other than Seller) to the agreements listed on
Schedule 10.01, or the Bankruptcy Court shall have issued an order, that
Seller's supply agreement with Coors and the agreements listed on Schedule
10.01, will not be terminated or materially altered as a result of the
transactions contemplated hereby.
(j) [Omitted]
(k) Each Buyer, at its expense, shall have received for each of the
Fee Properties to be acquired by such Buyer:
(I) an ALTA (or local equivalent) owner's extended coverage
policy of title insurance issued by a title company
satisfactory to such Buyer and dated the Closing Date insuring
the Company's is or its subsidiaries' title to such Fee
Property in an amount not exceeding the allocated portion of
the Purchase Price applicable thereto and free and clear of
all Liens and other exceptions to or exclusions from coverage
other than Permitted Liens. Without limiting the foregoing, no
such title insurance policy shall create an
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exception for or exclusion from the coverage of such policy or
from the liability of the title company on account of acts or
omissions of Seller or its subsidiaries or facts known to the
insured (or to its or their current or former directors,
stockholders, partners, officers, agents or employees) where
such acts or omissions occurred prior to the Closing Date.
Each such title insurance policy shall contain, where
obtainable in the particular jurisdictions, ALTA (or local
equivalent) zoning, comprehensive, survey, contiguity (where
appropriate), nonimputation and public-street access
endorsements and otherwise be in form and substance reasonably
satisfactory to counsel for such Buyer; and
(II) a survey of such Fee Property dated no earlier than six
months prior to the date hereof, prepared in insurable form in
accordance with standards applicable to registered and
licensed land surveyors making surveys in the jurisdiction in
which the Fee Property is located. Each survey shall be
certified to the applicable Buyer and the title company and
shall show (A) the courses and distances of all boundary lines
of the Fee Property (including appurtenant easements), (B) the
location of all improvements situated on or above such parcel
and on or above any easements or rights of way affecting the
Fee Property, (C) all encroachments of adjoining improvements
onto such Fee Property, (D) all encroachments of improvements
onto any adjoining property, (E) the location of all easements
and other rights burdening the Fee Property and all
encroachments of improvements onto the areas of such
easements, (F) the location of all roadways, alleys, rights of
way and the like affecting the Fee Property, (G) all
accessways from the Fee Property to public streets and (H)
such other facts and conditions affecting the Fee Property as
are appropriate, or as may have been reasonably requested by
the applicable Buyer, to be shown on such survey. Each such
survey shall otherwise be in form and substance reasonably
satisfactory to counsel for the such Buyer.
(l) [omitted]
(m) The Bankruptcy Court shall have issued an order not
subject to any stay providing for the assignment to each Buyer
of all of the leases relating to the Leased Property to be
acquired and assumed by such Buyer.
(n) As of the Closing Date, (i) there shall be no material
liabilities of Seller and its subsidiaries (including any of
their respective predecessors) or of or relating to the
Purchased Assets or the Business arising under or relating to
any Environmental Law, except as disclosed on Schedule 3.12,
and (ii) there shall have been no material adverse change in
the items (or the related liabilities) disclosed on Schedule
3.12, taken as a whole.
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<PAGE> 52
(o) Consumers shall have received in respect of each Fee
Property and Leased Property located in the State of New
Jersey, evidence of compliance by Seller with the requirements
of the New Jersey Industrial Site Recovery Act, which evidence
shall be satisfactory to Consumers in its sole discretion and
shall not impose upon Consumers any obligations or liabilities
to which Consumers shall not have consented in writing prior
to the Closing.
(p) Consumers shall have received in respect of each Fee
Property and Leased Property located in the State of
Connecticut, a Connecticut Transfer Form from Seller, which
form shall be satisfactory to Consumers in its sole discretion
and shall not impose upon Consumers any obligations or
liabilities to which Consumers shall not have consented in
writing prior to the Closing.
(q) Without limiting any conditions set forth in Sections
10.01(o) and 10.01(p), Seller shall have complied with all
applicable environmental notification statutes, laws and
regulations unless failure to do so would not have a Material
Adverse Effect.
(r) Consumers shall have received an agreement or agreements
among Seller, Consumers, Landlord and Citicorp with respect to
the Headquarters Lease that acknowledges and provides that (i)
Seller has assumed the Headquarters Lease, cured all defaults
thereunder and satisfied all of its obligations thereunder
pursuant to the Letter Agreement dated as of April 27, 1992
attached as Schedule 1 to the First Amendment to Lease; (ii)
the Headquarters Lease is modified (A) to provide that the
Purchase Option and the Termination Option may be exercised at
any time to and including April 17, 1997 or 60 days after the
Closing Date (whichever is later), that the purchase price
under the Purchase Option is the unpaid principal amount of
the Citicorp Loan and that the Liens securing the Citicorp
Loan will be released upon closing and payment of the purchase
price under the Purchase Option, (B) to provide that the
expiration date of the Headquarters Lease and the date of
payment of the Residual Value Guaranty Amount will be June 16,
1997 or 150 days after the Closing Date (whichever is later),
(C) to provide that Seller, Consumers and Landlord do not need
to negotiate the renewal terms pursuant to the Renewal Option
and (D) to delete from the Lease the events of default in
subparagraphs (12), (13), (14) and (15) and any other
covenants, events of default and provisions that are personal
to Seller; (iii) the Headquarters Lease, as so modified, is
assigned to Consumers or its designee; (iv) Consumers or its
designee assumes Seller's obligations under the Lease
(including the obligation to pay monthly rent) after the
Closing Date; and (v) Landlord and Citicorp consent to the
foregoing amendment, assignment and assumption of the
Headquarters Lease. The agreement or agreements
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<PAGE> 53
required under this clause (r) shall be in form and substance
reasonably satisfactory to Consumers. Except for Consumers'
legal fees and expenses, Consumers shall not be required to
make any monetary payments to Landlord or Citicorp or
otherwise in order to obtain such agreement or agreements.
(s) Consumers shall have consummated the financing
arrangements described in the Financing Letters.
(t) The PBGC shall not have terminated all of the Seller
Defined Benefit Plans.
(u) Consumers or New Anchor shall have received written
assurance from the PBGC that the PBGC will not terminate the
Seller Defined Benefit Plans after the Closing Date solely by
reason of the assumption of such Plans by New Anchor nor by
reason of the transactions contemplated by this Agreement.
10.02. Conditions to Obligations of Seller. The obligations of
Seller to consummate the Closing are subject to the satisfaction (or waiver by
Seller, without further notice to parties in interest or approval by the
Bankruptcy Court) of the following conditions:
(a) The representations and warranties of Buyers made in this
Agreement that are qualified as to materiality or Material
Adverse Effect should be true and correct as of the Closing
Date as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall
be true and correct in all material respects on and of such
earlier date). The representations and warranties of Buyers
made in this Agreement that are not qualified as to
materiality or Material Adverse Effect shall be true and
correct in all material respects as of the time of the Closing
as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall
be true and correct in all material respects on and as of such
earlier date). Each Buyer shall have performed or complied in
all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by
such Buyer by the Closing Date. Each Buyer shall have
delivered to Seller a certificate dated the Closing Date and
signed by the chief financial officer of such Buyer confirming
the foregoing.
(b) No provision of any applicable statute, rule, regulation,
executive order, decree, temporary restraining order,
judgment, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued by any
Governmental Entity shall be in effect that
49
<PAGE> 54
prevents the sale and purchase of the Purchased Assets or any
of the transactions contemplated by this Agreement.
(c) There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding, (i)
challenging or seeking to restrain, prohibit, alter or
materially delay the sale and purchase of the Purchased Assets
or any of the other transactions contemplated by this
Agreement or seeking to obtain from Seller or any of its
subsidiaries in connection with the sale and purchase of the
Purchased Assets any material damages.
(d) The waiting period under the HSR Act relating to the
transactions contemplated by this Agreement shall have expired
or been terminated.
(e) The Bankruptcy Court shall have issued the Sale Order on
or prior to December 19, 1996, and the Sale Order shall not be
subject to any stay.
(f) The PBGC shall not have terminated all of the Seller
Defined Benefit Plans.
(g) The conditions to the effectiveness of the Vitro Agreement
shall have been satisfied or waived and assuming the
consummation of the transactions contemplated by this
Agreement, the Vitro Agreement shall be in full force and
effect.
(h) New Anchor shall adopt and file with the Secretary of
State of the State of Delaware prior to Closing the
Certificate of Incorporation. Not less than seven days prior
to the Closing, New Anchor shall furnish to Seller copies of
the Certificate of Incorporation and copies of the By-laws
which shall be reasonably satisfactory to Seller and New
Anchor.
10.03. Frustration of Conditions. Neither Buyers nor Seller may rely
on the failure of any condition set forth in Section 10.01 or 10.02,
respectively, to be satisfied if such failure was caused by such party's failure
to act in good faith or to use its reasonable efforts to cause the Closing to
occur, as provided in this Agreement.
ARTICLE 11.
SURVIVAL
11.01. Survival. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall not survive the Closing except for the covenants and
50
<PAGE> 55
agreements contained herein which contemplate or specifically provide for
performance after the Closing Date.
ARTICLE 12.
TERMINATION
12.01. Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyers;
(ii) by either seller or Buyers if the Closing shall not have
been consummated on or before January 31, 1997;
(iii) by either Seller or Buyers if there shall be any law or
regulation that makes the consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction;
(iv) [Omitted]
(v) by Buyers if the Sale Order shall not have been entered on
or prior to December 20, 1996;
(vi) by Buyers or Seller if any Governmental Entity shall have
commenced litigation seeking to enjoin consummation of the transaction;
and
(vii) by Buyers or Seller if the Bankruptcy Court shall have
approved a sale of the Purchased Assets or Business (or the stock of
Seller) to a Person other than Buyers.
The party desiring to terminate this Agreement pursuant to clauses
(ii), (iii), (vi) or (vii) shall give notice of such termination to the other
parties.
12.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 12.01, such termination shall be without liability of any
party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful failure of any party to
fulfill a condition to the performance of the obligations of another party,
failure to perform a covenant of this Agreement or breach by any party to this
Agreement of any representation or warranty or agreement contained herein, such
party shall be fully liable for any and all losses incurred or suffered by the
other parties as a result of such failure or breach. The
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<PAGE> 56
provisions of Sections 6.01 and 13.03 shall survive any termination hereof
pursuant to Section 12.01.
ARTICLE 13.
MISCELLANEOUS
13.01. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by confirmed fax or sent, postage prepaid, by registered, certified
or express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand, confirmed faxed or if mailed, three days after
mailing (one business day in the case of express mail or overnight courier
service), as follows (or to such other address or telecopy number as the
applicable party shall have notified the other parties in writing in accordance
with this Section):
(i) if to Consumers,
Consumers Packaging Inc.
401 The West Mall
Suite 900
Etobicoke, Ontario M9C 5J7
Attention: Chairman
Telecopy: (416) 232-3635
with copies to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
Attention: Marc S. Kirschner, Esquire
Telecopy: (212) 755-7306
and
Eckert Seamans Cherin & Mellott
42nd Floor - 600 Grant Street
Pittsburgh, PA 15219
Attention: C. Kent May, Esquire
Telecopy: (412) 566-6099
(ii) if to OI,
Owens-Brockway Glass Container Inc.
One SeaGate
52
<PAGE> 57
Toledo, Ohio 43666
Attention: Thomas L. Young
Telecopy: (419) 247-2226
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Attention: Lillian E. Kraemer, Esquire
Telecopy: (212) 455-2502
(iii) if to Seller,
Anchor Glass Container Corporation
4343 Anchor Plaza Parkway
Tampa, FL 33634
Attention: Mark A. Kirk, CFO
Carl H. Young, III,
General Counsel
Telecopy: (813) 882-7859
with a copy to:
Stroock & Stroock & Lavan
Seven Hanover Square
New York, NY 10004
Attention: Robin E. Keller, Esq.
Telecopy: (212) 806-6006
13.02. Amendments and Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Closing Date if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof 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.
13.03. Fees and Expenses. (a) Except as otherwise provided herein,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
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(b) Seller shall pay all fees or commissions of any investment
banker, broker, or finder retained by it and approved by the Bankruptcy Court
that has acted for Seller in connection with this Agreement or the transactions
contemplated hereby.
(c) Consumers shall pay all fees or commissions of Rothschild, Inc.,
which Consumers represents is the only investment banker, broker or finder that
has acted for Consumers which might be entitled to any fee or commission in
connection with this Agreement or the transactions contemplated hereby. OI
represents that no investment banker, broker or finder has acted for it in
connection with this Agreement or the transactions contemplated hereby.
13.04. 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 assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto except that, subject to Section
6.05, either Buyer may transfer or assign, in whole or from time to time in
part, to one or more of its Affiliates, the right to purchase all or a portion
of the Purchased Assets, but no such transfer or assignment will relieve such
Buyer of its obligations hereunder.
13.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, without regard to
the conflicts of law rules of such state. All references to dollars or $ in this
Agreement are to united States dollars.
13.06. Counterparts; Effectiveness. 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 shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
13.07. Entire Agreement: Third Party Beneficiaries. This Agreement,
the Confidentiality Agreement, and the documents referred to herein and therein
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to such subject matter. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by any party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
13.08. Bulk Sales Laws. Buyers and Seller each hereby waive
compliance by Seller with the provision of the "bulk sales," "bulk transfer" or
similar laws of any state.
13.09. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
13.10. Severability. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
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<PAGE> 59
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other Persons or circumstances.
13.11. Consent to Jurisdiction. Each party hereto irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County, (b) the United States District Court for the Southern
District of New York, and (c) to the extent applicable, the United States
Bankruptcy Court for the District of Delaware for the purposes of any action,
suit or other proceeding arising out of or related to this Agreement, or any
transaction contemplated hereby but for no other purpose. Each party hereto
agrees to commence any action, suit or proceeding relating hereto either in the
United States District Court for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County or, to the extent applicable, the United States Bankruptcy Court for the
District of Delaware. Each party hereto further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction in this Section 13.11. Each party hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County, (ii) the United States District Court for the Southern District of New
York or (iii) to the extent applicable, the United States Bankruptcy Court for
the District of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum. Consumers also hereby irrevocably and unconditionally waives to the
extent not prohibited by applicable law, and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
the venue of any such action, suit or proceeding brought in one of the
above-named courts is improper, or that this Agreement, or the transactions
contemplated hereby may not be enforced in or by such court.
13.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER DOCUMENT REFERRED TO
HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
55
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
---------------------------------------
Title: Chairman
OWENS - BROCKWAY GLASS CONTAINER INC.
By: /s/ Illegible
---------------------------------------
Title: Vice President
ANCHOR GLASS CONTAINER
CORPORATION
By: /s/ Carl H. Young, III
---------------------------------------
Title: Vice President
56
<PAGE> 1
Exhibit 2.2
AMENDMENT TO
ASSET PURCHASE AGREEMENT
This AMENDMENT is made and entered into as of February 5, 1997, by
and among ANCHOR GLASS CONTAINER CORPORATION, a Delaware corporation ("Anchor"),
CONSUMERS PACKAGING INC., a corporation organized under the federal laws of
Canada ("Consumers"), and OWENS-BROCKWAY GLASS CONTAINER INC., a Delaware
corporation ("OI").
WITNESSETH:
WHEREAS, Anchor has entered into an Asset Purchase Agreement with
Consumers and OI, dated as of December 18, 1996 (the "Asset Purchase Agreement")
with respect to the sale by Anchor to Consumers and OI of substantially all of
the assets of Anchor on the terms and conditions specified in the Asset Purchase
Agreement, which Asset Purchase Agreement has been approved by order of the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court") which has jurisdiction over the Bankruptcy Case filed by Anchor, as
debtor, pursuant to Chapter 11 of the Bankruptcy Code (Capitalized terms used
herein but not otherwise defined herein shall have the same meanings given them
in the Asset Purchase Agreement); and
WHEREAS, pursuant to Section 2.01(i) of the Asset Purchase
Agreement, Anchor agreed to transfer and assign to Consumers and OI, and
Consumers and OI agreed to purchase from Anchor, all of Anchor's right, title
and interest in, to and under the Purchased Assets including all real property
used or owned or held for use in the Business in each case together with all
buildings, fixtures and improvements erected thereon; and
WHEREAS, pursuant to Section 2.06(b) of the Asset Purchase
Agreement, Anchor agreed to deliver to Consumers and OI, three business days
prior to the Closing Date, a certificate, signed by Anchor's Chief Financial
Officer, setting forth (i) Anchor's good faith estimate of the Estimated
Post-Filing Trade Payables and (ii) Anchor's good faith estimate of the
Estimated Final Net Assets; and
WHEREAS, Anchor has delivered the certificate described above dated
January 24, 1997 and pursuant to Section 2.06 of the Asset Purchase Agreement,
Consumers and OI are obligated to pay to Anchor the Estimated Purchase Price in
the amount of $333,937,000 in cash, of which $205,575,000 is payable by
Consumers; and
WHEREAS, Consumers and Anchor are desirous of amending the Asset
Purchase Agreement to eliminate from the Purchased Assets to be acquired by
Consumers three of the closed plants facilities owned by Anchor and to reduce
the Purchase Price and the Estimated Purchase Price otherwise payable by
Consumers in cash on the Closing Date by $5.7 million:
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:
1. Purchased Assets. Notwithstanding anything to the contrary
contained in the Asset Purchase Agreement, including, without limitation,
Section 2.01(i) thereof, the Purchased Assets shall not include the plant
facilities owned by Anchor described on Schedule 3.11(b) to the Asset Purchase
Agreement as the properties located at Corsicana, Texas (including the
warehouse), Huntington Park, California and San Leandro, California
(collectively, the "Excluded Properties"). Schedule 3.11(b) to the Asset
Purchase Agreement is hereby amended to delete the Excluded Properties therefrom
and the Asset Purchase Agreement is hereby amended such that the terms
"Purchased Assets" and "Real Properties" as used in the Asset Purchase Agreement
shall not include the Excluded Properties and the term "Excluded Assets" as used
therein shall include the Excluded Properties. All other references in the Asset
Purchase Agreement and the Schedules thereto to any of the Excluded Properties
are hereby deleted. Consumers shall have the right to remove any machinery and
equipment (but not building fixtures) and Anchor owned inventory located at any
of the Excluded Properties within the lesser of 60 days following the Closing
Date or the date of sale of any Excluded Property.
2. Assumed Liabilities. Notwithstanding anything to the contrary
contained in the Asset Purchase Agreement, including, without limitation,
Section 2.03(v) thereof, the Assumed Liabilities shall not include any
liabilities or obligations of Anchor relating to or in connection with the
Excluded Properties (the "Related Liabilities").
3. Purchase Price. The Purchase Price and the Estimated Purchase
Price for the Purchased Assets are hereby reduced by $5.7 million. To effectuate
such reduction, (i) the amount of $333.6 million appearing in clause (i)(A) of
the first sentence of Section 2.06(a) of the Asset Purchase Agreement is hereby
reduced to $327.9 million and the amount thereof payable by Consumers is hereby
reduced from $208.6 million to $202.9 million and (ii) the amount of $333.6
million appearing in clause (i) of the fourth sentence of Section 2.06(a) of the
Asset Purchase Agreement is hereby reduced to $327.9 million.
4. Closing Balance Sheet. Notwithstanding anything to the contrary
contained in the Asset Purchase Agreement, including, without limitation,
Sections 2.08 and 2.09 thereof, the Excluded Properties and the Related
Liabilities, at a net value of $6.84 million, shall be excluded from the Closing
Balance Sheet and solely for purposes of calculating any adjustment to the
Purchase Price pursuant to Section 2.09 of the Asset Purchase Agreement, the net
assets shown on the Reference Balance Sheet shall be reduced by the amount of
$6.84 million which is the agreed book value of the Excluded Properties net of
the Related Liabilities. It is the intention of the parties that this paragraph
4 shall preclude any adjustment in the Purchase Price pursuant to Section 2.09
of the Asset Purchase Agreement by reason of the exclusion of the Excluded
Properties net of the Related Liabilities from the Purchased Assets and the
Assumed Liabilities.
5. Future Sales of Excluded Properties. Anchor agrees that, in
connection with the sale of any of the Excluded Properties by Anchor, it will
include a covenant restricting
2
<PAGE> 3
any subsequent owner from operating such Excluded Property for the manufacture
of glass containers.
6. Assignment to New Anchor. Prior to the Closing, Consumers shall
have assigned to New Anchor all of its rights under this Amendment and shall
have caused New Anchor to assume all of the liabilities and obligations of
Consumers hereunder. Such assignment and assumption shall not relieve Consumers
of its liabilities and obligations under this Amendment.
7. Governing Law, etc. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflicts of law rules of such State. The provisions of Sections 13.11
(Consent to Jurisdiction) and 13.12 (Waiver of Jury Trial) of the Asset Purchase
Agreement shall be applicable to this Amendment as though fully set forth
herein.
IN WITNESS WHEREOF, each party has caused this Amendment to be
executed by its duly authorized representative as of the date first written
above.
ANCHOR GLASS CONTAINER CORPORATION
By:/s/ Mark A. Kirk
--------------------------------------
Name: Mark A. Kirk
Title: Senior Vice President
CONSUMERS PACKAGING INC.
By:/s/ John J. Ghaznavi
--------------------------------------
Name: John J. Ghaznavi
Title: Chairman and Chief Executive Officer
OWENS-BROCKWAY GLASS CONTAINER INC.
By:/s/ James W. Buehren
--------------------------------------
Name: James W. Buehren
Title: Vice President
3
<PAGE> 1
EXHIBIT 2.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
ANCHOR GLASS CONTAINER ) Case Nos. 96-1434
CORPORATION, et al. ) and 96-1516 (PJW)
) (Jointly Administered)
Debtors. )
ORDER UNDER 11 U.S.C. SECTIONS 105, 363, AND 365
APPROVING (i) ASSET PURCHASE AGREEMENT BETWEEN
THE DEBTOR, AND CONSUMERS PACKAGING INC, AND
OWENS-BROCKWAY GLASS CONTAINER INC. WHICH
PROVIDES FOR A SALE OF SUBSTANTIALLY ALL ASSETS OF
THE DEBTOR FREE AND CLEAR OF CERTAIN LIENS, CLAIMS,
INTERESTS AND ENCUMBRANCES, AND (ii) ASSUMPTION
AND ASSIGNMENT OF CERTAIN RELATED EXECUTORY CONTRACTS
Upon the motion (the "Motion") of Anchor Glass Container Corporation
("Anchor") dated October 4, 1996, for an order (the "Order") under 11 U.S.C.
Sections 105, 363, and 365 authorizing the Debtor to sell, subject to the
receipt of higher or better offers ("Competitive Bids"), substantially all of
its assets and the assets of its subsidiary, Anchor Recycling Corporation
("Recycling", and collectively with Anchor, the "Debtor"), also a Chapter 11
Debtor before this Court, free and clear of all liens, claims, interests, and
encumbrances other than Permitted Liens and Assumed Liabilities to (a)
Ball-Foster Glass Container Co., L.L.C. ("Ball-Foster") pursuant to the terms
and conditions of an
<PAGE> 2
Asset Purchase Agreement dated October 4, 1996 between the Debtor and
Ball-Foster (the "Ball-Foster Asset Purchase Agreement"), or (b) that entity or
entities making a Competitive Bid that is determined to be the highest and/or
best bid, and authorizing the assumption and assignment by the Debtor to the
successful purchaser of certain related executory contracts and unexpired leases
(the "Executory Contracts"); and
Upon this Court's order dated October 15, 1996, as amended, scheduling a
hearing with respect to the sale of the Purchased Assets, prescribing the form
and manner of notice thereof, approving bidding procedures related to the sale
(the "Bidding Procedures"), authorizing payment to Ball-Foster of the break-up
fee and performance of Section 5.05 of the Ball-Foster Asset Purchase Agreement
(the "Scheduling Order"); and
Due notice of the proposed sale, the Motion, the Order, the Scheduling
Order, the Hearing (as defined below), the list of proposed Executory Contracts
to be assumed and assigned together with a list of cure costs to be paid in
order to assume said Executory Contracts (the "Assumption Notices") having been
given to all parties entitled thereto under the Scheduling Order, as evidenced
by the affidavits of service and publication previously filed with this Court;
and
A Competitive Bid having been received on December 2, 1996 jointly from
Consumers Packaging Inc. ("Consumers") and Owens-Brockway Glass Container Inc.
("Owens") (the "Consumers-Owens Joint Bid") in accordance with the terms of the
Scheduling Order,
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seeking to purchase the Purchased Assets(1); and following the auction held
pursuant to the Scheduling Order, during which Ball-Foster did not offer to
increase its bid, the Debtor, in consultation with the Official Committee of
Unsecured Creditors of Anchor (the "Creditors' Committee"), having selected
Consumers and Owens (collectively, the "Purchasers"; sometimes referred to
individually as a "Purchaser") as the bidder submitting the highest and best
offer; and
The Debtor and the Purchasers having documented the Consumers-Owens Joint
Bid in an Asset Purchase Agreement dated December 18, 1996, which is
substantially similar to the Ball-Foster Asset Purchase Agreement except as
otherwise indicated on the record at the Hearing (the "Consumers-Owens Asset
Purchase Agreement") and various related agreements; and
A hearing having been held before this Court on December 12, 1996 at which
hearing the Debtor announced its acceptance of the Consumers-Owens Joint Bid;
and a supplemental notice of the key terms of the Consumers-Owens Joint Bid
having been sent by telecopy or Federal Express to those parties having filed a
notice of appearance in these cases (the "2002 List"), all known bidders for the
Debtor's assets, and all parties having filed objections to, or responses or
comments on the Motion; and
Hearings having been held before this Court on December 18, 1996 and
December 20, 1996 to approve a sale of the Purchased Assets pursuant to the
Consumers-Owens Asset Purchase Agreement
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(1) Unless defined herein, capitalized terms not otherwise defined shall have
the meaning ascribed to them in the Consumers-Owens Asset Purchase
Agreement.
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and to approve the assumption and assignment of certain Executory Contracts to
Consumers or Owens, as applicable (collectively, the "Hearing"), at which time
all parties-in-interest were afforded an opportunity to be heard; and the Court
having heard testimony and received evidence in support of approval of the sale
of the Purchased Assets to Consumers and Owens, as applicable, and the
assumption and assignment of the Executory Contracts to Consumers or Owens, as
applicable, effective as of the Closing Date;
NOW, THEREFORE, based upon all of the pleadings previously filed by the
Debtor and other interested parties in connection with the sale, the evidence
proffered or adduced at the Hearing, memoranda, objections and arguments of
counsel in connection with the Hearing; and upon the entire record of the
Hearing; and after due deliberation thereon; and good cause appearing therefor;
IT IS HEREBY FOUND AND DETERMINED THAT:(2)
l. This Court has jurisdiction to hear and determine the
Motion pursuant to 28 U.S.C. Sections 157 and 1134 and the "Standing Order
of Referral of Cases to Bankruptcy Judges" by the District Court for the
District of Delaware dated July 23, 1984.
2. Venue of these cases in this district is proper pursuant to
28 U.S.C. Section l409(a).
3. Determination of the Motion is a core proceeding under 28
U.S.C. Section 157(b)(2)(A) and (N). The statutory predicates for the relief
requested herein are sections 105, 363
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(2) Findings of fact shall be construed as conclusions of law and conclusions of
law shall be construed as findings of fact when appropriate. See Bankruptcy
Rule 7052.
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and 365 of the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as
amended (the "Bankruptcy Code"), and Federal Rules of Bankruptcy Procedure (the
"Bankruptcy Rules") 2002, 6004, and 6006.
4. The Debtor has followed the procedures for notice of the
Motion and the Hearing on the sale of the Purchased Assets set forth in the
Scheduling Order.
5. The Consumers-Owens Joint Bid complies with the Bidding
Procedures and the Joint Bid is the highest and best bid received for the
Purchased Assets in that it exceeds the amount of the Ball-Foster bid by more
than $8.0 million, which was the minimum initial overbid amount established by
the Bidding Procedures.
6. Proper, timely, adequate and sufficient notice of the
Motion, the Hearing and the sale of the Purchased Assets has been provided in
accordance with section 102(1) of the Bankruptcy Code and Bankruptcy Rules 2002,
6004, and 6006 and the Scheduling Order, and no other or further notice of the
Motion, the Hearing, or of the entry of this Order is required.
7. A reasonable opportunity to object or be heard regarding
the relief requested in the Motion has been afforded to all interested persons
and entities, including (a) all parties who claim interests in or Liens upon the
Purchased Assets, (b) all parties to Executory Contracts to be assumed and
assigned to Consumers or Owens, as applicable, who have received Assumption
Notices from the Debtor, (c) all governmental taxing authorities who have, or as
a result of the sale of the Purchased
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Assets may have, claims, contingent or otherwise, against the Debtor, (d) all
parties on the 2002 List, (e) all creditors, (f) all interested governmental,
pension and environmental entities, and (g) all competitive bidders for the
Purchased Assets.
8. The Debtor has demonstrated good and sufficient business
justification for the sale of the Purchased Assets pursuant to section 363(b) of
the Bankruptcy Code outside of a plan of reorganization and for the assumption
and assignment of the Executory Contracts, in that, among other things:
a. An expeditious sale of the Purchased Assets in accordance
with the procedures followed by the Debtor will maximize the value recoverable
by creditors from the Debtor's assets, and absent a prompt sale, it is likely
that the value of the Purchased Assets would precipitously decline due to
deteriorating market conditions, the Debtor's inadequate liquidity for necessary
operating and capital expenditures, and uncertainty about the Debtor's ability
to preserve its market share;
b. Claims against the Debtor's estate will be minimized as a
result of the prompt consummation of a sale of the Purchased Assets and the
assumption of the Assumed Liabilities and the concomitant assumption and
assignment of the Executory Contracts to the Purchasers, as applicable; and
c. More employees of the Debtor will retain their jobs and
related benefits, and more retirees will retain their pensions and health
benefits, than would be the case absent
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a prompt sale of the Purchased Assets or if the Debtor were liquidated.
d. Each Purchaser will provide adequate assurance of future
performance on Assumed Executory Contracts.
9. The sale of the Purchased Assets outside of a plan of
reorganization pursuant to the Consumers-Owens Asset Purchase Agreement does not
impermissibly restructure the rights of the Debtor's creditors or impermissibly
dictate the terms of a liquidating plan of reorganization for the Debtor.
10. The Consumers-Owens Asset Purchase Agreement represents
the highest and best offer for the Purchased Assets received following a fair
and equitable structured auction process in accordance with the Scheduling
Order. The Purchase Price for the Purchased Assets is fair and reasonable, and
constitutes reasonably equivalent value under the Bankruptcy Code and applicable
state law. Approval of the Consumers-Owens Asset Purchase Agreement and the sale
of the Purchased Assets in accordance therewith at this time are in the best
interests of the Debtor, its creditors, and its estate.
11. The Consumers-Owens Asset Purchase Agreement provides for
the sale, transfer, assignment, and delivery to the Purchasers of the Purchased
Assets (Owens' interest being limited to the OI Assets) as set forth in Section
2.01 of the Consumers-Owens Asset Purchase Agreement and the assumption of the
Assumed Liabilities by the Purchasers (Owens' obligations being limited to the
assumption of the OI Assumed Liabilities) as set forth in Section 2.03 of the
Consumers-Owens Asset Purchase Agreement.
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12. Based on the testimony and other statements in the record
at the Hearing, there is (a) an agreement between the Debtor, the Committee and
The Travelers Indemnity Company and its affiliates including The Aetna Casualty
and Surety Company ("Travelers/Aetna") evidenced by that certain letter between
the parties dated December 18, 1996, (the "Travelers/Aetna Agreement") whereby
Travelers/Aetna will provide valuable cash consideration to the estate and make
other accommodations to facilitate the sale in exchange for the assumption of
various insurance-related liabilities owed to Travelers/Aetna; and (b) a
supplemental agreement with Vitro to provide $8.4 million in cash to the estate
(the agreement to pay said $8.4 million is reflected in paragraph 9.A of the
agreement between Vitro and Consumers, on behalf of itself and New Anchor) and
to pay a $1.1 million IRS penalty claim against Anchor upon the conditions
specified in the aforesaid paragraph 9.A (the "Supplemental Vitro Agreement").
13. In accordance with Section 2.06 of the Consumers-Owens
Asset Purchase Agreement, 1,876,000 shares of New Anchor 10% preferred stock and
490,000 shares of New Anchor common stock are to be issued (the "New Anchor
Securities"). The Debtor contemplates distributing the New Anchor Securities and
cash under a liquidating plan of reorganization in exchange for and in
compromise of the claims of the Debtor's creditors.
14. The Debtor may sell the Purchased Assets free and clear of
all Liens, claims, interests, and encumbrances (other than Permitted Liens);
(provided, that a portion of the
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Purchase Price shall be paid to the Senior Lenders (as defined below), as
provided in decretal paragraph 6 below) because, as required by section 363(f)
of the Bankruptcy Code, the Purchase Price to be paid for the Purchased Assets
exceeds the aggregate amount of all Liens on the Purchased Assets, with such
Liens (other than Permitted Liens) attaching to the proceeds of the sale of the
Purchased Assets consistent with the requirements of section 363(e) of the
Bankruptcy Code. As a condition to the sale of the Purchased Assets, the
Purchasers require that (i) the Purchased Assets be sold free and clear of all
Liens, claims, interests, and encumbrances except for Permitted Liens and the
Assumed Liabilities and (ii) the Purchasers, individually or collectively, have
no liability for any of the Excluded Liabilities. The Purchasers would not enter
into the Consumers-Owens Asset Purchase Agreement and consummate the sale, thus
adversely affecting the Debtor's estate and its reorganization efforts, if the
sale to the Purchasers were not free and clear of all Liens, claims, interests
and encumbrances of the Debtor, other than Permitted Liens and Assumed
Liabilities, or if the Purchasers were or would be liable for any of the
Excluded Liabilities.
15. Unless otherwise agreed in writing by the non-Debtor party
to an Executory Contract, and each Purchaser, that Purchaser which is the
assignee specified on the First List of Contracts (as defined below) with
respect to each Executory Contract shall be the sole entity to whom such
Executory Contract has been assigned pursuant to section 365(f) of the
Bankruptcy
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Code and the other Purchaser shall not have any liability in respect of any such
Executory Contract for which it is not the specified assignee.
16. The amounts (the "Cure Amounts") reflected on the "First
Consolidated List of Contracts and Leases to be Assigned to Consumers or Owens"
submitted to the Court at the Hearing (the "First List of Contracts"),
constitute the sole amounts necessary under sections 365(b)(1)(A) and (B) and
365(f)(2)(A) of the Bankruptcy Code, to (i) cure all defaults, if any, under the
Executory Contracts and (ii) pay all actual or pecuniary losses that have
resulted from such defaults. As to those parties to Executory Contracts who have
not yet reached agreement with the Debtor on their Cure Amounts, this Court
shall schedule an appropriate hearing date on request of such parties and the
Debtor to determine their Cure Amounts. Accordingly, the Debtor has satisfied
the requirements of sections 365(b)(1)(A) and (B) and section 365(f)(2)(A) of
the Bankruptcy Code.
17. Each Purchaser, as applicable, has provided adequate
assurance of its future performance under the Executory Contracts being assigned
to it within the meaning of sections 365(b)(1)(C) and (f)(2)(B) of the
Bankruptcy Code.
18. The assumption and assignment of the Executory Contracts
is integral to the Consumers-Owens Asset Purchase Agreement and is in the best
interests of the Debtor, its creditors and its estate and represents the
exercise of the Debtor's prudent business judgment.
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19. The Consumers-Owens Asset Purchase Agreement was
negotiated, proposed and entered into by the parties in good faith, from arm's
length bargaining positions and without collusion. Neither Consumers nor Owens
is an "insider" or "affiliate" of the Debtor (as each such term is defined in
the Bankruptcy Code). None of the Debtor, Consumers or Owens has engaged in any
conduct that would prevent the application of section 363(m) of the Bankruptcy
Code or cause the application of section 363(n) of the Bankruptcy Code to these
transactions. Consequently, each of Consumers and Owens, individually and
collectively, is a good faith purchaser under section 363(m) of the Bankruptcy
Code and, as such, is entitled to the protections afforded thereby.
20. In the absence of a stay pending appeal, if any, each of
Consumers and Owens will be acting in good faith within the meaning of section
363(m) of the Bankruptcy Code in closing the transactions contemplated by the
Consumers-Owens Asset Purchase Agreement, including assumption and assignment of
the Executory Contracts, at any time after the entry of this Order.
21. Effective as of the Closing Date, the transfer of the
Purchased Assets and the assignment of the Executory Contracts (a) are or will
be legal, valid and effective transfers of property of the Debtor's estate to
each Purchaser, as expressly set forth in the Consumers-Owens Asset Purchase
Agreement, (b) are or will be valid assumptions and assignments of each
Executory Contract to the applicable Purchaser, and (c)
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vest or will vest each Purchaser with all right, title, and interest of the
Debtor in and to the Purchased Assets being purchased by such Purchaser and in
and to the Executory Contracts being assumed by the Debtor and assigned by such
Purchaser free and clear of all interests, including all Liens, claims, and
encumbrances (except for Assumed Liabilities and Permitted Liens being assumed
by each Purchaser, as expressly provided in the Consumers-Owens Asset Purchase
Agreement, the assumption of which liabilities shall be valid and binding),
under sections 363(f) and 105 of the Bankruptcy Code.
22. The transfer of the Purchased Assets and the assignment of
the Executory Contracts do not and will not subject the Purchasers to any
liability for claims against the Debtor (other than those expressly assumed as
Assumed Liabilities) by reason of such transfer under the laws of the United
States, any state, territory or possession thereof or the District of Columbia
applicable to such transactions.
23. All of the provisions of this Order are nonseverable and
mutually dependent.
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED
THIS:
1. The Motion be, and it hereby is, granted.
2. All objections to the Motion or the relief requested
therein that have not been withdrawn, waived, or settled, including all
reservations of rights included therein which are not otherwise provided for by
this Order are overruled on the merits.
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3. The terms and conditions of the Consumers-Owens Asset
Purchase Agreement are hereby approved, the sale of the Purchased Assets to
Consumers and Owens pursuant to the Consumers-Owens Asset Purchase Agreement is
hereby authorized under section 363(b) of the Bankruptcy Code, and the
assumption of the Assumed Liabilities by Consumers and Owens is hereby approved.
4. By the issuance of this Order, the Debtor is authorized and
directed to execute and deliver, and empowered to fully perform under,
consummate and implement, the Consumers-Owens Asset Purchase Agreement, together
with all additional instruments and documents that may be reasonably necessary
or desirable to implement that Agreement, and to take all further actions as may
be reasonably requested by the Purchasers, or either of them, for the purpose of
assigning, transferring, granting, conveying and conferring to each Purchaser,
as applicable, or reducing to possession, any or all of the Purchased Assets, or
as may be necessary or appropriate to the performance of the obligations of the
Debtor under the Consumers-Owens Asset Purchase Agreement.
5. Pursuant to sections 105(a), 363(b) and 363(f)(3) of the
Bankruptcy Code, on the Closing Date, the Purchased Assets shall be transferred
to each Purchaser, in accordance with the Consumers-Owens Asset Purchase
Agreement and, except as specified in such Agreement, shall be free and clear of
all Liens, including, but not limited to, any restriction on the use, transfer,
receipt of income or other exercise of any
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attributes of ownership of the Purchased Assets and all debts arising in any way
in connection with any acts of the Debtor, claims (as that term is defined in
the Bankruptcy Code), obligations, demands, guaranties, options, rights,
contractual commitments, restrictions, interests and matters of any kind and
nature, whether arising prior to or subsequent to the commencement of these
cases, whether arising in connection with the transactions authorized by this
Order, and whether imposed by agreement, understanding, law, equity or otherwise
(the foregoing collectively referred to as "Claims" herein), with all such Liens
and Claims released, terminated and discharged as to the Purchased Assets and
with all such Liens attaching to the proceeds of the sale of the Purchased
Assets, in the order of their priority, with the same validity, force and effect
which they now have as against the Purchased Assets.
6. Upon receipt of the Purchase Price, the Debtor is
authorized and directed on the Closing Date to pay a portion of the net proceeds
from the sale of the Purchased Assets to Foothill Capital Corporation, as a
Lender(3) and as Agent for the Lender Group, and Congress Financial Corporation,
as a Lender and as Co-Agent for the Lender Group (collectively, the "Senior
Lenders"), in full and final payment of all outstanding loans, advances and
other indebtedness, whether arising pre-petition or post-petition, including,
without limitation, all interest, fees,
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(3) Capitalized terms used in this paragraph 6 and in paragraphs 7 and 8 of this
Order which are not otherwise defined, shall have the meanings ascribed to
such terms in the Final Financing Order.
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including legal fees and disbursements, costs and expenses, due by the Debtor to
the Senior Lenders (collectively, the "Senior Lender Indebtedness") in
satisfaction of the first priority liens and security interests held by the
Senior Lenders ("Senior Liens") in accordance with the terms and conditions of
the Order Pursuant to Section 364(c) of the Bankruptcy Procedure Authorizing
Debtor to Obtain Permanent Post-Petition Financing, Granting Senior Liens and
Priority Administrative Expense Status, Modifying the Automatic Stay,
Authorizing the Debtor to Enter into Agreements with Foothill Capital
Corporation, as Agent and Lender, and Congress Financial Corporation, as
Co-Agent and Lender, and the Granting of Adequate Protection in favor of the
Noteholders, dated November 15, 1996 (the "Final Financing Order") and the
accompanying Loan Agreement and other Financing Agreements, as amended.
7. Upon the full and final payment of all Senior Lender
Indebtedness due by the Debtor to the Senior Lenders, each of the Senior
Lenders, individually and collectively, in accordance with the terms of the
Final Financing Order, shall release and discharge the Debtor, and its officers,
directors, agents and employees and its or their respective successors and
assigns, from any and all claims, obligations, demands, debts, accounts,
liabilities, actions, duties, responsibilities and causes of action, whether
known or unknown, present or future that the Senior Lenders may at any time have
had or may have against the Debtor and its successors and assigns pursuant to
the terms and conditions of the pre-petition and post-petition
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financing arrangements as set forth in the Final Financing Order, the Loan
Agreement and the other Financing Agreements, as amended, between the Debtor and
the Senior Lenders, provided, however, in the event any payment made to the
Senior Lenders, from or on behalf of the Debtor, is voided, rescinded, set
aside, or must otherwise be returned or repaid by the Senior Lenders, the
indebtedness to be repaid thereby and the Senior Liens securing such
indebtedness shall be reinstated against the proceeds of the sale without any
further action by the Senior Lenders in accordance with the terms of the Final
Financing Order, and provided further, that with respect to the calculation of
the Final Amount of the Senior Lender Indebtedness due and payable on the
Closing Date, this release shall not extend to claims of the Senior Lenders
arising from accounting errors or underpayments, or preclude the Senior Lenders
from making appropriate accounting adjustments or receiving such underpayments,
if any. The Senior Lenders further agree to execute and deliver, on the Closing
Date at Debtor's sole cost and expense, all documentation reasonably necessary
to release the Senior Liens against the Purchased Assets.
8. Upon the full and final payment of all Senior Lender
Indebtedness due by the Debtor to the Senior Lenders, the Debtor, in accordance
with the terms of the Final Financing Order, shall release and discharge each of
the Senior Lenders, their officers, directors, agents and employees and any of
their respective successors and assigns, from any and all claims, obligations,
demands, debts, accounts, liabilities, actions,
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duties, responsibilities and causes of action, whether in law or in equity,
known or unknown, present or future that the Debtor at any time had, has or may
have against the Senior Lenders and their successors and assigns arising out of
or relating to the terms and conditions of the pre-petition and post-petition
financing arrangements as set forth in the Final Financing Order, the Loan
Agreements and the other Financing Agreements, as amended, provided, however,
with respect to the calculation of the final amount of the Senior Lender
Indebtedness due and payable on the Closing Date, that this release shall not
extend to claims of the Debtor arising from accounting errors or overpayments or
preclude the Debtor from making appropriate accounting adjustments or recovering
such overpayments, if any.
9. Upon the payment in full of all indebtedness owed to the
Senior Lenders and upon termination of the Loan Agreement, the Senior Lenders
and the Debtor shall be entitled to all releases of claims provided for in the
applicable provisions of the Final Financing Order, and such provisions are
hereby ratified.
10. All amounts to be paid by the Debtor pursuant to the
Consumers-Owens Asset Purchase Agreement, including all amounts payable by the
Debtor pursuant to the Post-Closing Adjustment obligations as set forth in
Sections 2.06 and 2.09 and all amounts payable by the Debtor pursuant to Section
5.03(b) of such Agreement, constitute administrative expenses under sections
503(b) and 507(a)(1) of the Bankruptcy Code and are payable immediately if and
when the Debtor's obligations arise under the
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Consumers-Owens Asset Purchase Agreement without further order of the Court,
provided, however, that the payment of amounts which are in dispute by the
Debtor shall be subject to the further order of the Court.
11. Except as to Assumed Liabilities, which include but are
not limited to (i) all benefits provided pursuant to (a) the Anchor Glass
Container Corporation Nonqualified Additional Credited Service and ERISA Excess
Plan, (b) the Diamond-Bathurst Inc. Preferred Compensation Plan and (c) each of
the Life Annuity Benefit Agreements dated December 15, 1992 between Anchor and
Irma Landesfeind, Gordon Westby and Harry J. Susla, respectively, (ii) Anchor's
share of environmental clean-up costs at the Whitehouse Site and the Picketville
Site (as such terms are defined in the objection filed by the City of
Jacksonville, the Jacksonville Electric Authority and the Duval County School
Board) and (iii) Anchor's share of the clean-up costs and other related
environmental liabilities at the OII Site (as such term is defined in the
objection filed by The Operating Industries, Inc. Steering Committee), and
Permitted Liens under the Consumers-Owens Asset Purchase Agreement, all persons
and entities holding Liens or Claims of any kind and nature with respect to the
Purchased Assets are hereby barred and enjoined from asserting such Liens and
Claims of any kind and nature against the Purchasers, or either of them, their
respective successors or assigns, or the Purchased Assets.
12. If and to the extent Riley Manufacturing Co.
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("Riley") establishes an ownership interest or other proprietary rights in
certain of the Purchased Assets as set forth in the First Amended Verified
Complaint for Injunctive Relief and Damages pending in the United States
District Court for the District of Kansas, Case No. 96-2-309-KHV (the "Kansas
Litigation"), then the appropriate Purchaser shall cooperate with the return to
Riley of such Assets and shall be subject to any orders protecting such
proprietary rights, and the Debtor and Purchasers shall preserve all applicable
rights and claims against each other under the Consumers-Owens Asset Purchase
Agreement. The status of Riley's rights to establish its asserted claims,
property rights and interests as set forth in the Kansas Litigation is
preserved, subject to the automatic stay.
13. Notwithstanding the foregoing, a hearing will be held
prior to the Closing Date to establish ownership of the equipment and inventory
(the "Equipment") listed on Exhibit A annexed to Emhart Glass Manufacturing
Company (US), Inc. and Emhart Powers, Powers Manufacturing Division's ("Emhart")
objection to the Sale Motion. If and to the extent Emhart establishes that the
Equipment is owned by Emhart, the Equipment will be promptly turned over to
Emhart prior to the Closing Date.
14. The sale of the Purchased Assets shall be without
prejudice to the rights of Cap Gemini America, Inc. ("Cap Gemini") to establish
a basis for its asserted claims, property rights and interests as such claims
are asserted in the lawsuit
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currently pending against the Debtor in the Supreme Court of New York, Index No.
112443-96.
15. Nothing in this Order shall be construed to affect in any
way the respective rights, titles and interests of Bacardi International Limited
and its affiliates ("Bacardi") in and to the molds used by and/or in the
possession or control of the Debtor as set forth in the Strategic Supply
Agreement between the Debtor and Bacardi provided that Bacardi shall continue to
pay the applicable Purchaser for the molds in accordance with the Strategic
Supply Agreement between Bacardi and Anchor.
16. The Debtor is hereby authorized and directed in accordance
with section 365 of the Bankruptcy Code to (a) assume and assign to the
applicable Purchaser each of the Executory Contracts set forth on the First List
of Contracts, pursuant to the provisions of section 365 of the Bankruptcy Code,
in each case free and clear of all Liens and Claims (other than Assumed
Liabilities and Permitted Liens), and (b) execute and deliver to the applicable
Purchaser such documents or other instruments as may be necessary to assign and
transfer the Executory Contracts on the First List of Contracts to be assumed
and assigned to the applicable Purchaser pursuant to the Consumers-Owens Asset
Purchase Agreement.
17. The Debtor is hereby authorized and empowered to pay all
Cure Amounts due on the Executory Contracts as set forth on the First List of
Contracts, or as may otherwise be agreed between the Debtor and the non-Debtor
party to the Executory Contract or as may be ordered by the Bankruptcy Court,
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by paying or reserving for payment all such Cure Amounts from the proceeds of
sale or other available cash of the Debtor as soon as practicable after the
Closing Date.
18. Subject to paragraph 17 above, other than the Cure Amount
relating to each Executory Contract as set forth in the First List of Contracts,
and except for such post-petition, pre-Closing Date Cure Amounts as may be
payable by the Debtor to the parties enumerated in paragraph 18 hereof, there
are no other amounts due on the Executory Contracts listed on the First List of
Contracts, required to be paid under sections 365(b)(1)(A) and (B) and 365(f)(2)
of the Bankruptcy Code other than post-petition, pre-Closing Date amounts
payable in the ordinary course, which shall be paid when due by the Debtor.
19. Notwithstanding anything to the contrary herein, the Cure
Amount to be paid by the Debtor relating to the Executory Contract between the
Debtor and each of (i)(a) the Hayward Landlord, (b) Clifford Jones, and (c) DMI
Distribution, Inc., et al. shall also include all liquidated amounts necessary
to cure undisputed, post-petition defaults, if any, which occur after the
Hearing but prior to the Closing Date, and (ii) to (a) NationsBank and (b)
Heller Financial shall also include those reasonable post-petition, pre-Closing
Date attorneys' fees and expenses incurred by them in connection with enforcing
such entities' leases with the Debtor and which are expressly permitted by the
provisions of that certain Master Lease Agreement dated as of October 11, 1990
between the Debtor and Sun Financial Group, Inc.
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20. Each Executory Contract shall, upon assignment to the
applicable Purchaser, be deemed to be valid and binding on the Purchaser to whom
such Executory Contract is assigned and in full force and effect and enforceable
in accordance with its terms, and following such assignment, except for payment
of the Cure Amounts and other amounts referred to in paragraphs 16-18 hereof,
the Debtor shall be relieved pursuant to section 365(k) of the Bankruptcy Code,
from any further liability with respect to any breach of the Executory Contracts
after such assignment.
21. Each non-Debtor party to an Executory Contract which was
served with an Assumption Notice is hereby barred and enjoined from asserting
against the Debtor, or the Debtor's estate (a) any default existing as of the
date of the Hearing if such default was not raised or asserted in a timely
manner prior to the entry of this Order or (b) any objection to the assumption
and assignment of such non-Debtor party's Executory Contract or the Cure Amount,
as the latter may have been amended, of which the non-Debtor party was given
notice prior to the Hearing. The assignment of each Executory Contract to the
applicable Purchaser will not cause a default or otherwise allow the non-Debtor
party thereto to terminate or adversely affect such Purchaser's rights
thereunder. In no event shall Purchasers be liable for any Cure Amounts or
pre-Closing Date liabilities arising from or related to the Executory Contracts
with the exception of any Assumed Liabilities.
22
<PAGE> 23
22. Each Purchaser may, subsequent to the Hearing, but no
later than 10 days following the signing of the Consumers-Owens Asset Purchase
Agreement, identify additional executory contracts and unexpired leases
("Additional Executory contracts") to be assumed and assigned to such Purchaser
in connection with the sale as of the Closing Date, and the Debtor shall then
provide notice to the non-Debtor party to the Additional Executory Contract of
the intended assumption and assignment (the term "Assumption Notice" to be
applicable to such notice). Each such non-Debtor party shall have five (5) days
to object to the assumption and assignment and to the Cure Amount identified in
the Assumption Notice, and must state in its objection with specificity what the
proper Cure Amount should be and provide sufficient documentation in support
thereof. In the event a non-Debtor party to an Additional Executory Contract
asserts or raises an objection to the assumption and assignment of such party's
Executory Contract and/or to the Cure Amount which is not resolved by the
parties, a hearing will be scheduled before the Court at a date and time to be
established. If no timely objection is received by the Court, the Debtor and
each Purchaser, the Cure Amount shall be determined to be the amount listed in
the notice, and the Court may enter an order without a hearing approving the
assumption and assignment of the Additional Executory Contract and the related
Cure Amount. The assignment of each such Additional Executory Contract to the
applicable Purchaser will not cause a default or otherwise allow the non-
23
<PAGE> 24
Debtor party thereto to terminate or adversely affect such Purchaser's rights
thereunder.
23. Each non-Debtor party to an executory contract or
unexpired lease which has been served no later than five (5) business days prior
to the Closing Date by hand or facsimile transmission with a written notice
withdrawing a previous Assumption Notice (a "Notice of Withdrawal") which does
not file with the Court and serve on the Debtor and the Purchasers by hand or
facsimile transmission within two (2) business days after receipt of such Notice
of Withdrawal an objection stating with specificity its opposition to the Notice
of Withdrawal, shall be barred and enjoined from asserting any such objection.
In the event a non-Debtor party timely asserts such an objection, which is not
resolved by the parties, a hearing will be scheduled before the Court at a date
and time to be established. Neither the Debtor nor the Purchasers shall have any
liability to any party resulting from the filing and service of such a Notice of
Withdrawal or the non-assumption of any executory contract; provided, however,
that the foregoing shall not limit or restrict the Debtor's estate from
liability for any claim for damages asserted under the Bankruptcy Code due to
rejection of any executory contract in the amount of such claim as may be
ultimately allowed by the Court.
24. In the event the Debtor serves Sun Financial Group, Inc.
("Sun Financial") with a Notice of Withdrawal indicating that the Debtor does
not seek to assume and assign to the Purchasers one or more of the Lease Orders
executed by the
24
<PAGE> 25
Debtor and Sun Financial related to that certain Master Lease Agreement dated as
of October 11, 1990, Sun Financial shall have three (3) business days after
receipt of such Notice of Withdrawal to file with the Court and serve on the
Debtor and the Purchasers an objection stating with specificity its objection to
the Debtor's assumption and assignment to Purchasers of less than all of the
Lease Orders. In the event Sun Financial timely asserts such an objection, which
is not resolved by the parties, a hearing will be scheduled before the Court at
a date and time to be established. A copy of such Notice of Withdrawal shall
also be served by hand or facsimile upon Sun Financial's counsel of record in
these proceedings.
25. Except for (i) the Rocky Mountain Bottle Company
Partnership Agreement, (ii) the Supply Agreement effective as of January 1, 1995
between Coors Brewing Company ("Coors") and Anchor, (iii) the Technology License
Agreement dated June 30, 1995 between Coors, Anchor and Rocky Mountain Bottle
Company ("RMBC") and (iv) the Second Amendment to the TALA (as defined below),
the Executory Contracts to be assigned to Consumers or Owens, as applicable,
under the Consumers-Owens Asset Purchase Agreement are assignable, under section
365 of the Bankruptcy Code, notwithstanding any provisions contained in any
Executory Contract to the contrary. All necessary consents, including those of
Coors, have been obtained with respect to the Executory Contracts described in
clauses (i) through (iv) of this paragraph.
25
<PAGE> 26
26. On the Closing Date, the Collateral Agent for the Debtor's
senior secured notes is authorized and directed to execute such documents and
take all other actions as may be reasonably necessary to release Liens or Claims
against the Purchased Assets and shall be promptly paid or reimbursed without
further order of the Court by the Debtor.
27. Except for the holders of Permitted Liens and Assumed
Liabilities (Owens' obligations being limited to the OI Assumed Liabilities and
Permitted Liens, if any, against the OI Assets), all persons holding Claims and
Liens of any kind as against the Debtor or its property, including all Executory
Contracts and Additional Executory Contracts, are hereby restrained from
asserting such Claims and Liens against Purchasers or the Purchased Assets.
28. This Order (a) is and shall be effective as a
determination that, on the Closing Date, all Liens which are not Permitted Liens
(the "non-Assumed Liens") and Claims existing as to the Purchased Assets prior
to the Closing have been and hereby are unconditionally released, discharged and
terminated as to the Purchased Assets, and that the conveyance described in this
Order has been effected, (b) is and shall be effective to cause all such
non-Assumed Liens to attach to and be perfected in the proceeds of the sale of
the Purchased Assets, in the order of their priority, with the same validity,
force and effect which they now have as against the Purchased Assets, without
the need to file any financing statements or other evidence of perfection, and
(c) is and shall be binding upon and govern the acts of all
26
<PAGE> 27
entities including without limitation, all filing agents, filing officers, title
agents, title companies, recorders of mortgages, recorders of deeds, registrars
of deeds, administrative agencies, governmental departments, secretaries of
state, federal, state, and local officials, and all other persons and entities
who may be required by operation of law, the duties of their office, or
contract, to accept, file, register or otherwise record or release any documents
or instruments, or who may be required to report or insure any title or state of
title in or to any of the Purchased Assets. Each and every federal, state, and
local governmental agency or department hereby is directed to accept for filing
or recording this Order and any and all documents and instruments necessary and
appropriate to consummate the transactions contemplated by the Consumers-Owens
Asset Purchase Agreement.
29. To the extent that the ad valorem tax liens of Navarro
County, Navarro Central Taxing Authority and the Corsicana Independent School
District (the "Texas Taxing Authorities") which attached to the Debtor's
property on January 1, 1996 are valid and enforceable and/or represent
administrative expense claims against the Debtor's estate and the Closing Date
occurs after January 31, 1997, the Debtor shall pay such portion of the taxes
owing for the 1996 calendar year on or before January 31, 1997. To the extent
the Closing Date occurs prior to January 31, 1997, the Debtor and the Purchasers
shall pay such ad valorem tax claims of the Texas Taxing Authorities in
27
<PAGE> 28
accordance with Article 8 of the Consumers-Owens Asset Purchase Agreement.
30. Nothing in this Order shall impair the rights of the Texas
Taxing Authorities with regard to the ad valorem tax liens arising (i) on the
Debtor's property prior to the Closing Date, and (ii) on the Purchased Assets on
and after the Closing Date, within the respective taxing jurisdictions of each
of the Texas Taxing Authorities.
31. If any person or entity that has filed financing
statements, mortgages, deeds of trust, or other documents or agreements
evidencing non-Assumed Liens or Claims on or interests in the Purchased Assets
shall not have delivered to the Debtor prior to the Closing Date, in proper form
for filing or recording and executed by the appropriate parties, termination
statements, instruments of satisfaction or releases of all Liens or other
interests which the person or entity has with respect to the Purchased Assets,
the Debtor is hereby authorized and directed to execute and file such
statements, instruments, releases and other documents on behalf of the person or
entity with respect to the Purchased Assets.
32. All entities who are presently, or on the Closing Date may
be, in possession of some of the Purchased Assets are hereby directed to
surrender possession of said Purchased Assets to either Purchaser on the Closing
Date; provided, however, that Hartness International need not release and
deliver the equipment which is the subject of the parties' contract until
Hartness receives confirmation that the Cure
28
<PAGE> 29
Amount has been paid or that arrangements have been made for such amount to be
paid.
33. As of the Closing Date (a) the Executory Contracts and
Additional Executory Contracts shall be assigned to the Purchasers,
notwithstanding any restriction on the assignment of such Executory Contracts
contained therein pursuant to section 365(f)(3) of the Bankruptcy Code, and (b)
all agreements (other than the Executory Contracts and Additional Executory
Contracts) and all orders of this Court entered prior to the date hereof shall
be deemed amended or modified solely to the extent required to permit the
consummation of the transactions contemplated by the Consumers-Owens Asset
Purchase Agreement.
34. Except as to Assumed Liabilities and Permitted Liens or as
otherwise expressly provided in the Consumers-Owens Asset Purchase Agreement or
related instruments or as otherwise provided in this Order (Owens' obligations
in any event being limited to the OI Assigned Liabilities), the Purchasers,
individually or collectively, shall not have any liability or responsibility
whatsoever for any liability or other obligation of the Debtor other than for
payment of the Purchase Price, as set forth in Section 2.06 of the
Consumers-Owens Asset Purchase Agreement.
35. The Debtor will have taken steps necessary to protect and
preserve the record with respect to claims asserted by the reclamation claimants
by preserving inventory lists of the Purchased Assets purportedly subject to the
claims of such
29
<PAGE> 30
reclamation creditors, prior to the transfer of the Purchased Assets.
36. The Debtor will reserve sufficient funds from the proceeds
of the sale to pay in full all valid reclamation claims and all valid bailment
claims, if any, in respect of the Purchased Assets, as administrative expenses
of the Debtor's estate pursuant to sections 503(b), 507(a)(1) and 546(c)(2) of
the Bankruptcy Code. The holder of reclamation claims shall have no rights in
any of the Purchased Assets or against the Purchasers.
37. Effective on and after the Closing Date, all persons and
entities holding Liens or Claims of any kind and nature which constitute Assumed
Liabilities, Permitted Liens, or post-Closing Date obligations under Executory
Contracts, are hereby barred and enjoined from asserting such Liens and Claims
against the Debtor.
38. This Court retains jurisdiction (i) to enforce and
implement the terms and provisions of the Consumers-Owens Asset Purchase
Agreement, all amendments thereto, any waivers and consents thereunder, and of
each of the agreements executed in connection therewith, (ii) to compel delivery
of the Purchased Assets to the Purchasers, (iii) to resolve any disputes arising
under or related to the Consumers-Owens Asset Purchase Agreement and related
agreements, except as otherwise provided therein, (iv) to resolve any disputes
arising under or related to the assumption and assignment of Executory Contracts
and Cure Amounts, and the assumption and assignment of Additional
30
<PAGE> 31
Executory Contracts, (v) to enjoin the assertion of any Claims or Liens against
the Purchasers or the Purchased Assets which do not constitute Permitted Liens
or Assumed Liabilities in accordance with the Consumers-Owens Asset Purchase
Agreement, and (vi) to interpret, implement and enforce the provisions of this
Order.
39. Pursuant to Section 1145 of the Bankruptcy Code, the New
Anchor Securities to be issued by Consumers to the Debtor and thereafter
distributed by the Debtor to creditors of the Debtor's estate in exchange for
and in compromise of such creditors' claims under any reorganization (or
liquidation) plan for the Debtor, are exempt from the registration requirements
of the Securities Act of 1933, as amended (and the regulations pertaining
thereto).
40. Nothing contained (i) in any plan of reorganization (or
liquidation) confirmed in these cases, (ii) the order of confirmation confirming
any plan of reorganization (or liquidation), (iii) any order dismissing these
cases or converting them to a Chapter 7 liquidation or (iv) any order appointing
an examiner in either of these cases shall conflict with or derogate from the
provisions of the Consumers-Owens Asset Purchase Agreement or the terms of this
Order.
41. In the absence of a stay pending appeal, if any, if the
Purchasers elect to close under the Consumers-Owens Asset Purchase Agreement at
any time after entry of this Order, then, with respect to the Consumers-Owens
Asset Purchase Agreement, including the assumption and assignment of the
Executory Contracts and Additional Executory Contracts, each of
31
<PAGE> 32
Consumers and Owens, as Purchasers in good faith of the Purchased Assets, shall
be entitled to the protections of section 363(m) of the Bankruptcy Code if this
Order or any authorization contained herein is reversed or modified on appeal.
42. The terms and provisions of the Consumers-Owens Asset Purchase
Agreement, together with the terms and provisions of this Order, shall be
binding in all respects upon, and shall inure to the benefit of, the Debtor and
its estate, Consumers, Owens, and their respective affiliates, successors and
assigns, notwithstanding any subsequent appointment of an examiner or any
trustee for the Debtor under any chapter of the Bankruptcy Code, as to which
examiner or trustee such terms and provisions likewise shall be binding in all
respects.
43. The terms and provisions of this Order shall be binding
upon the Debtor, its estate, and its creditors, Consumers, Owens, and their
respective affiliates, successors and assigns, and any affected third parties
including but not limited to (a) each non-Debtor party to an Executory Contract
or an Additional Executory Contract, which party shall be bound to the
assumption and assignment of such party's Executory Contract or Additional
Executory Contract to the Purchasers and to continue to perform under the terms
and conditions of such Executory Contract or Additional Executory Contract, and
(b) persons asserting a claim against or interest in the Debtor's estate or any
of the Purchased Assets to be sold to the Purchasers pursuant to the
Consumers-Owens Asset Purchase Agreement.
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<PAGE> 33
44. The failure specifically to include any particular
provisions of the Consumers-Owens Asset Purchase Agreement in this Order shall
not diminish or impair the effectiveness of such provision, it being the intent
of the Court that the Consumers-Owens Asset Purchase Agreement be authorized and
approved in its entirety.
45. The Consumers-Owens Asset Purchase Agreement and any
related agreements, documents or other instruments may be modified, amended or
supplemented by the parties thereto in accordance with the terms thereof without
further order of the Court, provided that any such modification, amendment or
supplement is not material.
46. The transfer of the OI Assets to Owens and the balance of
the Purchased Assets to Consumers, and the making, execution, delivery or
recordation of any deed, termination or modification of any lease or other
instrument of transfer, or assignment executed in connection with any of the
transactions contemplated in connection with the Consumers-Owens Asset Purchase
Agreement or to its schedules is not subject to taxation under any state or
local law imposing a stamp, transfer or other similar tax in accordance with
section 1146(c) and section 105 of the Bankruptcy Code.
47. Effective as of the Closing Date, and conditioned upon the
occurrence of the Closing, the Debtor shall be deemed to have rejected, pursuant
to section 365(a) of the Bankruptcy Code, all its right, title and interest in,
to and under the Technical Assistance and License Agreement, dated as of
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<PAGE> 34
August 9, 1989, as heretofore amended, supplemented or otherwise modified (the
"TALA"), between Owens-Illinois Glass Container Inc. and C. Holdings Corp. If
the Closing Date shall not occur for any reason, the TALA shall be unaffected by
this Order. Owens shall be entitled to assert (i) a pre-petition, general
unsecured claim for fees and expenses in connection with unpaid technical
advisory services pursuant to paragraphs 2 or 3 of the TALA or royalty payments
and other amounts payable pursuant to paragraph 6 of the TALA ("TALA
Obligations") relating to technical advisory services provided or sales of
Licensed Products prior to the Petition Date, and (ii) an administrative expense
claim pursuant to section 503 (b)(1) of the Bankruptcy Code for unpaid TALA
Obligations relating to technical advisory services provided or sales of
Licensed Products on or after the Petition Date. Except as expressly set forth
in the immediately preceding sentence, Owens shall not assert any claim against
the Debtor on account of the rejection of the TALA. The Court retains
jurisdiction to resolve any dispute between or among Owens, the Debtor and the
Creditors' Committee as to the amount of the claims described in this paragraph.
48. Notwithstanding paragraph 47 above, Debtor's right, title
and interest in, to and under the Second Amendment To Technical Assistance and
License Agreement, effective June 30, 1995, among Debtor, Owens, C. Holdings and
Coors (the "Second Amendment to the TALA") shall continue in full force and
effect and shall be, effective as of the Closing Date and, conditioned
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<PAGE> 35
upon the occurrence of the Closing, assumed and assigned to Owens pursuant to
section 365 of the Bankruptcy Code.
49. The Travelers/Aetna Agreement and the Supplemental Vitro
Agreement are binding upon the parties thereto, but only in accordance with the
terms and upon the conditions thereof.
50. As provided by Bankruptcy Rule 7062, this Order shall be
effective and enforceable immediately upon entry.
51. The Debtor, Consumers or Owens, and any agent or
representative of any of them, are each hereby authorized and empowered to serve
upon all filing and recording officers a notice when filing or recording any
instruments of transfer (including, without limitation, deeds, leases, and
assignments, modifications and terminations of leases) in accordance with this
Order and the Consumers-Owens Asset Purchase Agreement to evidence and implement
this paragraph of the Order. All filing and recording officers are hereby
directed to accept, file and record all instruments of transfer including,
without limitation, deeds, leases, and assignments, modifications and
terminations of leases to be filed and recorded pursuant to and in accordance
with this Order or the Consumers-Owens Asset Purchase Agreement and the various
documents related thereto, without the payment of any such taxes. The Court
retains jurisdiction to enforce this direction.
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<PAGE> 36
Dated: Wilmington, Delaware
Dec. 20, 1996
/s/ Peter J. Walsh
-------------------------------
UNITED STATES BANKRUPTCY JUDGE
36
<PAGE> 1
Exhibit 2.4
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
ANCHOR GLASS CONTAINER ) Case Nos. 96-1434 and
CORPORATION, et al. ) 96-1516 (PJW)
)
Debtors. ) (Jointly Administered)
ORDER AUTHORIZING AND APPROVING MODIFICATIONS
OF CONSUMERS-OWENS ASSET PURCHASE AGREEMENT
Upon the oral motion of Anchor Glass Container Corporation
("Anchor") for an order authorizing and approving certain modifications to the
asset purchase agreement among Anchor, Consumers Packaging Inc. ("Consumers")
and Owens-Brockway Glass Container Inc. ("Owens"), dated as of December 18, 1996
(the "Asset Purchase Agreement"),(1) and approved by order of the Bankruptcy
Court dated December 20, 1996 (the "Sale Order"), which modifications are set
forth in the Amendment to Asset Purchase Agreement (the "Amendment") annexed
hereto as Exhibit A; and upon the consent of the Official Committee of Unsecured
Creditors, Consumers and Owens; and Foothill Capital Corporation, Congress
Financial Corporation and the Senior Secured Noteholders having been notified of
the relief requested and the hearing indicated no objection; and upon the entire
record of the hearing held on January 31, 1997; and after due deliberation
thereon and good cause appearing therefor, it is hereby
ORDERED, that the oral motion is hereby granted; and it is further
- ----------
(1) All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Consumers-Owens Asset Purchase Agreement
dated December 18, 1996.
<PAGE> 2
ORDERED, that the Debtor is hereby authorized to modify the Asset
Purchase Agreement in the manner provided for by the Amendment effective upon
the closing of the Asset Purchase Agreement; and it is further
ORDERED, that the terms and conditions of the Asset Purchase
Agreement as modified by the Amendment are hereby approved; and it is further
ORDERED, that the sale of the Purchased Assets to Consumers and
Owens pursuant to the Asset Purchase Agreement as modified herein is hereby
authorized under section 363(b) of the Bankruptcy Code; and it is further
ORDERED, that any and all liens, claims and encumbrances on any of
the assets of the Debtor not sold pursuant to the Asset Purchase Agreement, as
modified herein, including, without limitation, the Excluded Properties (as
defined in the Amendment) shall remain in full force and effect; and it is
further
ORDERED, that the terms of the Sale Order shall remain in full force
and effect except as may be modified herein.
Dated: Wilmington, Delaware
January 31, 1997
/s/ Peter J. Walsh
------------------------------
UNITED STATES BANKRUPTCY JUDGE
2
<PAGE> 3
EXHIBIT
A
<PAGE> 4
AMENDMENT TO
ASSET PURCHASE AGREEMENT
This AMENDMENT is made and entered into as of January 31, 1997, by
and among ANCHOR GLASS CONTAINER CORPORATION, a Delaware corporation ("Anchor"),
CONSUMERS PACKAGING INC., a corporation organized under the federal laws of
Canada ("Consumers"), and OWENS-BROCKWAY GLASS CONTAINER, INC., a Delaware
corporation ("OI").
WITNESSETH:
WHEREAS, Anchor has entered into an Asset Purchase Agreement with
Consumers and OI, dated as of December 18, 1996 (the "Asset Purchase Agreement")
with respect to the sale by Anchor to Consumers and OI of substantially all of
the assets of Anchor on the terms and conditions specified in the Asset Purchase
Agreement, which Asset Purchase Agreement has been approved by order of the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court") which has jurisdiction over the Bankruptcy Case filed by Anchor, as
debtor, pursuant to Chapter 11 of the Bankruptcy Code (Capitalized terms used
herein but not otherwise defined herein shall have the same meanings given them
in the Asset Purchase Agreement); and
WHEREAS, pursuant to Section 2.01(i) of the Asset Purchase
Agreement, Anchor agreed to transfer and assign to Consumers and OI, and
Consumers and OI agreed to purchase from Anchor, all of Anchor's right, title
and interest in, to and under the Purchased Assets including all real property
used or owned or held for use in the Business in each case together with all
buildings, fixtures and improvements erected thereon; and
WHEREAS, pursuant to Section 2.06(b) of the Asset Purchase
Agreement, Anchor agreed to deliver to Consumers and OI, three business days
prior to the Closing Date, a certificate, signed by Anchor's Chief Financial
Officer, setting forth (i) Anchor's good faith estimate of the Estimated
Post-Filing Trade Payables and (ii) Anchor's good faith estimate of the
Estimated Final Net Assets; and
WHEREAS, Anchor has delivered the certificate described above dated
January 24, 1997 and pursuant to Section 2.06 of the Asset Purchase Agreement,
Consumers and OI are obligated to pay to Anchor the Estimated Purchase Price in
the amount of $333,937,000 in cash, of which $205,575,000 is payable by
Consumers; and
WHEREAS, Consumers and Anchor are desirous of amending the Asset
Purchase Agreement to eliminate from the Purchased Assets to be acquired by
Consumers three of the closed plants facilities owned by Anchor and to reduce
the Purchase Price and the Estimated Purchase Price otherwise payable by
Consumers in cash on the Closing Date by $5.7 million;
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:
<PAGE> 5
1. Purchased Assets. Notwithstanding anything to the contrary
contained in the Asset Purchase Agreement, including, without limitation,
Section 2.01(i) thereof, the Purchased Assets shall not include the plant
facilities owned by Anchor described on Schedule 3.11(b) to the Asset Purchase
Agreement as the properties located at Corsicana, Texas (including the
warehouse), Huntington Park, California and San Leandro, California
(collectively, the "Excluded Properties"). Schedule 3.11(b) to the Asset
Purchase Agreement is hereby amended to delete the Excluded Properties therefrom
and the Asset Purchase Agreement is hereby amended such that the terms
"Purchased Assets" and "Real Properties" as used in the Asset Purchase Agreement
shall not include the Excluded Properties and the term "Excluded Assets" as used
therein shall include the Excluded Properties. All other references in the Asset
Purchase Agreement and the Schedules thereto to any of the Excluded Properties
are hereby deleted. Consumers shall have the right to remove any machinery and
equipment (but not building fixtures) located at any of the Excluded Properties
within the lesser of 60 days following the Closing Date or the date of sale of
any Excluded Property.
2. Assumed Liabilities. Notwithstanding anything to the contrary
contained in the Asset Purchase Agreement, including, without limitation,
Section 2.03(v) thereof, the Assumed Liabilities shall not include any
liabilities or obligations of Anchor relating to or in connection with the
Excluded Properties (the "Related Liabilities").
3. Purchase Price. The Purchase Price and the Estimated Purchase
Price for the Purchased Assets are hereby reduced by $5.7 million. To effectuate
such reduction, (i) the amount of $333.6 million appearing in clause (i)(A) of
the first sentence of Section 2.06(a) of the Asset Purchase Agreement is hereby
reduced to $327.9 million and the amount thereof payable by Consumers is hereby
reduced from $208.6 million to $202.9 million and (ii) the amount of $333.6
million appearing in clause (i) of the fourth sentence of Section 2.06(a) of the
Asset Purchase Agreement is hereby reduced to $327.9 million.
4. Closing Balance Sheet. Notwithstanding anything to the contrary
contained in the Asset Purchase Agreement, including, without limitation,
Sections 2.08 and 2.09 thereof, the Excluded Properties and the Related
Liabilities shall be excluded from the Closing Balance Sheet and solely for
purposes of calculating any adjustment to the Purchase Price pursuant to Section
2.09 of the Asset Purchase Agreement, the net assets shown on the Reference
Balance Sheet shall be reduced by the amount of $6.84 million which is the
agreed book value of the Excluded Properties net of the Related Liabilities. It
is the intention of the parties that this paragraph 4 shall preclude any
adjustment in the Purchase Price pursuant to Section 2.09 of the Asset Purchase
Agreement by reason of the exclusion of the Excluded Properties net of the
Related Liabilities from the Purchased Assets and the Assumed Liabilities.
5. Future Sales of Excluded Properties. Anchor agrees that, in
connection with the sale of any of the Excluded Properties by Anchor, it will
include a covenant restricting any subsequent owner from operating such Excluded
Property for the manufacture of glass containers.
6. Assignment to New Anchor. Prior to the Closing, Consumers shall
have assigned to New Anchor all of its rights under this Amendment and shall
have caused New
2
<PAGE> 6
Anchor to assume all of the liabilities and obligations of Consumers hereunder.
Such assignment and assumption shall not relieve Consumers of its liabilities
and obligations under this Amendment.
7. Governing Law, etc.. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflicts of law rules of such State. The provisions of Sections 13.11
(Consent to Jurisdiction) and 13.12 (Waiver of Jury Trial) of the Asset Purchase
Agreement shall be applicable to this Amendment as though fully set forth
herein.
IN WITNESS WHEREOF, each party has caused this Amendment to be
executed by its duly authorized representative as of the date first written
above.
ANCHOR GLASS CONTAINER CORPORATION
By:
------------------------------------
Name:
Title:
CONSUMERS PACKAGING INC.
By:
------------------------------------
Name:
Title:
OWENS-BROCKWAY GLASS CONTAINER INC.
By:
------------------------------------
Name:
Title:
3
<PAGE> 1
Exhibit 2.5
Memorandum of Understanding
Reference is made to the Asset Purchase Agreement dated
December 18, 1996 between Anchor Glass Container Corporation ("Anchor"),
Consumers Packaging Inc. ("Consumers") and Owens-Brockway Glass Container, Inc.
(the "Agreement"), approved by order of the United States Bankruptcy Court for
the District of Delaware dated December 20, 1996 (the "Sale Order"). Capitalized
terms used herein shall have the meaning set forth in the Agreement, unless
otherwise defined.
In connection with the Closing this day of the transactions
contemplated by the Agreement, Anchor and Consumers, and Anchor Glass
Acquisition Corporation ("New Anchor") as assignee of Consumers, agree with
respect to the Agreement as follows:
1. Any accrued real estate taxes paid by Anchor at the Closing
are paid under protest, and without prejudice to the respective positions of
Anchor, Consumers or New Anchor that another party has responsibility under the
Agreement to bear those liabilities.
2. The parties reserve their rights with respect to the
responsibility for obligations related to the Daynet sublease at the Dayville,
Connecticut property, and the sublease between Muskingum County and the City of
Zanesville at Zanesville, Ohio.
3. In the event good title to one or more patents cannot be
transferred, the parties reserve their rights with respect to appropriate
adjustments, if any.
4. With respect to certain contracts marked as "Maybe"
contracts on the Master List of contracts submitted to Anchor by Consumers with
its letter dated January 3, 1997, it is agreed that Consumers will have up to 60
days after the Closing to agree on mutually acceptable terms to achieve savings
from the contracting parties which savings will be shared in agreed upon
portions between Anchor and Consumers. If Anchor and Consumers cannot so agree,
the contracts marked as Maybe shall be automatically deemed to be included in
the Purchased Assets and Anchor shall assume and assign such contracts to New
Anchor, which shall be treated in accordance with the provisions of the Sale
Order applicable to assigned contracts.
5. The parties reserve their rights with respect to whether
Consumers (directly or indirectly) is entitled to receive common stock of New
Anchor or warrants to acquire common stock of New Anchor pursuant to the last
sentence of Section 2.01(a) of the Warrant Agreement, dated as of February 5,
1997, by and between New Anchor and Bankers Trust Company.
<PAGE> 2
6. The parties agree to review a list of contracts and leases
provided by Anchor to Consumers which were designated for rejection by
Consumers, but Anchor believes must be assumed by Consumers/New Anchor. The
parties reserve their rights with respect to responsibility for those
obligations.
Dated: February 5, 1997
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ Mark A. Kirk
--------------------------------
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
--------------------------------
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ John J. Ghaznavi
--------------------------------
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ANCHOR GLASS ACQUISITION CORPORATION
The undersigned, the Chairman of the Corporation, hereby certifies that
the Certificate of Incorporation of Anchor Glass Acquisition Corporation (the
"Corporation"), originally filed in Delaware on January 3, 1997, is hereby
amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the corporation is Anchor Glass Acquisition Corporation
(the "Corporation").
ARTICLE II
ADDRESS OF REGISTERED OFFICE;
NAME OF REGISTERED AGENT
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, Delaware 19801, County of
New Castle. The name of the registered agent at that address is The Corporation
Trust Company.
ARTICLE III
PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
Delaware General Corporation Law. It shall have all powers that may now or
hereafter be lawful for a corporation to exercise under the Delaware General
Corporation Law.
<PAGE> 2
ARTICLE IV
CAPITAL STOCK
SECTION 4.1. TOTAL NUMBER OF SHARES OF STOCK. The total number of
shares of stock of all classes that the Corporation shall have authority to
issue is Seventy Million (70,000,000). The authorized capital stock is divided
into Twenty Million (20,000,000) shares of Preferred Stock, $.01 par value per
share (the "Preferred Stock"), and Fifty Million (50,000,000) shares of Common
Stock, $0.10 par value per share (the "Common Stock").
SECTION 4.2 PREFERRED STOCK.
(a) The shares of Preferred Stock of the Corporation may be issued
from time to time in one or more classes or series thereof, the shares of each
class or series thereof to have such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as are stated and expressed herein or in the resolution or
resolutions providing for the issuance of such class or series, adopted by the
Board of Directors as hereinafter provided. All shares of the same class and
series of Preferred Stock will be identical, but shares of different classes or
series of Preferred Stock need not be identical or rank equally except as
provided by law or herein.
(b) Authority is hereby expressly granted to the Board of
Directors of the Corporation, subject to the provisions of this Article IV and
to the limitations prescribed by the Delaware General Corporation Law, to
authorize the issuance of one or more classes, or series thereof, of Preferred
Stock and with respect to each such class or series to fix by the resolution or
resolutions providing for the issuance of such class or series, the voting
powers, full or limited, if any, of the shares of such class or series and the
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof. The authority
of the Board of Directors with respect to each class or series thereof shall
include, but not be limited to, the determination or fixing of the following:
(i) the maximum number of shares to constitute such class or
series, which may subsequently be increased or decreased (but not below the
number of shares of that class or series then outstanding) by resolution of the
Board of Directors, the distinctive designation thereof and the stated value
thereof if different than the par value thereof;
(ii) the dividend rate of such class or series, the conditions
and dates upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or classes of
stock or any other series of any class of stock of the Corporation, and whether
such dividends shall be cumulative or noncumulative;
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(iii) whether the shares of such class or series shall be
subject to redemption by the Corporation and, if made subject to such
redemption, the times, prices and other terms and conditions of such redemption;
(iv) the terms and amount of any sinking fund established
for the purchase or redemption of the shares of such class or series;
(v) whether or not the shares of such class or series shall
be convertible into or exchangeable for shares of any other class or classes of
any stock or any other series of any class of stock of the Corporation, and, if
provision is made for conversion or exchange, the times, prices, rates,
adjustments, and other terms and conditions of such conversion or exchange;
(vi) the extent, if any, to which the holders of shares of
such class or series shall be entitled to vote with respect to the election of
directors or otherwise;
(vii) the restrictions, if any, on the issuance or reissuance
of any additional shares of Preferred Stock;
(viii) whether or not the issuance of any additional shares of
any such class or series or of any other class or series in addition to such
class or series shall be subject to restrictions in addition to the
restrictions, if any, on the issuance of additional shares imposed in the
resolution or resolutions fixing the terms of any outstanding class or series of
Preferred Stock theretofore issued pursuant to this Section 4.2 and, if subject
to additional restrictions, the extent of such additional restrictions; and
(ix) the rights of the holders of the shares of such class
or series upon the dissolution, liquidation or winding up of, or upon the
distribution of assets of, the Corporation.
For purposes of this Section 4.2, the voluntary sale, conveyance, lease,
exchange or transfer of all or substantially all the property or assets of the
Corporation or a consolidation, merger or other business combination of the
Corporation with one or more other corporations or entities (whether or not the
Corporation is the corporation surviving such consolidation or merger) shall not
be deemed to be a liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
The Board of Directors of the Corporation is further expressly vested with the
authority to make the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of any class or series of Preferred
Stock dependent upon facts ascertainable outside this Certificate of
Incorporation or of any amendment hereto, or outside the resolution or
resolutions providing for the issuance of such stock adopted by the Board of
Directors, provided that the manner in which such facts shall operate upon the
voting powers, designations, preferences, rights and qualifications, limitations
or restrictions of such class or series of Preferred Stock is clearly and
expressly set forth in the resolution or
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<PAGE> 4
resolutions providing for the issuance of such stock adopted by the Board of
Directors of the Corporation.
Any specification for a class or series of Preferred Stock of designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, pursuant to this Section
4.2 shall be defined in this Certificate of Incorporation as a "Preferred Stock
Designation."
(c) Before any dividends shall be declared or paid or any distribution
ordered or made upon the Common Stock (other than a dividend payable in Common
Stock), the Corporation shall comply with the dividend and sinking fund
provisions, if any, of any resolution or resolutions providing for the issuance
of any class or series of Preferred Stock, any shares of which shall at the time
be outstanding. Subject to the foregoing sentence, the holders of Common Stock
shall be entitled, to the exclusion of the holders of Preferred Stock of any and
all classes and series, to receive such dividends as from time to time may be
declared by the Board of Directors of the Corporation.
SECTION 4.3 COMMON STOCK.
(a) During the Initial Period, the Corporation shall have three (3)
classes of Common Stock, 19,000,000 shares of which are hereby designated as
Class A Common Stock ("Class A Common Stock"), 28,000,000 shares of which are
hereby designated as Class B Common Stock ("Class B Common Stock"), and
3,000,000 shares of which are hereby designated as Class C Common Stock ("Class
C Common Stock"). The rights of the Class A Common Stock, the Class B Common
Stock and the Class C Common Stock shall be identical in all respects, except
that during the Initial Period (as defined in Section 7.2 hereof), (i) the
Holders of Class A Common Stock shall have the right to elect four (4) directors
and the Holders of Class B Common Stock shall have the right to elect five (5)
directors, as more fully set forth in Section 7.2 of this Certificate of
Incorporation, and (ii) the Class C Common Stock shall have no voting rights. At
the end of the Initial Period, (a) (i) the Class A Common Stock (whether or not
outstanding), (ii) the Class B Common Stock (whether or not outstanding) and
(iii) the Class C Common Stock (whether or not outstanding) shall automatically
be converted into shares of Common Stock, without any designation as to class,
(b) Common Stock (without designation) shall be the only Common Stock
outstanding, (c) the number of authorized shares of Common Stock shall be
50,000,000, (d) such Common Stock shall have full voting rights (including for
the election of all directors, other than directors elected pursuant to Section
7.3 hereof) and (e) no shares of Class A Common Stock, Class B Common Stock or
Class C Common Stock shall thereafter be issued; all shares of Common Stock
issued after the Initial Period shall be issued without a class designation.
(b) Holders of Class A Common Stock and Class B Common Stock voting
together as a single class on all matters except the election and removal of
directors during the Initial Period, as set forth in Section 7.2 hereof, shall
be entitled to one vote for each share of Common Stock held by them on each
matter on which they are entitled to vote. Except as set forth in Section 7.2
hereof, any action required to be taken at an annual or
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special meeting of the holders of Common Stock may be taken without a meeting,
without prior notice and without a vote, only if a consent in writing setting
forth the action so taken, shall be signed by all of the holders of the
outstanding Common Stock of the Corporation. No action may be taken by the
holders of Common Stock by less than unanimous written consent, and any action
so taken shall be invalid.
(c) The holders of Common Stock shall be entitled to participate share
for share in any cash dividend which may be declared from time to time on the
Common Stock of the Corporation by the Board of Directors and to receive pro
rata the net assets of the Corporation on dissolution, liquidation or winding up
of the Corporation, in both cases subject to all amounts which the holders of
Preferred Stock are entitled to receive or have set aside.
ARTICLE V
INCORPORATOR
The name and the mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Eileen R. Sisca c/o Eckert Seamans Cherin & Mellott
600 Grant St., 42nd Floor
Pittsburgh, PA 15219
ARTICLE VI
TERM OF EXISTENCE PERPETUAL
The Corporation is to have perpetual existence.
ARTICLE VII
BOARD OF DIRECTORS
SECTION 7.1 POWERS OF THE BOARD OF DIRECTORS. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the Bylaws of the
Corporation, by the affirmative vote of a majority of the whole Board of
Directors; provided, however, that no
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<PAGE> 6
Bylaws hereafter adopted shall invalidate any prior act of the directors that
would have been valid if such new Bylaws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures
that affect the power of the Board of Directors to manage and direct the
business and affairs of the Corporation, including the power to designate and
empower committees of the Board of Directors, to elect, appoint and empower the
officers and other agents of the Corporation, and, subject to the requirement of
Section 7.4, to determine the time and place of, and the notice requirements
for, Board meetings, as well as quorum and voting requirements for, and the
manner of taking, Board action; and
(c) exercise all such powers and do all such acts as may be
exercised or done by the Corporation, subject to the provisions of the laws of
the State of Delaware, this Certificate of Incorporation, and the Bylaws of the
Corporation.
SECTION 7.2 INITIAL DIRECTORS.
(a) For the period beginning on the date of the closing under that
certain Asset Purchase Agreement dated December 18, 1996, by and among Anchor
Glass Container Corporation, Consumers Packaging Inc., and Owens-Brockway Glass
Container Inc. (the "Closing Date") and ending on the third (3rd) anniversary of
the Closing Date (the "Initial Period"), the number of directors of the
Corporation ("Initial Directors") shall be nine (9); provided, however, that any
vacancies occurring on the Board for any reason, including without limitation,
failure of the Class A Common Stock or the Class B Common Stock to elect all of
the directors which each such class is entitled to elect, or failure of the
Class A Common Stock or the Class B Common Stock to fill any vacancy, however
occurring, shall not affect the validity of any action taken by the Board of
Directors. During the Initial Period, the following shall apply:
(i) The holder or holders of the Class A Common Stock,
including Class A Common Stock received upon the
conversion of Preferred Stock held by any Class A
Stockholder (the "Class A Shares"), by the
affirmative vote of a majority of Class A Shares
present at a duly organized meeting of the
stockholders, shall have the right (i) to elect four
(4) Initial Directors ("Class A Directors"), (ii) to
remove any Class A Director from office, with or
without cause, and (iii) to fill any vacancy on the
Board of Directors occurring with respect to a Class
A Director; provided, however, that notwithstanding
the foregoing, all nominees for Class A Directors,
including persons nominated to fill vacancies, must
be approved by the affirmative vote of a majority of
the Class B Stockholders or by the Chairman of the
Corporation, such approval not to be unreasonably
withheld.
(ii) The holder or holders of the Class B Common Stock,
including Class B Common Stock received upon the
conversion of Preferred Stock held by Class B
Stockholders ("Class B Shares"), by the affirmative
vote of
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a majority of the Class B Shares present at a duly
organized meeting of the stockholders, shall have the
right (i) to elect five (5) Initial Directors ("Class
B Directors"), (ii) to remove any Class B Director
from office, with or without cause, and (iii) to fill
any vacancy on the Board of Directors occurring with
respect to a Class B Director.
(iii) No Class A Director may be removed from office during
the Initial Period, except by the affirmative vote of
a majority of Class A Shares present at a duly
organized meeting of the stockholders. No Class B
Director may be removed from office during the
Initial Period, except by the affirmative vote of a
majority of Class B Shares present at a duly
organized meeting of the stockholders.
(iv) Any action taken pursuant to this Section 7.2(a), may
be taken without a meeting, without prior notice and
without a vote, only if a consent in writing setting
forth the action so taken shall be signed by all of
the holders of the Class A Shares and/or the Class B
Shares, as applicable. No action may be taken by the
holders of the Class A Shares and/or the Class B
Shares, as applicable, by less than unanimous written
consent, and any action so taken shall be invalid.
(b) Prior to the commencement of the Initial Period, and from and after the
expiration of the Initial Period, the number of directors and the manner of
their election, removal and the filling of vacancies shall be in accordance with
the Bylaws of the Corporation, subject to Section 7.3 hereof, and to the
requirements of this Section 7.2(b). Upon the expiration of the Initial Period,
the Board of Directors shall determine the number of directors which shall
thereafter constitute the Board of Directors. Such number of directors shall
then be divided into three classes ("Classes"), which shall be as nearly equal
in number as possible. The term of office of the first Class of directors shall
expire at the first annual meeting after their election; the term of office of
the second Class of directors shall expire at the second annual meeting after
their election; and the term of office of the third Class of directors shall
expire at the third annual meeting after their election. At each annual meeting,
the number of directors equal to the Class whose term has expired at the time of
such meeting shall be elected to hold office until the third succeeding annual
meeting.
SECTION 7.3 ELECTION OF DIRECTORS BY HOLDERS OF PREFERRED STOCK.
Whenever the holders of any one or more classes of Preferred Stock or series
thereof issued by the Corporation shall have the right, voting separately by
class or series, to elect directors at an annual or special meeting of
stockholders, the number of such directors, and the election, term of office,
filling of vacancies and other features of each such directorship, shall be
governed by the terms of this Certificate of Incorporation and any Preferred
Stock Designation applicable thereto.
SECTION 7.4 MEETINGS OF DIRECTORS. During the Initial Period, a meeting
of the Board of Directors shall be held at least once each calendar quarter.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 RIGHT TO INDEMNIFICATION. Each person (including the estate
of such person, and any executor or similar representative of such estate) who
was or is made a party or is threatened to be made a party to or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact:
(a) that he or she is or was a director or officer of the Corporation,
or
(b) that he or she is or was serving at the request of the Corporation
as a director, trustee, officer, employee or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (collectively, "another enterprise" or
"other enterprise"),
whether either in case (a) or in case (b) the basis of such proceeding is
alleged action or inaction (x) in an official capacity as a director or officer
of the Corporation, or as a director, trustee, officer, employee or agent of
such other enterprise, or (y) in any other capacity while so serving as a
director, trustee, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent not prohibited by Section 145
of the Delaware General Corporation Law (or any successor provision or
provisions) as the same exists or may hereafter be amended (but, in the case of
any such amendment, with respect to alleged action or inaction occurring prior
to such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against any expense, liability or loss (including without limitation
attorneys' fees and expenses, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such person
in connection therewith. The persons indemnified by this Article VIII are
hereinafter referred to as "indemnitees." Such indemnification as to such
alleged action or inaction shall continue as to an indemnitee who has after such
alleged action or inaction ceased to be a director or officer of the
Corporation, or director, officer, employee or agent of such other enterprise,
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators. Notwithstanding the foregoing, except as may be provided in
Section 8.4 hereof or the Bylaws of the Corporation or by the Board of
Directors, the Corporation shall not indemnify any such indemnitee in connection
with a proceeding (or portion thereof) initiated by such indemnitee (but this
prohibition shall not apply to a counterclaim, cross-claim or third-party claim
brought by the indemnitee in any proceeding) unless such proceeding (or portion
thereof) was authorized by the Board of Directors. The right to indemnification
conferred in this Article VIII: (1) shall be a contract right; (ii) shall not be
changed by any amendment of this Certificate of Incorporation to adversely
affect any indemnitee with respect to any alleged action or inaction occurring
prior to such amendment; and (iii) shall, subject to any requirements imposed by
law and the Bylaws of the Corporation, include the right to be paid by the
Corporation the expenses incurred in
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defending any such proceeding in advance of its final disposition, provided,
however, that, if the General Corporation Law of the State of Delaware so
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined by a final
judicial decision from which there is no further right to appeal, that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
SECTION 8.2 RELATIONSHIP TO OTHER RIGHTS AND PROVISIONS CONCERNING
INDEMNIFICATION. The rights to indemnification and to the advancement of
expenses conferred in this Article VIII shall not be exclusive of any other
right which any person may have or hereafter acquire under this Certificate of
Incorporation, or any statute, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. The Bylaws of the Corporation may contain
such other provisions concerning indemnification, including provisions
specifying reasonable procedures relating to and conditions to the receipt by
indemnitees of indemnification, provided that such provisions are not
inconsistent with the provisions of this Article VIII.
SECTION 8.3 AGENTS AND EMPLOYEES. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent of
the Corporation (or any person serving at the Corporation's request as a
director, trustee, officer, employee or agent of another enterprise) or to any
person who is or was a director, officer, employee or agent of any of the
Corporation's affiliates, predecessor or subsidiary corporations or a
constituent corporation absorbed by the Corporation in a consolidation or merger
or who is or was serving at the request of such affiliate, predecessor or
subsidiary corporation or of such constituent corporation as a director,
officer, employee or agent of another enterprise, in each case as determined by
the Board of Directors to the fullest extent of the provisions of this Article
VIII in cases of the indemnification and advancement of expenses of directors
and officers of the Corporation, or to any lesser extent (or greater extent, if
permitted by law) determined by the Board of Directors.
SECTION 8.4 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph
8.1(a) of this Section is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation, except in the
case of a claim for advancement of expenses, in which case the applicable period
shall be thirty (30) days, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If successful
in whole or in part in any such suit, or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
claimant shall be entitled to be paid also the expense of prosecuting or
defending such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that
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the claimant has not met the standards of conduct which make it permissible
under the General Corporation Law of the State of Delaware for the Corporation
to indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
SECTION 8.5 INSURANCE, CONTRACTS AND FUNDING. The Corporation may
maintain insurance, at its expense, to protect itself and any director, trustee,
officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware. The Corporation may enter into
contracts with any person entitled to indemnification hereunder or otherwise,
and may create a trust fund, grant a security interest, or use other means
(including without limitation, a letter of credit) to ensure the payment of such
amounts as may be necessary to effect indemnification as provided herein.
SECTION 8.6 SEVERABILITY. In the event that any of the provisions of
this Article VIII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
ARTICLE IX
LIMITATION ON LIABILITY OF DIRECTORS
No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided however, that the foregoing shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended hereafter to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX shall not adversely
affect any right or protection of a director of the Corporation existing
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hereunder with respect to any act or omission occurring prior to such amendment,
repeal or modification.
ARTICLE X
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation hereby reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by the Delaware General Corporation Law, and
all rights conferred upon stockholders herein are granted subject to this
reservation; provided that during the Initial Period, any amendment of the
provisions of this Certificate shall require the affirmative votes of the
holders of a majority of the Class A Common Stock and the holders of a majority
of the Class B Common Stock, voting as separate classes. During the Initial
Period, no amendment may be made that would adversely affect the rights of the
Class C Common Stock vis a vis the Class A Common Stock and the Class B Common
Stock.
ARTICLE XI
SEVERABILITY
In the event that any of the provisions of this Certificate of
Incorporation (including any provision within a single Article, Section,
paragraph or sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, the remaining provisions are severable
and shall remain enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, the undersigned Chief Executive Officer
has executed this Amended and Restated Certificate of Incorporation, this 5th
day of February, 1997.
/s/ John J. Ghaznavi
------------------------------------
John J. Ghaznavi
Chief Executive Officer
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EXHIBIT 3.2
CERTIFICATE OF INCORPORATION
OF
CONSUMERS U.S., INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Consumers U.S., Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 1209 Orange
Street, City of Wilmington, DE 19801, County of New Castle; and the name of the
registered agent of the corporation in the State of Delaware at such address is
The Corporation Trust Company.
THIRD: The nature of the business and the purposes to be conducted
and promoted by the corporation, shall be to conduct any lawful business, to
promote any lawful purpose, and to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is 1,000. The par value of the shares shall be
$0.01 par value per share.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
Cynthia L. Woolheater c/o Eckert Seamans Cherin & Mellott
600 Grant Street, 42nd Floor
Pittsburgh, PA 15219
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The personal liability of the directors of the corporation
is hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of
the State of Delaware, as the same may be amended and supplemented.
<PAGE> 2
EIGHTH: The corporation shall, to the fullest extent permitted by
the provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
NINTH: From time to time any of the provisions of this certificate
of incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article Ninth.
IN WITNESS WHEREOF, this Certificate of Incorporation has been duly
executed on January 15, 1997.
/s/ Cynthia L. Woolheater
-----------------------------------
Cynthia L. Woolheater, Incorporator
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EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CONSUMERS U.S., INC.
It is hereby certified that:
1. The name of the corporation hereinafter called (the "Corporation") is
CONSUMERS U.S., INC.
2. The Certificate of Incorporation of the Corporation is hereby amended by
striking out Article FOURTH thereof and by substituting in lieu of said Article
the following new Article FOURTH:
The total number of shares of stock which the Corporation shall have
authority to issue is TWENTY MILLION (20,000,000). The par value of the shares
shall be $0.01 par value per share.
3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed on October 9, 1997.
CONSUMERS U.S., INC.
By: /s/ C. Kent May
-------------------------
C. Kent May, Secretary
<PAGE> 1
Exhibit 3.4
BYLAWS OF
ANCHOR GLASS ACQUISITION CORPORATION
(A Delaware Corporation)
SECTION I
Capital Stock
Section 1.1. Certificates. Every holder of stock in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by such
person or persons authorized by the General Corporation Law of the State of
Delaware to so sign such a certificate certifying the number of shares in the
Corporation owned by such holder. If such certificate is countersigned (a) by a
transfer agent other than the Corporation or its employee, or, (b) by a
registrar other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation, with the
same effect as if such person were such officer, transfer agent, or registrar at
the date of issue.
Whenever the Corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
Corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
Delaware General Corporation Law. Any restrictions on the transfer or
registration of transfer of any shares of stock of any class or series shall be
noted conspicuously on the certificate representing such shares.
Section 1.2. Record Ownership. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issuance thereof shall be made on the Corporation's books. The
Corporation 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 any share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as required by the laws of the State of Delaware.
Section 1.3. Transfer of Record Ownership. Transfers of stock shall be
made on the books of the Corporation only by direction of the holder of record
or such person's attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assignment of the shares
evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
Section 1.4. Lost Certificates. Any person claiming a stock certificate in
lieu of one lost, stolen or destroyed shall give the Corporation an affidavit as
to such person's ownership of
<PAGE> 2
the certificate and of the facts which go to prove its loss, theft or
destruction. Such person shall also, if required by policies adopted by the
Board of Directors, give the Corporation a bond, in such form as may be approved
by the Corporation, sufficient to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss of the certificate or
the issuance of a new certificate.
Section 1.5. Transfer Agents; Registrars; Rules Respecting Certificates.
The Board of Directors may appoint, or authorize any officer or officers to
appoint one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issuance, transfer and registration of stock certificates of the
Corporation.
Section 1.6. Record Date. (a) In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting. If no record date has been fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
SECTION II
Meetings of Stockholders
Section 2.1. Annual. The annual meeting of stockholders for the election
of directors and the transaction of other proper business shall be held within
or without the State of Delaware on such date and at such time as shall be
designated by the Board of Directors.
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Section 2.2. Special. Special meetings of stockholders for any purpose or
purposes may be called by the Board of Directors, or by the holders of not less
than three-quarters of all shares entitled to vote at the meeting. Special
meetings may be held at any place, within or without the State of Delaware, as
determined by the Board of Directors. The only business which may be conducted
at such a meeting, other than procedural matters and matters relating to the
conduct of the meeting, shall be the matter or matters described in the notice
of the meeting.
Section 2.3. Notice. Written notice of each meeting of stockholders,
stating the date, time, place and, in the case of a special meeting, the purpose
thereof, shall be given as provided by law by the Secretary or an Assistant
Secretary of the Corporation not less than ten (10) days nor more than sixty
(60) days before such meeting (unless a different time is specified by law) to
every stockholder entitled by law to notice of such meeting.
Section 2.4. List of Stockholders. A complete list of stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and shall be
open to the examination of any stockholder, for any purpose germane to a meeting
of stockholders, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified at the place where the meeting is to be held, for at least ten (10)
days before the meeting and at the place of the meeting during the whole time of
the meeting.
Section 2.5. Quorum. The holders of shares of stock entitled to cast a
majority of the votes on the matters at issue at a meeting of stockholders,
present in person or represented by proxy, shall constitute a quorum, except as
otherwise required by the Delaware General Corporation Law. In the event of a
lack of a quorum, the chairman of the meeting or a majority in interest of the
stockholders present in person or represented by proxy may adjourn the meeting
from time to time without notice other than announcement at the meeting, until a
quorum shall be obtained. At any such adjourned meeting at which there is a
quorum, any business may be transacted that might have been transacted at the
meeting originally called.
Section 2.6. Organization and Procedure.
(a) The Chairman of the Board, or, in the absence of the Chairman of the
Board, the Vice Chairman of the Board, or any other person designated by the
Board of Directors, shall preside at meetings of stockholders. The Secretary of
the Corporation shall act as secretary, but in the absence of the Secretary, the
presiding officer may appoint a secretary.
(b) At each meeting of stockholders, the chairman of the meeting shall fix
and announce the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting and shall
determine the order of business and all other matters of procedure. Except to
the extent inconsistent with any such rules and regulations as adopted by the
Board of Directors, the chairman of the meeting may establish rules, which need
not be in writing, to maintain order for the conduct of the meeting, including,
without limitation, restricting attendance to bona fide stockholders of record
and their proxies and other persons in
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attendance at the invitation of the chairman and making rules governing speeches
and debates. The chairman of the meeting acts in his or her absolute discretion
and his or her rulings are not subject to appeal.
Section 2.7. Voting. Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and of these By-Laws, or, with
respect to the issuance of Preferred Stock, in accordance with the terms of a
Preferred Stock Designation, shall be entitled to one vote, in person or by
written proxy, for each share of stock entitled to vote held by such
stockholder. In the election of directors, a plurality of the votes cast at the
meeting shall elect. Any other action shall be authorized by a majority of the
votes cast, except where the Certificate of Incorporation, the Delaware General
Corporation Law or these Bylaws prescribes a different percentage of votes
and/or a different exercise of voting power.
Voting by ballot shall not be required for corporate action except as
otherwise provided by the Delaware General Corporation Law.
Section 2.8. Inspectors. The Board of Directors by resolution may, in
advance of any meeting of stockholders, appoint one or more inspectors of
election, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act as judges of the
voting and to determine those entitled to vote at any meeting of the
stockholders or any adjournment thereof, and make a written report thereof. One
or more persons may be designated by the Board of Directors as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of stockholders, the chairman of the
meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspector(s) shall have the
duties prescribed by the Delaware General Corporation Law.
Section 2.9. Nominations of Directors. Subject to the rights, if any, of
the holders of any series of Preferred Stock to elect additional directors under
circumstances specified in a Preferred Stock Designation, following the
expiration of the Initial Term (as defined in the Certificate of Incorporation),
only persons who are nominated in accordance with the following procedures will
be eligible for election as directors of the Corporation. Nominations of persons
for election as directors of the Corporation may be made at any meeting of
stockholders (i) by, or at the direction of, a majority of the Board of
Directors or (ii) by any stockholder who is a stockholder of record entitled to
vote at such annual meeting, provided that such stockholder (a) is the record or
Beneficial Owner (as hereinafter defined) of at least one percent (1%) or One
Thousand Dollars ($1,000) in market value of Common Stock, (b) shall have held
such shares of Common Stock for a period of at least one (1) year, and (c) shall
continue to own such Common Stock through the date of the annual meeting. Only
persons nominated in accordance with the procedures set forth in this Section
2.9 and the shareholder proposal rules set forth in Regulation 14A-8 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") shall be
eligible for election as a director at an annual meeting.
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Nominations, other than those made by, or at the direction of a majority
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation as set forth in this Section 2.9. To be timely,
a stockholder's notice shall be delivered to, or mailed and received at, the
principal executive offices of the Corporation not less than one hundred twenty
(120) days prior to the one-year anniversary of the date of the Corporation's
proxy statement released to holders of the Common Stock in connection with the
previous year's annual meeting of holders of Common Stock; provided that if no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) days from the date contemplated at the
time of the previous year's proxy statement, a proposal shall be received by the
Corporation, not less than one hundred twenty (120) days prior to the date of
the scheduled annual meeting, regardless of postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than seventy-five (75) days' notice or prior public disclosure of the date of
the scheduled annual meeting is given or made, notice by the stockholder to be
timely must be so delivered or received no later than the close of business on
the tenth (10th) day following the earlier of the date on which such notice of
the date of the scheduled annual meeting was mailed or the day on which such
public disclosure was made. Such stockholder's notice shall set forth (i) as to
each person whom the stockholder proposes to nominate as a director (a) the
name, age, business address and residence address of such person, (b) the
principal occupation or employment of such nominee, (c) the class and number of
shares of the Corporation's equity securities which are Beneficially Owned (as
defined below) by such nominee on the date of such stockholder notice, (d) any
other information relating to such person that would be required to be disclosed
pursuant to Regulation 13D under the Exchange Act in connection with the
acquisition of shares, and pursuant to Regulation 14A under the Exchange Act, in
connection with the solicitation of proxies with respect to nominees for
election as directors, regardless of whether such nominee is subject to the
provisions of such regulations, including, but not limited to, information
required to be disclosed by Items 4(b) and 6 of Schedule A of Regulation 14A and
information which would be required to be filed on Schedule B of Regulation 14A
with the Securities and Exchange Commission (as such Items and Schedules are in
effect on the date hereof and such additional information as may be required by
those provisions or successor provisions adopted after the date thereof); and
(e) the signed consent of each nominee to serve as a director of the Corporation
if so elected; and (ii) as to the stockholder giving the notice (a) the name and
address, as they appear on the Corporation's books, of such stockholder and any
other stockholder who is a record or Beneficial Owner of any equity securities
of the Corporation and who is known by such stockholder to be supporting such
nominee(s) and (b) the class and number of shares of the Corporation's equity
securities which are Beneficially Owned and owned of record by such stockholder
on the date of such stockholder notice and the number of shares of the
Corporation's equity securities Beneficially Owned and owned of record by any
Person known by such stockholder to be supporting such nominee(s) on the date of
such stockholder notice. At the request of a majority of the Board of Directors
any person nominated by, or at the direction of, the Board of Directors for
election as a director at an annual meeting shall furnish to the Secretary of
the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. Ballots bearing the names of
all the persons who have been nominated for election as directors at an annual
meeting in accordance with procedures set forth in this Section 2.9 shall be
provided for use at the annual meeting.
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A majority of the Board of Directors may reject any nomination by a
stockholder not timely made in accordance with the requirements of this Section
2.9. The Secretary of the Corporation shall notify a stockholder in writing
whether his nomination has been made in accordance with the time and
informational requirements of this Section 2.9. Notwithstanding the procedure
set forth in this Section 2.9, if a majority of the Board of Directors does not
make a determination as to the validity of any nomination by a stockholder, the
presiding officer of the annual meeting shall determine and declare at the
annual meeting whether a nomination was not made in accordance with the terms of
this Section 2.9. If the presiding officer determines that a nomination was not
made in accordance with the terms of this Section 2.9, he shall so declare at
the annual meeting and the defective nomination shall be disregarded.
For the purposes of this Section 2.9 and Section 2.10, a person shall be
considered the "Beneficial Owner" of any security (whether or not owned of
record):
(a) with respect to which such person or any affiliate or associate (as
those terms are defined under Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, "Affiliate or Associate") of such person directly or
indirectly has or shares (i) voting power, including the power to vote or to
direct the voting of such securities and/or (ii) investment power, including the
power to dispose of or to direct the disposition of such security;
(b) which such person or any Affiliate or Associate of such person has (i)
the right or obligation to acquire (whether such right or obligation is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, and/or (ii) the right to vote pursuant to any agreement, arrangement
or understanding (whether or not in writing and whether or not such right is
exercisable immediately or only after the passage of time); or
(c) which is Beneficially Owned within the meaning of (a) or (b) of this
paragraph by any other person with which such first-mentioned person or any of
its Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing), with respect to (x) acquiring, holding, voting or
disposing of such security or any security convertible into or exchangeable or
exercisable for such security, or (y) acquiring, holding or disposing of all or
substantially all of the assets or businesses of the Corporation or a subsidiary
of the Corporation.
Section 2.10. New Business. The Chairman or such other officer of the
Corporation designated by a majority of the Board of Directors, will call
meetings of the Stockholders to order and will act as presiding officer thereof.
At the annual meeting of stockholders, only such new business shall be
conducted, and only such proposals shall be acted upon, as shall have been
brought before the annual meeting (a) by, or at the direction of, a majority of
the Board of Directors or (b) by any stockholder of the Corporation who meets
the requirements set forth in the first paragraph of Section 2.9 of these Bylaws
(a "Qualifying Stockholder") and who complies with the notice procedures set
forth in this Section 2.10, provided that a majority of the Board of Directors
has not elected to omit such stockholder proposal in accordance with the
provisions of Regulation 14A-8 under the Exchange Act. For the proposal to be
properly brought before an annual meeting by a Qualifying Stockholder, the
Qualifying Stockholder must have given timely
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notice thereof in writing to the Secretary of the Corporation. To be timely, a
Qualifying Stockholder's notice must comply with the notice requirements of
Section 2.9 of these Bylaws. A Qualifying Stockholder's notice to the Secretary
shall set forth as to each matter such stockholder proposes to bring before the
annual meeting (a) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business and any other stockholder who
is the record or Beneficial Owner of any equity security of the Corporation
known by such stockholder to be supporting such proposal, (c) the class and
number of shares of the Corporation's equity securities which are Beneficially
Owned and owned of record by the stockholder giving the notice on the date of
such stockholder notice and by any other record or Beneficial Owners of the
Corporation's equity securities known by such stockholder to be supporting such
proposal on the date of such stockholder notice, and (d) any financial or other
interest of the stockholder in such proposal.
A majority of the Board of Directors may reject (a) any stockholder
proposal not properly made in accordance with the terms of this Section 2.10,
and (b) any stockholder proposal which Regulation 14A-8 of the Exchange Act
permits the Board of Directors to omit. If a majority of the Board of Directors
determines that the information provided in a stockholder's notice does not
satisfy the informational requirements of this Section 2.10 in any material
respect, the Secretary of the Corporation shall promptly notify such stockholder
of the deficiency in the notice. The stockholder shall have an opportunity to
cure the deficiency by providing additional information to the Secretary within
such period of time, not to exceed five (5) days from the date such deficiency
notice is given to the stockholder, as a majority of the Board of Directors
shall reasonably determine. If the deficiency is not cured within such period,
or if a majority of the Board of Directors determines that the additional
information provided by the stockholder, together with information previously
provided, does not satisfy the requirements of this Section 2.10 in any material
respect, then a majority of the Board of Directors may reject such stockholder's
proposal. A majority of the Board of directors may also reject any stockholder
proposal which is described in Rule 14A-8 under the Exchange Act. The Secretary
of the Corporation shall notify a stockholder in writing whether his or her
proposal has been included or rejected. Notwithstanding the procedures set forth
in this paragraph, if a majority of the Board of Directors does not make a
determination as to the validity of any stockholder proposal, the presiding
officer of the annual meeting shall determine and declare at the annual meeting
whether the stockholder proposal was made in accordance with the terms of this
Section 2.10, and is a proper subject for a stockholder proposal. If the
presiding officer determines that a stockholder proposal was not made in
accordance with the terms of this Section 2.10, or that a stockholder proposal
should be omitted pursuant to Regulation 14A-8, he or she shall so declare at
the annual meeting and any such proposal shall not be acted upon at the annual
meeting.
Section 2.11. Action by Stockholders Without a Meeting. Action by written
consent may be taken only as set forth in the Corporation's Certificate of
Incorporation.
Section 2.12. Proxy Representation. Every stockholder may authorize
another person or persons to act for such stockholder by proxy in all matters in
which a stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder
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or by such person's attorney-in-fact. No proxy shall be voted or acted upon
after three years from its date unless such proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and, if, and only as long as, it is coupled with an interest sufficient in law
to support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or an interest in the Corporation generally.
SECTION III
Board of Directors
Section 3.1. Number and Qualifications. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. A director need not be a stockholder, a citizen of the United States
or a resident of the State of Delaware. Except as set forth in the Certificate
of Incorporation, and subject to the rights, if any, of any series of Preferred
Stock to elect additional directors under circumstances specified in a Preferred
Stock Designation, the number of directors constituting the Board shall be
determined by a resolution adopted by the majority of the Board of Directors;
provided, however, that in no event shall the number of directors (a) be less
than two (2) prior to the Initial Period, and (b) be less than three (3) after
the conclusion of the Initial Period.
Section 3.2. Term. Except as set forth in the Certificate of
Incorporation, each director shall serve until such director's successor is
elected and qualified or until such director's earlier resignation, retirement,
disqualification, removal from office or death.
Section 3.3. Removal. Subject to the rights, if any, of the holders of any
series of Preferred Stock to elect additional directors under circumstances
specified in a Preferred Stock Designation, and except for the removal
provisions set forth in the Certificate of Incorporation with respect to the
removal of the Initial Directors, which removal provisions expire on the third
anniversary of the Closing Date (as defined in the Certificate of
Incorporation), the entire Board of Directors, a class of the Board, and/or any
individual director may be removed from office only with cause by the
affirmative vote of the holders of three-quarters (3/4) of the outstanding
shares of capital stock of the Corporation then entitled to vote at an election
of directors.
Section 3.4. Vacancies. Subject to the rights, if any, of the holders of
any series of Preferred Stock to elect additional directors under circumstances
specified in Preferred Stock Designation, and except as set forth in the
Certificate of Incorporation, a vacancy on the Board of Directors, however
occurring, whether by increase in the number of directors, death, resignation,
retirement, disqualification, removal from office or otherwise, may be filled,
until the next election of directors by the stockholders by the affirmative vote
of a majority of the total number of directors then remaining in office, though
they may constitute less than a quorum of the Board of Directors, or by a sole
remaining director.
Section 3.5. Resignation. A director may resign at any time by giving
written notice to the Chairman of the Board, to the Chief Executive Officer, or
to the Secretary. Unless otherwise
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stated in such notice of resignation, the acceptance thereof shall not be
necessary to make it effective; and such resignation shall take effect at the
time specified therein or, in the absence of such specification, it shall take
effect upon the receipt thereof.
Section 3.6. Regular Meetings. Except as set forth in the Certificate of
Incorporation, regular meetings of the Board of Directors may be held without
further notice at such time as shall from time to time be determined by the
Board of Directors. A meeting of the Board of Directors for the election of
officers and the transaction of such other business as may come before it may be
held without notice immediately following the annual meeting of stockholders.
Section 3.7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the Chief Executive Officer, or at
the request in writing of majority of the members of the Board of Directors then
in office.
Section 3.8. Notice of Special Meetings. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his or her designated address at least six (6) days before the meeting; or
sent by overnight courier to each director at his or her designated address at
least two (2) days before the meeting (with delivery scheduled to occur no later
than the day before the meeting); or given orally by telephone or other means,
or by telegraph or telecopy, or by any other means comparable to any of the
foregoing, to each director at his designated address at least twenty-four (24)
hours before the meeting; provided, however, that if less than five (5) days'
notice is provided and one-third of the members of the Board of Directors then
in office object in writing prior to or at the commencement of the meeting, such
meeting shall be postponed until five (5) days after such notice was given
pursuant to this sentence (or such shorter period to which a majority of those
who objected in writing agree), provided that notice of such postponed meeting
shall be given in accordance with this Section 3.8. The notice of the special
meeting shall state the general purpose of the meeting, but other routine
business may be conducted at the special meeting without such matter being
stated in the notice.
Section 3.9. Place of Meetings. The Board of Directors may hold their
meetings and have an office or offices inside or outside of the State of
Delaware.
Section 3.10. Telephone Meeting and Participation. Any or all of the
directors may participate in a meeting of the Board of Directors or any
committee thereof by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at the meeting.
Section 3.11. Action by Directors Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or of such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
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Section 3.12. Quorum and Adjournment. A majority of the directors then
holding office shall constitute a quorum. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Whether or not a quorum is present to conduct a meeting,
any meeting of the Board of Directors (including an adjourned meeting) may be
adjourned by a majority of the directors present, to reconvene at a specific
time and place. It shall not be necessary to give to the directors present at
the adjourned meeting notice of the reconvened meeting or of the business to be
transacted, other than by announcement at the meeting that was adjourned;
provided, however, notice of such reconvened meeting, stating the date, time and
place of the reconvened meeting, shall be given to the directors not present at
the adjourned meeting in accordance with the requirements of Section 3.5 hereof.
Section 3.13. Organization. The Chairman of the Board, or in the absence
of the Chairman of the Board, the Vice Chairman of the Board, shall preside at
meetings of the Board of Directors; provided that if the Vice Chairman of the
Board is also absent, a member of the Board of Directors selected by the members
present shall preside at such meetings. The Secretary of the Corporation shall
act as secretary, but in the absence of the Secretary, the presiding officer may
appoint a secretary.
Section 3.14. Compensation of Directors. Directors shall receive such
compensation for their services as the Board of Directors may determine. Any
director may serve the Corporation in any other capacity and receive
compensation therefor.
Section 3.15. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors when a vote on any matter is
taken is deemed to have assented to the action taken unless he or she votes
against or abstains from the action taken, or unless at the beginning of the
meeting or promptly upon arrival the director objects to the holding of the
meeting or transacting specified business at the meeting. Any such dissenting
votes, abstentions or objections shall be entered in the minutes of the meeting.
Section 3.16. Chairman of the Board of Directors and Vice Chairman of the
Board of Directors. The Chairman of the Board of Directors shall preside at all
meetings of the Board of Directors and the stockholders. The Chairman of the
Board of Directors, shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time prescribe.
In the absence of the Chairman of the Board of Directors, the Vice Chairman of
the Board of Directors shall perform the duties and exercise the powers of the
Chairman of the Board of Directors. Neither the Chairman of the Board of
Directors nor the Vice Chairman of the Board of Directors shall, solely by
virtue of holding such titles, be officers of the Company. The Chairman of the
Board of Directors and Vice Chairman of the Board of Directors shall be
appointed by the Board of Directors and serve at the pleasure of the Board of
Directors.
SECTION IV
Committees
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Section 4.1. Committees. The Board of Directors may, by resolutions passed
by a majority of the members of the Board of Directors, designate members of the
Board of Directors to constitute committees which shall in each case consist of
such number of directors, and shall have and may execute such powers as may be
determined and specified in the respective resolutions appointing them. Any such
committee may fix its rules of procedure, determine its manner of acting and the
time and place, whether within or without the State of Delaware, of its meetings
and specify what notice thereof, if any, shall be given, unless the Board of
Directors shall otherwise by resolution provide. Unless otherwise provided by
the Board of Directors or such committee, the quorum, voting and other
procedures shall be the same as those applicable to actions taken by the Board
of Directors. A majority of the members of the Board of Directors then in office
shall have the power to change the membership of any such committee at any time
to fill vacancies therein and to discharge any such committee or to remove any
member thereof, either with or without cause. Notwithstanding the foregoing, (a)
the Board of Directors shall not create an executive committee during the
Initial Period, and (b) during the Initial Period, any committee of the Board of
Directors shall have at least one Class A director as a member.
SECTION V
Officers
Section 5.1. Designation. The officers of the Corporation shall be a Chief
Executive Officer, a President, a Treasurer and a Secretary, and the Board of
Directors may elect or appoint, or provide for the appointment of, one or more
Assistant Secretaries and Assistant Treasurers. The Board of Directors may elect
or appoint, or provide for the appointment of, such other officers, including
one or more Vice Presidents in such gradation as the Board of Directors may
determine, or agents as may from time to time appear necessary or advisable in
the conduct of the business and affairs of the Corporation. Any number of
offices may be held by the same person.
Section 5.2. Election Term. At its first meeting after each annual meeting
of stockholders, the Board of Directors shall elect the officers or provide for
the appointment thereof. Subject to Sections 5.3 and 5.4 hereof, the term of
each officer elected by the Board of Directors shall be until the first meeting
of the Board of Directors following the next annual meeting of stockholders and
until such officer's successor is chosen and qualified.
Section 5.3. Resignation. Any officer may resign at any time by giving
written notice to the Chief Executive Officer or the Secretary. Unless otherwise
stated in such notice of resignation, the acceptance thereof shall not be
necessary to make it effective; and such resignation shall take effect at the
time specified therein or, in the absence of such specification, it shall take
effect upon the receipt thereof.
Section 5.4. Removal. Any officer may be removed at any time with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors then in office. Any officer appointed by another officer may be
removed with or without cause by such officer or the Chief Executive Officer.
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Section 5.5. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors or, in the case of
offices held by officers who may be appointed by other officers, by any officer
authorized to appoint such officer.
Section 5.6. Chief Executive Officer. The Chief Executive Officer shall be
the chief executive officer of the Corporation and, subject to the control of
the Board of Directors, shall in general supervise and control all of the
business and affairs of the Corporation. The Chief Executive Officer shall have
authority, subject to such rules as may be prescribed by the Board of Directors,
to appoint agents and employees of the Corporation as such Chief Executive
Officer shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents and employees shall
hold office at the discretion of the Chief Executive Officer. Such Chief
Executive Officer shall have authority to sign, execute and acknowledge, on
behalf of the Corporation, all deeds, mortgages, bonds, stock certificates,
contracts, leases, reports and all other documents or instruments necessary or
proper to be executed in the course of the Corporation's regular business or
which shall be authorized by resolution of the Board of Directors; and except as
otherwise provided by law or the Board of Directors, the Chief Executive Officer
may authorize the President or any Vice President or other officer or agent of
the Corporation to sign, execute and acknowledge such documents or instruments
in such Chief Executive Officer's place and stead. In general the Chief
Executive Officer shall perform all duties incident to the office of chief
executive officer and such other duties as may be prescribed by the Board of
Directors from time to time.
Section 5.7. President. The President shall be the chief operating officer
of the Corporation and shall be responsible for supervising and directing the
operation of the Corporation's business, subject to the direction of the Chief
Executive Officer and the Board of Directors. The President shall have such
other duties and powers as may be assigned to or vested in him from time to time
by the Board of Directors or Chief Executive Officer. In the absence of the
Chief Executive Officer or such Chief Executive Officer's inability to act, the
President shall perform the duties and exercise the authority of the Chief
Executive Officer.
Section 5.8. Vice President. Each Vice President shall have such powers
and perform such duties as may be provided for herein and as may be assigned by
the Chief Executive Officer, the President or the Board of Directors.
Section 5.9. Treasurer. The Treasurer shall have charge of all funds of
the Corporation and shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors.
Section 5.10. Secretary. The Secretary shall keep the minutes, and give
notices, of all meetings of stockholders and directors and of such committees as
directed by the Board of Directors. The Secretary shall have charge of such
books and papers as the Board of Directors may require. The Secretary or any
Assistant Secretary is authorized to certify copies of extracts from minutes and
of documents in the Secretary's charge and anyone may rely on such certified
copies to the same effect as if such copies were originals and may rely upon any
statement of fact concerning the Corporation certified by the Secretary or any
Assistant Secretary. The Secretary
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shall perform all acts incident to the office of Secretary, subject to the
control of the Board of Directors.
Section 5.11. Assistant Secretaries and Assistant Treasurers. Assistant
Secretaries and Assistant Treasurers shall have such powers and perform such
duties as usually pertain to their respective offices and as may be assigned by
the Board of Directors or an officer designated by the Board of Directors.
Section 5.12. Compensation of Officers. The officers of the Corporation
shall receive such compensation for their services as the Board of Directors may
determine. The Board of Directors may delegate its authority to determine
compensation to designated officers of the Corporation.
Section 5.13. Execution of Instruments. Checks, notes, drafts, other
commercial instruments, assignments, guarantees of signatures and contracts
(except as otherwise provided herein or by law) shall be executed by the Chief
Executive Officer, the President, any Vice President or such officers or
employees or agents as the Board of Directors or any of such designated officers
may direct.
Section 5.14. Mechanical Endorsements. The Chief Executive Officer, the
President, any Vice President or the Secretary may authorize any endorsement on
behalf of the Corporation to be made by such mechanical means or stamps as any
of such officers may deem appropriate.
SECTION VI
Miscellaneous
Section 6.1. Seal. The Corporation may have a suitable seal, containing
the name of the Corporation. The Secretary shall be in charge of the seal and
may authorize one or more duplicate seals to be kept and used by any other
officer or person.
Section 6.2. Waiver of Notice. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 6.3. Voting of Stock Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chief Executive Officer, the President, any
Vice President or such officers or employees or agents as the Board of Directors
or any of such designated officers may direct. Any such officer may, in the name
of and on behalf of the Corporation, take all such action as any such officer
may deem advisable to vote in person or by proxy at any meeting of security
holders of any corporation in
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which the Corporation may own securities and at any such meeting shall possess
and may exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof the Corporation might have exercised
and possessed if present. The Board of Directors may from time to time confer
like powers upon any other person or persons.
Section 6.4. Fiscal Year. The fiscal year of the Corporation shall be
fixed, and shall be subject to change, by the Board of Directors.
Section 6.5. Time Periods. In applying any provision of these Bylaws that
requires that an act be done or not be done a specified number of days prior to
an event or that an act be done during a period of a specified number of days
prior to an event, calendar days will be used unless otherwise specified, the
day of doing of the act will be excluded, and the day of the event will be
included.
Section 6.6. Certain Defined Terms. Terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Certificate of
Incorporation.
SECTION VII
Amendment of Bylaws
The Board of Directors, by the affirmative vote of a majority of the whole
Board of Directors, shall have power to amend, alter, change, adopt or repeal
the Bylaws of the Corporation at any regular or special meeting. The
stockholders entitled to vote also shall have the power to amend, alter, change,
adopt or repeal the Bylaws of the Corporation at any annual or special meeting
subject to the requirements of the Certificate of Incorporation; provided that
during the Initial Period, any amendment of these Bylaws shall require the
affirmative votes of the holders of a majority of the Class A Common Stock and
the holders of a majority of the Class B Common Stock, voting as separate
classes.
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Exhibit 3.5
BY LAWS
OF
CONSUMERS U.S., INC.
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
1. ISSUANCE OF STOCK. Issuance of stock after the initial
capitalization will require the unanimous vote of all of the members of the
Board of Directors. Any vacancy on the Board of Directors must be filled prior
to the issuance of stock.
2. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in
the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President, or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
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The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
3. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
4. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
5. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his
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attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar, if
any, and, in the case of shares represented by certificates, on surrender of the
certificate or certificates for such shares of stock properly endorsed and the
payment of all taxes due thereon.
6. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the
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resolution taking such prior action. In order that the corporation may determine
the stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to exercise
any rights in respect of any change, conversion, or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
7. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share of
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
8. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization of
the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting. A special
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meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or
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convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, CEO, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present, the Chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
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- INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holders thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
9. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the
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holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Action taken pursuant to this paragraph shall be subject to the provisions of
Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITIONS. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of three (3) persons. Thereafter the
number of directors constituting the whole board shall be at least three (3).
Subject to the foregoing limitation and except for the first Board of Directors,
such number may be fixed from time to time by action of the stockholders or of
the directors. The number of directors may be increased or decreased by action
of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of
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stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling of
any vacancy in that connection, newly created directorships and any vacancies in
the Board of Directors, including unfilled vacancies resulting from the removal
of directors for cause or without cause, may be filled by the vote of a majority
of the remaining directors then in office, although less than a quorum, or by
the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, of the President, CEO, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need by specified in any
written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein
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otherwise provided, and except as otherwise provided by the General Corporation
Law, the vote of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board. The quorum and voting
provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law or these Bylaws which govern a meeting
of directors held to fill vacancies and newly created directorships in the Board
or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any, and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, CEO, if
present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
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7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a Chairman of the
Board, a Secretary, a Treasurer, and, if deemed necessary, expedient, or
desirable by the Board of Directors, a President, a Chief Executive Officer, a
Vice-Chairman of the Board, an Executive Vice-President, one or more other
Vice-Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers with such titles as the resolution of the
Board of Directors choosing them shall designate. Except as may otherwise be
provided in the resolution of the Board of Directors choosing him, no officer
other than the Chairman or Vice-Chairman of the Board, if any, need be a
director. Any number of offices may be held by the same person, as the directors
may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the Corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and choosing
such officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to him. Any officer may be removed,
with or without cause, by the Board of Directors. Any vacancy in any office may
be filled by the Board of Directors.
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ARTICLE IV
CORPORATE SEAL
The corporation seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the Certificate of Incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the Bylaws of "CONSUMERS U.S., INC.", a Delaware corporation, as in effect on
the date hereof.
Dated: January , 1997
/s/ C. Kent May
-------------------------------
C. Kent May, Secretary
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Exhibit 3.6
CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF THE
SERIES A 10% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
ANCHOR GLASS ACQUISITION CORPORATION
---------------------------------------------
Anchor Glass Acquisition Corporation, a corporation organized and
existing by virtue of the laws of the State of Delaware (the "Corporation"),
does hereby certify that the following resolutions were duly adopted by the
Board of Directors of the Corporation (the "Board of Directors") by Unanimous
Written Consent dated February 5, 1997:
RESOLVED THAT, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors hereby
creates, from the shares of Preferred Stock (the "Preferred Stock") of the
Corporation authorized to be issued pursuant to the Certificate of
Incorporation, a series of the Preferred Stock designated the Series A 10%
Cumulative Convertible Preferred Stock, and hereby fixes the voting powers,
designations, preferences and relative participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such series as follows:
1. Designation. Two Million Two Hundred Thirty-Nine Thousand Three
Hundred Twenty (2,239,320) shares of the Preferred Stock are hereby designated
Series A 10% Cumulative Convertible Preferred Stock with a par value of one cent
($0.01) per share (the "Series A 10% Preferred Stock"), which number, subject to
the provisions of Section 6(c) hereof, may be increased or decreased (but not
below the number thereof then outstanding) from time to time by the Board of
Directors.
2. Rank. The Series A 10% Preferred Stock shall rank senior to the
Corporation's Common Stock, par value $0.10 per share ("Common Stock") which may
be in two or more classes, and to all other classes and series of Preferred
Stock, including but not limited to, the Series B 8% Cumulative Convertible
Preferred Stock of the Corporation.
3. Dividends.
<PAGE> 2
(a) The holders of outstanding shares of Series A 10% Preferred
Stock shall be entitled to receive, when and as declared out of funds legally
available for the payment of cumulative cash dividends by the Board of
Directors, cash dividends on each share of outstanding Series A 10% Preferred
Stock (referred to herein individually as a "Share" and collectively as
"Shares") at a rate per annum of $2.50 per Share, from and including January 31,
1997 to and including the date on which the "Redemption Price" (as hereinafter
defined) of such Share is paid.
Such dividends, to the extent declared by the Board of Directors,
will be payable quarterly in arrears on each March 31, June 30, September 30 and
December 31 in each year, or, if any such date is not a business day, on the
next succeeding business day (hereinafter referred to individually as a
"Dividend Payment Date" and collectively as "Dividend Payment Dates"), to the
holders of Shares of record on the respective record dates fixed for that
purpose by the Board of Directors or a committee thereof in advance of the
payment of such dividends. To the extent that dividends are not paid on a
particular Dividend Payment Date, all such dividends will accrue on a quarterly
basis and will be paid on or before the Redemption Date on all Shares. Dividends
payable on Shares for any period of less than a full calendar quarter will be
computed on the basis of a 365 or 366 (as applicable) day year and the actual
days elapsed from the immediately preceding Dividend Payment Date, or from
February 5, 1997 with respect to the calendar quarter ending March 31, 1997.
Dividends paid on Shares in an amount less than the total amount of such
dividends at the time accrued and payable shall be allocated pro rata among all
Shares.
(b) Except as provided in the immediately succeeding sentence, so
long as any Shares are outstanding, the Corporation will not declare or pay or
set apart for payment any dividends or make any other distribution on any class
of stock of the Corporation ranking junior to the Series A 10% Preferred Stock
(including the Series B 8% Cumulative Convertible Preferred Stock and all
classes of Common Stock) either as to dividends or upon liquidation
(collectively, "Junior Securities") and will not redeem, purchase or otherwise
acquire for value, or set apart money or property for any sinking or other
analogous fund for the redemption or purchase of any shares of any Junior
Securities (in any such case, a "Junior Payment"), other than (i) cash dividends
on the Series B 8% Cumulative Convertible Preferred Stock of the Corporation;
provided, however that any such cash dividends may be paid only if all
cumulative dividends on the Series A 10% Preferred Stock for all Dividend
Payment Dates prior to or concurrent with the payment of such cash dividend have
been paid, (ii) "Stock Dividends" as defined in, and pursuant to, Section 3(a)
of the Certificate of Designations for the Series B 8% Cumulative Convertible
Preferred Stock of the Corporation and (iii) cash dividends on the Common Stock
in an amount not to exceed, for any fiscal year, the lesser of (x) 50% of the
consolidated net income of the Corporation and its subsidiaries available to be
paid to the holders of the Common Stock (after payment of all cumulative cash
dividends on all series of Preferred Stock) as determined in accordance with
generally accepted accounting principles in the United States as in effect from
time to time and (y) Ten Million Dollars ($10,000,000); provided that any such
cash dividends may be paid only if all cumulative dividends on the Series A 10%
Preferred Stock for all Dividend Payment Dates prior to or concurrent with the
payment of such cash dividends have been paid. In the event that the
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Corporation pays any dividend on Junior Securities, other than a dividend
permitted by the immediately preceding sentence (an "Other Dividend"),
concurrently with the payment of such Other Dividend the Corporation will pay a
special dividend on the Shares such that the holders of Shares will receive the
same cash or property paid in connection with such Other Dividend that they
would have received had all Shares been converted into shares of Common Stock
immediately prior to the record date for such Other Dividend.
4. Liquidation.
(a) In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the holders of
Shares, after the payment or provision for payment of the debts and liabilities
of the Corporation and before any payment or distribution of the assets of the
Corporation (whether capital, surplus or earnings) or proceeds therefrom shall
be made to or set apart for the holders of shares of any Junior Securities, the
holders of Shares shall be entitled to receive a cash payment of Twenty Five
Dollars ($25.00) per Share (the "Liquidation Value") held by them, plus an
amount equal to all dividends accrued and unpaid on such Shares to the date of
such payment.
(b) If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
10% Series A Preferred Stock are insufficient to permit payment to such holders
of the aggregate amount which they are entitled to be paid, then the entire
assets to be distributed will be distributed ratably among such holders based
upon the aggregate Liquidation Value of the Series A 10% Preferred Stock held by
each such holder. Neither the consolidation, combination or merger of the
Corporation into or with any other corporation or corporations or other entity
or entities, nor the sale or transfer by the Corporation of all or substantially
all of its assets, nor the reduction of the capital stock of the Corporation,
will be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Section 4.
5. Redemption.
(a) Mandatory Redemption. The Corporation shall redeem all Shares
not later than January 31, 2009 (the "Mandatory Redemption Date") at the
Redemption Price; provided, however, that if there are insufficient funds
legally available for redemption in full of all Shares pursuant to this Section
5(a), the Corporation shall redeem in full such lesser number of Shares as may
lawfully be redeemed from funds legally available therefor, and shall redeem all
or part of the remainder of the Shares as soon as the Corporation has sufficient
funds which are legally available therefor until all Shares have been redeemed.
(b) Optional Redemption. At any time and from time to time after
February 5, 2000, and before the Mandatory Redemption Date, provided that the
"Trading Price" (as defined below) of the Common Stock is greater than Six
Dollars ($6.00) per share, the Corporation shall have the right to redeem all or
any part of the Shares at the Redemption Price, by giving written notice thereof
to the affected stockholder or stockholders (the "Redemption Notice"); provided,
however, that less than all of the Shares may be redeemed
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only after all accrued and unpaid and current dividends with respect to the
Series A 10% Preferred Stock have either been paid or set aside for payment. The
Redemption Notice shall specify the redemption date which shall be not less than
thirty (30) days after the date of the Redemption Notice and the number of
Shares to be redeemed. If fewer than all of the Shares are to be redeemed, the
Shares to be redeemed shall be selected by whichever of the following methods
the Board of Directors shall choose: by lot or pro rata in such manner as may be
prescribed by resolution of the Board of Directors. For purposes of this Section
5, Section 7(e), Section 8(a), and paragraphs (i), (ii) and (v) of Section 8(b)
hereof, "Trading Price" means, as to any security, (i) such security's closing
sales price on the principal nationally recognized domestic securities exchange
(including the NASDAQ Stock Market - National Market tier) on which such
security may, at the time, be listed or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all exchanges on which such security may, at the time, be listed, at the end of
such day, or (ii) if on any day such security is not so listed, the average of
the representative bid and asked prices quoted in the NASDAQ Inter-Dealer
Quotation System (the "NASDAQ System") as of the close of trading in New York,
New York on such day, or (iii) if on any day such security is not quoted in the
NASDAQ System, the average of the high and low bid and asked prices on such day
in the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in the case of a
determination of Trading Price for purposes of this Section 5 averaged over a
period of sixty (60) consecutive "Trading Days" (as hereinafter defined) ending
on the Trading Day immediately preceding the date as of which the Trading Price
is being determined, and in the case of a determination of Trading Price for
purposes of Section 7(e), Section 8(a) and/or paragraph (i), (ii) or (v) of
Section 8(b) hereof as reported on the date of the applicable issuance or sale
or deemed issuance or sale, as the case may be, provided that if such date is
not a Trading Day as reported on the Trading Day immediately preceding such
date. As used herein, the term "Trading Day" shall mean any day on which trading
takes place on the applicable securities exchange or the NASDAQ System on which
the Common Stock is listed or traded, as the case may be.
(c) Redemption Price. The redemption price for Shares (the
"Redemption Price") shall be Twenty Five Dollars ($25.00) per Share, plus an
amount equal to all accrued and unpaid dividends to the date of redemption (the
"Redemption Date"); provided, however, that the Redemption Price for all Shares
that have not been redeemed (or called for redemption with the funds for
redemption set aside in accordance with Section 5(d) hereof) on or before the
Mandatory Redemption Date shall bear interest at the rate of ten percent (10%)
per annum from and after the Mandatory Redemption Date until such Shares have
been redeemed and the Redemption Price, including accrued interest as aforesaid,
for such Shares has been paid in full.
(d) Redemption Procedure. Not more than sixty (60) and not less
than thirty (30) days prior to the Redemption Date, the Redemption Notice shall
be mailed to the holders of record of the Series A 10% Preferred Stock to be
redeemed, such notice to be addressed to each such holder at his last known post
office address shown on the records of the Corporation, and the time of mailing
such notice shall be deemed to be the time of the giving
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thereof. In addition, notice of any redemption of Shares shall be published in
The New York Times or The Wall Street Journal not less than thirty (30) and not
more than sixty (60) days prior to the record date for such event (or, if there
is no record date, the date of such event). On or after the Redemption Date,
each holder of Series A 10% Preferred Stock called for redemption shall
surrender his certificate(s) for such stock to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive payment of
the Redemption Price. Unless default is made in the payment of the Redemption
Price, all rights of the holders of such Shares as stockholders of the
Corporation by reason of the ownership of the respective Shares shall cease at
the close of business on the Redemption Date, except the right to receive
payment in full of the Redemption Price of such Shares on presentation and
surrender of the certificate or certificates for such Shares, and after the
Redemption Date such Shares shall not be deemed to be outstanding. In case less
than all the Shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed Shares without cost to
the holder thereof. If the Redemption Notice shall have been given as aforesaid,
and if on or before the Redemption Date funds necessary for the redemption shall
have been set aside so as to be and continue to be available therefor, then,
notwithstanding the certificates representing any Shares so called for
redemption shall not have been surrendered, the dividends thereon shall cease to
accrue after the Redemption Date, and all rights with respect to the Shares so
called for redemption shall forthwith after such Redemption Date cease, except
only the right of the holders to receive the Redemption Price without interest.
At its option, the Corporation may, on or prior to the Redemption
Date, deposit an amount equal to the aggregate Redemption Price of the Shares to
be redeemed with a bank or trust company having an office or agency in New York
City and having a combined capital and surplus of at least $100,000,000 (the
"Depositary") designated by the Board of Directors, to be held in trust by the
Depositary, for the sole benefit of the holders of the Series A 10% Preferred
Stock, for payment to the holders of such Shares then to be redeemed. If such
deposit is made and the funds so deposited are made immediately available to the
holders of the Shares to be redeemed, the Corporation shall thereupon be
released and discharged (subject to the provisions of the next paragraph of this
Section 5) from its obligation to make payment of the Redemption Price of the
Shares to be redeemed, and the holders of such Shares shall look only to the
Depositary for such payment. Any funds deposited with the Depositary as
aforesaid and which shall not be required for such redemption because of the
exercise of any right of conversion subsequent to the date of such deposit shall
be returned to the Corporation forthwith.
Any funds deposited with the Depositary as aforesaid with respect
to payment of the Redemption Price of Shares remaining unclaimed at the end of
five (5) years from and after the Redemption Date in respect of which such funds
were deposited, shall be returned to the Corporation forthwith; and thereafter
the holders of Shares redeemed on such Redemption Date shall look only to the
Corporation for the payment of the Redemption Price thereof. Any interest
accrued on any funds deposited with the Depositary shall belong to the
Corporation and shall be paid to it by the Depositary from time to time on
demand.
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On or after the Redemption Date, the holders of Shares which have
been redeemed shall surrender their certificates representing such Shares to the
Corporation at its principal place of business or as otherwise notified, and
thereupon the Redemption Price of such Shares shall be paid to the order of the
holder of record of the Shares represented by such certificate or certificates
and each surrendered certificate shall be cancelled, and such Shares shall be
retired and shall not be reissued.
6. Voting.
(a) No Voting Rights. Except as otherwise provided by the Delaware
General Corporation Law and in this Section 6, the holders of Series A 10%
Preferred Stock shall have no voting rights whatsoever.
(b) Default in Payment of Dividends. Whenever dividends payable on
Shares are in arrears and unpaid in an aggregate amount equal to or exceeding
the aggregate amount of dividends payable thereon for twelve (12) quarterly
dividend payments, the number of directors then constituting the Board of
Directors of the Corporation shall thereupon automatically be increased by
three, and the holders of the Series A 10% Preferred Stock shall have the
exclusive and special right, voting separately as a class to elect three
directors ("Series A Preferred Stock Directors") to fill such newly created
directorships by the vote of the holders of record of a majority of the Shares.
Whenever the right of the holders of Series A 10% Preferred Stock to
elect Series A Preferred Stock Directors shall have vested, such right may be
exercised initially either at a special meeting of such holders of Series A 10%
Preferred Stock called as provided in the following paragraph, or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders. The
right of the holders of Series A 10% Preferred Stock voting separately as a
class to elect Series A Preferred Stock Directors as aforesaid, when vested,
shall continue until such time as all dividends in arrears on the Shares shall
have been paid in full and, when so paid, the right of the holders of Series A
10% Preferred Stock to elect Series A Preferred Stock Directors as aforesaid
shall cease, subject always to revesting in the event of each and every
subsequent failure to pay in full the aggregate amount specified in the
preceding paragraph.
At any time when such special voting power shall have vested in the
holders of Series A 10% Preferred Stock as provided in the preceding paragraph,
a proper officer of the Corporation, shall upon the written request of the
holders of record of at least twenty-five percent (25%) of the Shares, call a
special meeting of the holders of record of the Series A 10% Preferred Stock,
such special meeting to be held within forty-five (45) calendar days after the
date on which such request is received by the Corporation, for the purpose of
enabling such holders to elect the number of directors specified above;
provided, however, that such special meeting need not be called if an annual
meeting of stockholders of the Corporation for the election of directors shall
be scheduled to be held within such forty-five (45) calendar days; and provided,
further, that in lieu of any such special meeting, the election of the directors
to
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be elected thereat may be effected by the written consent of the holders of
record of a majority of the Shares.
Any director elected by the holders of record of the Series A 10%
Preferred Stock shall continue to serve as such director until (i) removed by
the vote of the holders of record of a majority of the Series A 10% Preferred
Stock then outstanding, voting separately as a class; (ii) the next annual
meeting of the stockholders of the Corporation and until his or her successor is
duly elected and qualified by the holders of Series A 10% Preferred Stock; or
(iii) the right of holders of the Series A 10% Preferred Stock, voting as a
separate class, to elect directors as provided in this Section 6(b) shall have
terminated, whichever first occurs.
If, prior to the end of the term of any director elected as aforesaid
by the holders of record of the Series A 10% Preferred Stock, a vacancy in the
office of such director shall occur by reason of death, resignation, removal or
disability, or for any other cause, such vacancy shall be filled for the
unexpired term by vote or written consent of the holders of record of a majority
of the outstanding Series A 10% Preferred Stock then outstanding, voting or
acting separately as a class.
(c) Changes Affecting the Series A 10% Preferred Stock. Without the
written consent of the holders of a majority of the outstanding Series A 10%
Preferred Stock (considered as a single class) or the favorable vote of the
holders of a majority of the outstanding Series A 10% Preferred Stock (voting as
a single class) which are represented at a meeting of the holders of Series A
10% Preferred Stock called for such purpose, the Corporation will not (i)
create, authorize or issue any other class or series of stock (or any security
convertible into or exchangeable for such stock) which is on a parity with or
entitled to a preference prior to Series A 10% Preferred Stock upon any dividend
or distribution or any liquidation, distribution of assets, dissolution or
winding up of the Corporation, or increase the authorized amount of any such
other class or series, (ii) increase or decrease the authorized number of shares
of Series A 10% Preferred Stock, except that the Corporation may authorize and
issue additional shares of Series A 10% Preferred Stock pursuant to the Plan
Termination Agreement dated February 3, 1997 by and between Consumers Packaging
Inc., the Corporation and the Pension Benefit Guaranty Corporation (the "PBGC
Agreement"), (iii) increase or decrease the Liquidation Value or the par value
of the Series A 10% Preferred Stock or (iv) amend, alter or repeal any provision
of the Certificate of Incorporation so as to adversely affect the relative
rights and preferences of the Series A 10% Preferred Stock in any respect. For
the purpose of any consent or vote pursuant to this Section 6(c), each Share
shall have one vote.
(d) The Corporation shall not sell, lease, convey or exchange all
or substantially all of the assets, property or business of the Corporation, or
merge or consolidate with or into any other corporation or otherwise
recapitalize or reorganize itself (such transactions being hereinafter in this
proviso referred to as a "Reorganization") unless (i) the resulting, surviving
or acquiring corporation will have after such Reorganization no stock either
authorized or outstanding ranking prior to, or on a parity with, the Series A
10% Preferred Stock or the stock of the resulting, surviving or acquiring
corporation issued in
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exchange therefor; (ii) each holder of shares of Series A 10% Preferred Stock
immediately preceding such Reorganization will receive in exchange therefor the
same number of shares of stock, with substantially the same preferences, rights
and powers, of the resulting, surviving, or acquiring corporation or the
Corporation is the surviving corporation and the Series A 10% Preferred Stock
remains outstanding without change to its preferences, rights and powers and
(iii) notice of such transaction has been provided to all holders of shares
pursuant to the procedures set forth in Section 7(b) hereof.
7. Conversion.
(a) Conversion Rights. Each holder of the Series A 10% Preferred
Stock will have the right to convert at any time and from time to time at least
ten percent (10%) or Two Thousand (2,000), whichever is less, of such holder's
Shares into Class A Common Stock at an exercise price of Six Dollars ($6.00) per
share of Class A Common Stock, subject to adjustment in accordance with the
provisions of Section 8 hereof (the "Exercise Price"); provided that the right
to convert any Shares called for redemption shall terminate at the close of
business on the third business day prior to the date fixed for such redemption
unless default shall be made in the payment of the Redemption Price, and upon
any liquidation, dissolution or winding-up of the affairs of the Corporation
such right of conversion shall terminate at the close of business on the third
business day prior to the date fixed for payment of distributable amounts on the
Series A 10% Preferred Stock. Each Share held by each holder will, without
payment of any additional consideration by such holder, be converted into that
number of shares of Class A Common Stock determined by dividing Twenty Five
Dollars ($25.00) by the Exercise Price then in effect ("Conversion Ratio"), with
the total number of shares of Class A Common Stock to be issued to such holder
upon such conversion being rounded to the nearest whole share. Any Shares which
are not converted to Class A Common Stock will remain outstanding until
converted by the holders or redeemed by the Corporation.
(b) Conversion Procedures. Each holder of Series A 10% Preferred
Stock desiring to exercise his right of conversion shall deliver to the
Corporation written notice of his election to convert, and shall surrender to
the Corporation the certificates for the Shares to be converted (properly
endorsed or assigned for transfer if the Board of Directors of the Corporation
shall so require). Upon receipt by the Corporation of any such notice of
election to convert Series A 10% Preferred Stock and upon surrender of the
certificates therefor, the Corporation shall, as soon as practicable, and in any
event within ten (10) business days after the surrender of such certificate(s)
and the receipt of such notice relating thereto, execute and deliver to the
converting holder of Series A 10% Preferred Stock certificates for the number of
full shares of Class A Common Stock to which he is entitled upon conversion. If
more than one stock certificate for Series A 10% Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Class A Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Shares represented by all the
certificates so surrendered; provided, however, that if less than the full
number of Shares evidenced by the surrendered certificate or certificates are
being converted, a new certificate or certificates, of like tenor, for the
number of Shares evidenced by such surrendered certificate or certificates less
the number of Shares converted. For all purposes
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<PAGE> 9
related to the Shares being converted, the rights of a converting holder of
Series A 10% Preferred Stock as a holder of such converted Shares shall cease,
and the person or person in whose name or names the certificates for Class A
Common Stock issuable upon such conversion are to be issued shall be deemed to
have become the record holder or holders of such Class A Common Stock at the
close of business on the day on which delivery of such notice or the surrender
of the certificates for such Shares (whichever shall last occur) shall be made.
(c) Reservation of Common Stock. The Corporation will at all times
reserve and keep available for issuance upon exercise of the conversion rights
described in this Section 7 such number of its authorized but unissued shares of
Class A Common Stock as will be sufficient to permit the exercise in full of
such conversion rights, and upon issuance of shares of Class A Common Stock
pursuant to any exercise of such conversion rights such shares of Class A Common
Stock will be validly issued, fully paid and nonassessable.
(d) Taxes on Conversion. The Corporation will pay any and all stamp
or similar taxes that may be payable in respect of the issuance or delivery of
shares of Class A Common Stock on conversion of Shares pursuant to this Section
7. The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
shares of Class A Common Stock in a name other than that of the holder of the
Shares to be converted, and no such issuance or delivery shall be made unless
and until the person requesting such issuance has paid to the Corporation the
amount of any such tax, or has established to the satisfaction of the
Corporation that such tax has been paid.
(e) Upon conversion of any Shares into shares of Class A Common
Stock, the holder of such Shares shall be entitled to receive all accrued and
unpaid dividends on the Shares so converted to the date of conversion which the
Corporation, at its option, may pay in additional shares of Common Stock valued
at the Trading Price of the Common Stock on the date of notice described in
Section 7(b) hereof, or, if there is no such Trading Price on such date, at the
"Fair Market Value" (as defined in paragraph (i) of Section 8(b) hereof) of the
Common Stock on such date.
8. Anti-Dilution.
(a) General. The initial Exercise Price upon conversion of Series A
10% Preferred Stock into Class A Common Stock is set forth in Section 7 hereof.
Said Exercise Price will be subject to adjustment from time to time in
accordance with the provisions of this Section 8. Whenever the Corporation
issues or sells, or in accordance with Section 8(b) hereof is deemed to have
issued or sold, any shares of its Common Stock for a price per share less than
the Trading Price at the time of such issuance or sale or deemed issuance or
sale, as the case may be, or, if there is no Trading Price at such time, at a
price per share less than the Fair Market Value of the Common Stock at such
time, then (except in the case of the securities and transactions described in
Section 8(c) hereof) immediately upon such issuance or sale or deemed issuance
or sale, as the case may be, the Exercise Price will be reduced to a price
determined by multiplying the Exercise Price in effect immediately prior to such
issuance or
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<PAGE> 10
sale or deemed issuance or sale, as the case may be, by a fraction, (i) the
numerator of which is the sum of (A) the number of shares of "Common Stock
Deemed Outstanding" (as defined below) immediately prior to such issuance or
sale or deemed issuance or sale, as the case may be, and (B) the number of
shares of Common Stock that the maximum aggregate consideration received or
receivable by the Corporation upon such issuance or sale or deemed issuance or
sale, as the case may be, would purchase at the Trading Price in effect
immediately prior to such issuance or sale or deemed issuance or sale, as the
case may be, or, if there is no Trading Price at such time, at the Fair Market
Value of the Common Stock at such time, and (ii) the denominator of which is the
number of shares of Common Stock Deemed Outstanding immediately after such
issuance or sale or deemed issuance or sale, as the case may be. For purposes of
this Section 8, the term "Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock actually outstanding at such time,
plus the number of shares of Common Stock deemed to be outstanding pursuant to
paragraphs (i) and (ii) of Section 8(b) hereof.
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 8(a) hereof (except in the
case of securities and transactions described in Section 8(c) hereof), the
following will be applicable:
(i) Warrants, Options or Other Rights. If the Corporation
issues, sells or grants any warrants, options or other rights to subscribe for,
purchase or otherwise acquire Common Stock or any stock, evidences of
indebtedness or other securities, directly or indirectly, convertible into or
exchangeable for Common Stock (such warrants, options or other rights being
herein called "Options" and such convertible or exchangeable stock or securities
being herein called "Convertible Securities") and the price per share of Common
Stock issuable upon exercise of such Options and/or upon conversion or exchange
of such Convertible Securities (the "Option Price") is less than the Trading
Price of the Common Stock at the time of the granting of such Options, or, if
there is no such Trading Price at such time, at a price per share less than the
Fair Market Value of the Common Stock at such time, then the total maximum
number of shares of Common Stock issuable upon exercise of such Options and/or
upon conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options will be deemed to be
outstanding and to have been issued and sold by the Corporation for the Option
Price. For purposes of this paragraph (i), the Option Price will be determined
by dividing (A) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Corporation
upon exercise of all such Options, plus, in the case of Options that relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the issuance of all such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the exercise of all such
Options or upon the conversion or exchange of all Convertible Securities
issuable upon the exercise of all such Options. Except as otherwise provided in
paragraphs (iii) and (iv) of this Section 8(b), no adjustment of the Exercise
Price will be made when Convertible Securities are actually issued upon exercise
of such Options or when Common Stock is actually issued upon exercise of such
Options or the conversion or
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<PAGE> 11
exchange of such Convertible Securities. For purposes of this paragraph (i) and
paragraph (ii) of Section 8(b) and Section 7(e) hereof, "Fair Market Value"
means an amount per share of Common Stock determined, in good faith, by the
Board of Directors; provided that, if the holders of at least twenty-five
percent (25%) of the outstanding Series A 10% Preferred Stock ("Objecting
Holders") notify the Corporation in writing, within thirty (30) days after the
date of the notice described in Section 8(f) hereof, that they disagree with the
Fair Market Value of the Common Stock as determined by the Board of Directors
and that they desire a determination of Fair Market Value in accordance with
clauses (A) through (E) of this paragraph (i), the following shall apply:
(A) the Objecting Holders shall select a nationally
recognized investment banking firm which shall be identified in the notice
described above;
(B) the Company within thirty (30) days thereafter shall
select a nationally recognized investment banking firm and notify the Objecting
Holders;
(C) the two investment banking firms shall each make a
determination of the Fair Market Value of the Common Stock and if the two
determinations differ by no more than five percent (5%) of the higher of the two
determinations, the Fair Market Value of the Common Stock shall be the average
of the two determinations;
(D) if the two determinations made under clause (C)
differ by more than five percent (5%) of the higher of the two determinations,
the two investment banking firms shall select a third nationally recognized
investment banking firm which will determine the Fair Market Value of the Common
Stock within the range of the two determinations made under clause (C); and
(E) the Company and the Objecting Holders shall bear the
costs of their respective investment banking firms and, if applicable, the cost
of the third investment banking firm shall be borne by the Company or the
Objecting Holders, as the case may be, whose determination made under clause C
is the furtherest from the determination made under clause D.
(ii) Convertible Securities. If the Corporation issues or
sells (or otherwise creates) Convertible Securities (other than Convertible
Securities deemed to be outstanding and to have been issued and sold as
described in paragraph (i) of this Section 8(b) and in respect of which
adjustment to the Exercise Price has been made in accordance with said
paragraph), and the price per share for which Common Stock is issuable upon
conversion or exchange of such Convertible Securities (the "Conversion Price")
is less than the Trading Price of the Common Stock at the time of such issuance
or sale, or, if there is no such Trading Price at such time, at a price per
share less than the Fair Market Value of the Common Stock at such time, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities will be deemed to be outstanding and
to have been issued and sold by the Corporation for the Conversion Price. For
purposes of this paragraph (ii), the Conversion Price will be determined by
dividing (A) the total amount, if any, received
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<PAGE> 12
or receivable by the Corporation as consideration for the issuance or sale of
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities.
Except as otherwise provided in paragraphs (iii) and (iv) of this Section 8(b),
no adjustment of the Exercise Price will be made when Common Stock is actually
issued upon the conversion or exchange of such Convertible Securities.
(iii) Change in Option Price, Conversion Price or Conversion
Rate. If the Option Price provided for in any Options, the Conversion Price
provided for in any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock changes at any
time (other than under or by reason of provisions of the type set forth in this
Section 8 that are designed to protect against dilution and that have no more
favorable effect on the holder of such Options or Convertible Securities than
this Section 8 would have if this Section 8 were included in the instrument
representing such Options or Convertible Securities), then the Exercise Price in
effect at the time of such change will be readjusted at such time to the
Exercise Price that would have been in effect had such Options or Convertible
Securities outstanding at the time of such change provided for such changed
Option Price, Conversion Price or conversion rate at the time of the original
grant, issuance or sale. Such adjustment of the Exercise Price will be made
whether the result is to increase or decrease the Exercise Price then in effect;
provided that no such adjustment will increase the Exercise Price above the
initial Exercise Price set forth in Section 7 hereof.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option, or the termination of any right
to convert or exchange any Convertible Security, without the exercise of such
Option or the right to convert or exchange such Convertible Security, the
Exercise Price then in effect will be adjusted at the time of such expiration or
termination to the Exercise Price that would have been in effect had such Option
or Convertible Security never been granted or issued; provided that no such
adjustment will affect any shares of Common Stock issued upon conversion of
Shares of Series A 10% Preferred Stock prior to the date such adjustment is
made.
(v) Calculation of Consideration. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold, as the case may be, for consideration that includes cash, then
the amount of cash consideration received and/or receivable by the Corporation
will be deemed to be the cash portion thereof. If any Common Stock, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold,
as the case may be, for consideration part or all of which is other than cash,
then the amount of the consideration other than cash received and/or receivable
by the Corporation will be the fair value thereof, except where such
consideration consists of securities for which there is a Trading Price in which
case the amount of such consideration received and/or receivable by the
Corporation will be the Trading Price thereof, in each case determined as of the
date that such Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold, as the case may be. If any Common
Stock, Options or Convertible Securities are issued in connection with any
merger,
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<PAGE> 13
consolidation or other business combination in which the Corporation is the
surviving or resulting entity, then the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving or non-resulting entity or entities as is attributable to such
Common Stock, Options or Convertible Securities, as the case may be. For
purposes of this paragraph (v) of Section 8(b), the determination of fair value
and any attribution of fair value to any Common Stock, Options or Convertible
Securities shall be made by the Board of Directors of the Corporation in good
faith.
(vi) If the Corporation shall be a party to any transaction,
including, without limitation, any merger, consolidation, sale of all or
substantially all of the Corporation's assets, liquidation or recapitalization
of the Common Stock (a "Transaction"), in which the Common Stock outstanding
immediately prior to the consummation of the Transaction shall be changed into,
or exchanged for, (A) different securities of the Corporation, (B) common stock
or other securities of another corporation, (C) interests in a noncorporate
entity, or (D) other property (including cash) or any combination of the
foregoing, then, as a condition of the consummation of any such Transaction,
lawful and adequate provision shall be made so that each holder of Shares shall
be entitled, upon conversion of such Shares, to receive an amount per Share so
converted equal to (Y) the aggregate amount of securities, interests, cash
and/or other property (payable in kind), as the case may be, into which or for
which a share of Common Stock was changed or exchanged in such Transaction times
(Z) the number of shares of Common Stock into which such Share was convertible
immediately prior to such Transaction.
(c) Excluded Securities and Transactions. The following securities
and transactions shall be excluded from the operation of Sections 8(a) and 8(b):
(i) the existence and any exercise of Common Stock Purchase
Warrants (A) issued to Bankers Trust Company and/or its affiliates and (B)
issued in connection with the sale of the Corporation's debt securities, in each
case for shares of Class C Common Stock in an amount not to exceed in the
aggregate ten percent (10%) of the fully diluted common equity of the
Corporation;
(ii) the existence of Three Million Three Hundred Sixty
Thousand (3,360,000) shares of the Series B 8% Cumulative Convertible Preferred
Stock of the Corporation issued and outstanding on the date hereof, the payment
of in-kind dividends on outstanding shares of the Series B 8% Cumulative
Convertible Preferred Stock, including dividends on outstanding shares received
as dividends, and the conversion of outstanding shares of Series B 8% Cumulative
Convertible Preferred Stock into Class B Common Stock;
(iii) Four Hundred Ninety Thousand Eight Hundred Ninety Eight
(490,898) shares of Class A Common Stock issued and outstanding on the date
hereof;
(iv) Two Hundred Thousand (200,000) shares of Class B Common
Stock issued and outstanding on the date hereof; and
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<PAGE> 14
(v) any grant or exercise of options to purchase up to an
aggregate of Two Million Five Hundred Thousand (2,500,000) shares of Common
Stock pursuant to any employee stock plan or non-employee director stock plan
approved by the Board of Directors and, if required, by the stockholders of the
Corporation.
(vi) the issuance of additional shares of Series A 10%
Preferred Stock to the Anchor Glass Container Corporation Service Retirement
Plan, the Pension Plan for Hourly Employees, Latchford Glass Company and
Associated Companies and/or the Anchor Glass Container Corporation Retirement
Plan for Salaried Employees pursuant to the PBGC Agreement.
(d) Stock Dividends; Subdivision or Combination of Common Stock. If
the Corporation, at any time after the date hereof (i) issues any shares of
Common Stock, Options or Convertible Securities as a dividend on Common Stock,
(ii) issues any shares of Common Stock, Options or Convertible Securities in
subdivision of outstanding shares of Common Stock, by reclassification or
otherwise, or (iii) combines outstanding shares of Common Stock, by
reclassification or otherwise, then the Exercise Price in effect immediately
prior to such action will be adjusted by multiplying it by a fraction, (x) the
numerator of which is the number of shares of Common Stock Deemed Outstanding
immediately prior to such action and (y) the denominator of which is the number
of shares of Common Stock Deemed Outstanding immediately following such action.
Such adjustment of the Exercise Price will be made whether the result is to
increase or decrease the Exercise Price then in effect; provided that no such
adjustment will increase the Exercise Price above the initial Exercise Price set
forth in Section 7 hereof.
(e) No De Minimis Adjustments. No adjustment of the Exercise Price
will be made if the amount of such adjustment would be less than one cent
($0.01) per share, but in such case any adjustment that otherwise would be
required to be made will be carried forward and will be made at such time and
together with the next subsequent adjustment that together with any adjustment
or adjustments so carried forward, amounts to not less than one cent ($0.01) per
share.
(f) Notice of Adjustment. Promptly upon any adjustment of the
Exercise Price, the Corporation will send written notice thereof to the holders
of Series A 10% Preferred Stock setting forth the adjusted Exercise Price and
the number of shares of Class A Common Stock issuable upon conversion of a Share
and also setting forth in reasonable detail the method of calculation of such
adjustment and number of shares, including any determination by the Board of
Directors of the Fair Market Value of the Common Stock. When appropriate, such
notice may be given in advance and included as part of any notice required to be
given pursuant to Section 8(g) hereof.
(g) No Impairment. The Corporation will not, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or other voluntary action, avoid the observance or
performance of any of the terms to be observed or
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<PAGE> 15
performed hereunder by the Corporation but will at all times in good faith
assist in the carrying out of the provisions of this Section 8 and in the taking
of all such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Shares against impairment. Without
limiting the generality of the foregoing, the Corporation (i) will not permit
the par value of any shares of stock at any time receivable upon the conversion
of the Shares to exceed the Exercise Price then in effect, (ii) will take all
such action as may be necessary or appropriate in order that the Corporation may
validly and legally issue fully paid, nonassessable shares of stock on the
conversion of the Shares, (iii) will not take any action which results in any
adjustment of the Exercise Price if the total number of shares of Class A Common
Stock issuable after the action upon the conversion of all of the Shares will
exceed the total number of shares of Class A Common Stock then authorized by the
Corporation's Certificate of Incorporation and available for the purpose of
issue once upon such conversion and (iv) will not take or permit any action
which results in any adjustment of the Exercise Price below a positive amount.
(h) If at any time after the date hereof:
(i) the Corporation shall pay any dividend in stock upon its
Common Stock or make any distribution (other than cash dividends) to the holders
of its Common Stock;
(ii) the Corporation shall offer for subscription or purchase
pro rata to the holders of its Common Stock any additional shares of stock of
any class or any other rights;
(iii) there shall be any reorganization or reclassification of
the capital stock of the Corporation, any consolidation, merger, or other
business combination of the Corporation with or into another entity, or a sale
or disposition of all or substantially all of the Corporation's assets; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then in each such case, the
Corporation shall give prior written notice to the holders of the Series A 10%
Preferred Stock at the addresses of such holders as shown on the books of the
Corporation of (A) the date and time on which the books of the Corporation shall
close or a record shall be taken for the purpose of such action and (B) the date
and time, if known, on which such action will, or is expected to, take place. A
copy of each such notice will be sent simultaneously to each transfer agent of
the Common Stock. Such notice will also specify the date as of which the holders
of Common Stock of record will participate in such action. Such written notice
will be given at least thirty (30) days prior to the record date or the subject
action, whichever is earlier.
9. No Preemptive Rights. The holders of Series A 10% Preferred Stock
shall have no preemptive rights, and no holders of the Series A 10% Preferred
Stock shall be entitled, as a matter of right, to subscribe for or purchase
shares of any class now or hereafter authorized, or to subscribe for or purchase
securities convertible into or exchangeable for shares of any class or to which
shall be attached or appertain any warrants or rights entitling the holder
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<PAGE> 16
thereof to subscribe for or purchase shares of any class, except such rights of
subscription or purchase, if any, at such price or prices and upon such terms
and conditions, as the Board of Directors in its discretion may from time to
time determine.
10. Enforcement of Rights. Any holder of Series A 10% Preferred Stock
may proceed to protect and enforce its rights and the rights of such holders by
any available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision of this
Certificate of Designation or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
IN WITNESS WHEREOF, Anchor Glass Acquisition Corporation has caused
this Certificate to be signed by its Vice President and attested by its
Secretary this 5th day of February, 1997.
ATTEST: ANCHOR GLASS ACQUISITION CORPORATION
/s/C. Kent May By:/s/ M. William Lightner, Jr.
- --------------------------------- -----------------------------------------
Secretary Vice President
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<PAGE> 1
Exhibit 3.7
CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF THE
SERIES B 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
ANCHOR GLASS ACQUISITION CORPORATION
---------------------------------------------
Anchor Glass Acquisition Corporation, a corporation organized and
existing by virtue of the laws of the State of Delaware (the "Corporation"),
does hereby certify that the following resolutions were duly adopted by the
Board of Directors of the Corporation (the "Board of Directors") by Unanimous
Written Consent dated February 5, 1997:
RESOLVED THAT, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors hereby
creates, from the shares of Preferred Stock (the "Preferred Stock") of the
Corporation authorized to be issued pursuant to the Certificate of
Incorporation, a series of the Preferred Stock designated the Series B 8%
Cumulative Convertible Preferred Stock, and hereby fixes the voting powers,
designations, preferences and relative participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such series as follows:
1. Designation. Five Million (5,000,000) shares of the Preferred Stock
are hereby designated Series B 8% Cumulative Convertible Preferred Stock with a
par value of one cent ($0.01) per share (the "Series B 8% Preferred Stock"),
which number, subject to the provisions of Section 6(c) hereof, may be increased
or decreased (but not below the number thereof then outstanding) from time to
time by the Board of Directors.
2. Rank. The Series B 8% Preferred Stock shall rank senior to the
Corporation's Common Stock, par value $0.10 per share ("Common Stock") which may
be in two or more classes, and to all other classes and series of Preferred
Stock, other than the Series A 10% Cumulative Convertible Preferred Stock of the
Corporation as to which the Series B 8% Preferred Stock shall rank junior.
<PAGE> 2
3. Dividends.
(a) On each "Dividend Payment Date" (as hereinafter defined) to and
including December 31, 1999, the holders outstanding of shares of Series B 8%
Preferred Stock shall be entitled to receive cumulative dividends on each share
of outstanding Series B 8% Preferred Stock (referred to herein individually as a
"Share" and collectively as "Shares") payable in shares of Series B 8% Preferred
Stock at the rate per annum of eight one-hundredths (8/100) of a share of Series
B 8% preferred Stock for each Share (individually a "Stock Dividend" and
collectively "Stock Dividends"). Stock Dividends shall be rounded to the nearest
whole Share. For the period ending March 31, 1997, the Stock Dividend shall be
calculated from and including February 5, 1997. On each Dividend Payment Date
subsequent to December 31, 1999, the holders of Shares shall be entitled to
receive, when and as declared out of funds legally available for the payment of
cash dividends, cumulative cash dividends on each Share at a rate per annum of
$2.00 per Share (individually a "Cash Dividend" and collectively "Cash
Dividends"), from and including January 1, 2000 to and including the date on
which the "Redemption Price" (as hereinafter defined) of such Share is paid.
Notwithstanding the foregoing, no Cash Dividend shall be paid at any time that
any accrued dividends on the Series A 10% Preferred Stock remain unpaid, but all
such Cash Dividends that are not so paid shall accrue until paid.
Stock Dividends, and, to the extent declared by the Board of
Directors, Cash Dividends will be payable quarterly in arrears and on each March
31, June 30, September 30 and December 31 in each year, or, if any such date is
not a business day, on the next succeeding business day (hereinafter referred to
individually as a "Dividend Payment Date" and collectively as "Dividend Payment
Dates"), to the holders of Shares of record on the respective record dates fixed
for that purpose by the Board of Directors or a committee thereof in advance of
the payment of such dividends. To the extent that dividends are not paid on a
particular Dividend Payment Date, all such dividends will accrue on a quarterly
basis and will be paid on or before the Redemption Date on all Shares. Dividends
payable on Shares for any period of less than a full calendar quarter will be
computed on the basis of a 365 or 366 (as applicable) day year and actual days
elapsed from the immediately preceding Dividend Payment Date, or from February ,
1997 with respect to the calendar quarter ending March 31, 1997. Dividends paid
on Shares in an amount less than the total amount of such dividends at the time
accrued and payable shall be allocated pro rata among all Shares.
(b) Except as provided in the immediately succeeding sentence, so
long as any Shares are outstanding, the Corporation will not declare or pay or
set apart for payment any dividends or make any other distribution on any class
of stock of the Corporation ranking junior to the Series B 8% Preferred Stock
(including all classes of Common Stock) either as to dividends or upon
liquidation (collectively, "Junior Securities") and will not redeem, purchase or
otherwise acquire for value, or set apart money or property for any sinking or
other analogous fund for the redemption or purchase of any shares of any Junior
Securities (in any such case, a "Junior Payment"), other than cash dividends on
the Common Stock in an amount not to exceed, for any fiscal year, the lesser of
(i) fifty percent (50%) of the consolidated net income of the Corporation and
its subsidiaries available to be paid to the holders of the Common Stock (after
payment of all cumulative cash dividends on all series of
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<PAGE> 3
Preferred Stock) as determined in accordance with generally accepted accounting
principles in the United States as in effect from time to time and (ii) Ten
Million Dollars ($10,000,000); provided that any such cash dividends may be paid
only if all cumulative dividends on the Series B 8% Preferred Stock for all
Dividend Payment Dates prior to or concurrent with the payment of such cash
dividends have been paid. In the event that the Corporation pays any dividend on
Junior Securities, other than a dividend permitted by the immediately preceding
sentence (an "Other Dividend"), concurrently with the payment of such Other
Dividend the Corporation will pay a special dividend on the Shares such that the
holders of Shares will receive the same cash or property paid in connection with
such Other Dividend that they would have received had all Shares been converted
into shares of Common Stock immediately prior to the record date for such Other
Dividend.
4. Liquidation.
(a) In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the holders of
Shares, after the payment or provision for payment of the debts and liabilities
of the Corporation and before any payment or distribution of the assets of the
Corporation (whether capital, surplus or earnings) or proceeds therefrom shall
be made to or set apart for the holders of shares of any Junior Securities, the
holders of Shares shall be entitled to receive a cash payment of Twenty Five
Dollars ($25.00) per Share (the "Liquidation Value") held by them, plus an
amount equal to all dividends accrued and unpaid on such Shares to the date of
such payment.
(b) If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series B 8% Preferred Stock are insufficient to permit payment to such holders
of the aggregate amount which they are entitled to be paid, then the entire
assets to be distributed will be distributed ratably among such holders based
upon the aggregate Liquidation Value of the Series B 8% Preferred Stock held by
each such holder. Neither the consolidation, combination or merger of the
Corporation into or with any other corporation or corporations or other entity
or entities, nor the sale or transfer by the Corporation of all or substantially
all of its assets, nor the reduction of the capital stock of the Corporation,
will be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Section 4.
5. Redemption.
(a) Optional Redemption. At any time and from time to time after
February 5, 2000, provided that the "Trading Price" (as defined below) of the
Common Stock is greater than Five Dollars and fifty cents ($5.50) per share, the
Corporation shall have the right to redeem all or any part of the Shares at the
Redemption Price, by giving written notice thereof to the affected stockholder
or stockholders (the "Redemption Notice"); provided, however, that less than all
of the Shares may be redeemed only after all accrued and unpaid and current
dividends with respect to the Series B 8% Preferred Stock have either been paid
or set aside for payment. The Redemption Notice shall specify the redemption
date which shall be not less than thirty (30) days after the date of the
Redemption Notice and the number of Shares to be redeemed. If fewer than all of
the Shares are to be redeemed, the Shares to
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be redeemed shall be selected by whichever of the following methods the Board of
Directors shall choose: by lot or pro rata in such manner as may be prescribed
by resolution of the Board of Directors. For purposes of this Section 5, Section
7(e), Section 8(a) and paragraphs (i), (ii) and (v) of Section 8(b) hereof,
"Trading Price" means, as to any security, (i) such security's closing sales
price on the principal nationally recognized domestic securities exchange
(including the NASDAQ Stock Market-National Market tier) on which such security
may, at the time, be listed or, if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all
exchanges on which such security may, at the time, be listed, at the end of such
day, or (ii) if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ Inter-Dealer Quotation
System (the "NASDAQ System") as of the close of trading in New York, New York on
such day, or (iii) if on any day such security is not quoted in the NASDAQ
System, the average of the high and low bid and asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in the case of a
determination of Trading Price for purposes of this Section 5 averaged over a
period of sixty (60) consecutive "Trading Days" (as hereinafter defined) ending
on the Trading Day immediately preceding the date as of which the Trading Price
is being determined, and in the case of a determination of Trading Price for
purposes of Section 7(e), Section 8(a) and/or paragraph (i), (ii) or (v) of
Section 8(b) hereof as reported on the date of the applicable issuance or sale
or deemed issuance or sale, as the same may be, provided that if such date is
not a Trading Day as reported on the Trading Day immediately preceding such
date. As used herein the term "Trading Day" shall mean any day on which trading
takes place on the applicable securities exchange or the NASDAQ System on which
the Common Stock is listed or traded, as the case may be. Notwithstanding the
foregoing, no redemption of Series B 8% Preferred Stock shall be made at any
time that shares of Series A 10% Preferred Stock are outstanding.
(b) Redemption Price. The redemption price for Shares (the
"Redemption Price") shall be Twenty Five Dollars ($25.00) per Share, plus an
amount equal to all accrued and unpaid dividends to the date of redemption (the
"Redemption Date"); provided, however, that the Redemption Price for all Shares
that have not been redeemed (or called for redemption with the funds for
redemption set aside in accordance with Section 5(d) hereof) on or before the
Mandatory Redemption Date shall bear interest at the rate of eight percent (8%)
per annum from and after the Mandatory Redemption Date until such Shares have
been redeemed and the Redemption Price, including accrued interest as aforesaid,
for such Shares has been paid in full.
(c) Redemption Procedure. Not more than sixty (60) and not less
than thirty (30) days prior to the Redemption Date, the Redemption Notice shall
be mailed to the holders of record of the Series B 8% Preferred Stock to be
redeemed, such notice to be addressed to each such holder at his last known post
office address shown on the records of the Corporation, and the time of mailing
such notice shall be deemed to be the time of the giving thereof. In addition,
notice of any redemption of Shares shall be published in The New York Times or
The Wall Street Journal not less than thirty (30) and not more than sixty (60)
days prior to the record date for such event (or, if there is no record date,
the date of such event). On or after the Redemption Date, each holder of Series
B 8% Preferred Stock called
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for redemption shall surrender his certificate(s) for such stock to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price. Unless default is made in
the payment of the Redemption Price, all rights of the holders of such Shares as
stockholders of the Corporation by reason of the ownership of the respective
Shares shall cease at the close of business on the Redemption Date, except the
right to receive payment in full of the Redemption Price of such Shares on
presentation and surrender of the certificate or certificates for such Shares,
and after the Redemption Date such Shares shall not be deemed to be outstanding.
In case less than all the Shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed Shares
without cost to the holder thereof. If the Redemption Notice shall have been
given as aforesaid, and if on or before the Redemption Date funds necessary for
the redemption shall have been set aside so as to be and continue to be
available therefor, then, notwithstanding the certificates representing any
Shares so called for redemption shall not have been surrendered, the dividends
thereon shall cease to accrue after the Redemption Date, and all rights with
respect to the Shares so called for redemption shall forthwith after such
Redemption Date cease, except only the right of the holders to receive the
Redemption Price without interest.
At its option, the Corporation may, on or prior to the Redemption
Date, deposit an amount equal to the aggregate Redemption Price of the Shares to
be redeemed with a bank or trust company having an office or agency in New York
City and having a combined capital and surplus of at least $100,000,000 (the
"Depositary") designated by the Board of Directors, to be held in trust by the
Depositary, for the sole benefit of the holders of the Series B 8% Preferred
Stock, for payment to the holders of such Shares then to be redeemed. If such
deposit is made and the funds so deposited are made immediately available to the
holders of the Shares to be redeemed, the Corporation shall thereupon be
released and discharged (subject to the provisions of the next paragraph of this
Section 5) from its obligation to make payment of the Redemption Price of the
Shares to be redeemed, and the holders of such Shares shall look only to the
Depositary for such payment. Any funds deposited with the Depositary as
aforesaid and which shall not be required for such redemption because of the
exercise of any right of conversion subsequent to the date of such deposit shall
be returned to the Corporation forthwith.
Any funds deposited with the Depositary as aforesaid with respect
to payment of the Redemption Price of Shares remaining unclaimed at the end of
five (5) years from and after the Redemption Date in respect of which such funds
were deposited, shall be returned to the Corporation forthwith; and thereafter
the holders of Shares redeemed on such Redemption Date shall look only to the
Corporation for the payment of the Redemption Price thereof. Any interest
accrued on any funds deposited with the Depositary shall belong to the
Corporation and shall be paid to it by the Depositary from time to time on
demand.
On or after the Redemption Date, the holders of Shares which have
been redeemed shall surrender their certificates representing such Shares to the
Corporation at its principal place of business or as otherwise notified, and
thereupon the Redemption Price of such Shares shall be paid to the order of the
holder of record of the Shares represented by
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such certificate or certificates and each surrendered certificate shall be
cancelled, and such Shares shall be retired and shall not be reissued.
6. Voting.
(a) No Voting Rights. Except as otherwise provided by the Delaware
General Corporation Law and in this Section 6, the holders of Series B 8%
Preferred Stock shall have no voting rights whatsoever.
(b) Default in Payment of Dividends. Whenever Cash Dividends
payable on Shares are in arrears and unpaid in an aggregate amount of dividends
payable thereon for twelve (12) quarterly dividend payments, the number of
directors then constituting the Board of Directors of the Corporation shall
thereupon automatically be increased by three, and the holders of the Series B
8% Preferred Stock shall have the exclusive and special right, voting separately
as a class to elect three directors ("Series B Preferred Stock Directors") to
fill such newly created directorships by the vote of the holders of record of a
majority of the Shares.
Whenever the right of the holders of Series B 8% Preferred Stock to
elect Series B Preferred Stock Directors shall have vested, such right may be
exercised initially either at a special meeting of such holders of Series B 8%
Preferred Stock called as provided in the following paragraph, or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders. The
right of the holders of Series B 8% Preferred Stock voting separately as a class
to elect Series B Preferred Stock Directors as aforesaid, when vested, shall
continue until such time as all Cash Dividends in arrears on the Shares shall
have been paid in full and, when so paid, the right of the holders of Series B
8% Preferred Stock to elect Series B Preferred Stock Directors as aforesaid
shall cease, subject always to revesting in the event of each and every
subsequent failure to pay in full the aggregate amount specified in the
preceding paragraph.
At any time when such special voting power shall have vested in the
holders of Series B 8% Preferred Stock as provided in the preceding paragraph, a
proper officer of the Corporation, shall upon the written request of the holders
of record of at least twenty-five percent (25%) of the Shares, call a special
meeting of the holders of record of the Series B 8% Preferred Stock, such
special meeting to be held within forty-five (45) calendar days after the date
on which such request is received by the Corporation, for the purpose of
enabling such holders to elect the number of directors specified above;
provided, however, that such special meeting need not be called if an annual
meeting of stockholders of the Corporation for the election of directors shall
be scheduled to be held within such forty-five (45) calendar days; and provided,
further, that in lieu of any such special meeting, the election of the directors
to be elected thereat may be effected by the written consent of the holders of
record of a majority of the Shares.
Any director elected by the holders of record of the Series B 8%
Preferred Stock shall continue to serve as such director until (i) removed by
the vote of the holders of record of a majority of the Series B 8% Preferred
Stock then outstanding, voting separately as a class; (ii) the next annual
meeting of the stockholders of the Corporation and until his or her successor
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is duly elected and qualified by the holders of Series B 8% Preferred Stock; or
(iii) the right of holders of the Series B 8% Preferred Stock, voting as a
separate class, to elect directors as provided in this Section 6(b) shall have
terminated, whichever first occurs.
If, prior to the end of the term of any director elected as aforesaid
by the holders of record of the Series B 8% Preferred Stock, a vacancy in the
office of such director shall occur by reason of death, resignation, removal or
disability, or for any other cause, such vacancy shall be filled for the
unexpired term by vote or written consent of the holders of record of a majority
of the Series B 8% Preferred Stock then outstanding, voting or acting separately
as a class.
(c) Changes Affecting the Series B 8% Preferred Stock. Without the
written consent of the holders of a majority of the outstanding Series B 8%
Preferred Stock (considered as a single class) or the favorable vote of the
holders of a majority of the outstanding Series B 8% Preferred Stock (voting as
a single class) which are represented at a meeting of the holders of Series B 8%
Preferred Stock called for such purpose, the Corporation will not (i) create,
authorize or issue any other class or series of stock (or any security
convertible into or exchangeable for such stock) which is on a parity with or
entitled to a preference prior to Series B 8% Preferred Stock (other than the
Series A 10% Cumulative Convertible Preferred Stock described in Section 8(c)
hereof) upon any dividend or distribution or any liquidation, distribution of
assets, dissolution or winding up of the Corporation, or increase the authorized
amount of any such other class or series, (ii) increase or decrease the
authorized number of shares of Series B 8% Preferred Stock, (iii) increase or
decrease the Liquidation Value or the par value of the Series B 8% Preferred
Stock or (iv) amend, alter or repeal any provision of the Certificate of
Incorporation so as to adversely affect the relative rights and preferences of
the Series B 8% Preferred Stock in any material respect. For the purpose of any
consent or vote pursuant to this Section 6(c), each Share shall have one vote.
(d) The Corporation shall not sell, lease, convey or exchange all
or substantially all of the assets, property or business of the Corporation, or
merge or consolidate with or into any other corporation or otherwise
recapitalize or reorganize itself (such transactions being hereinafter in the
proviso referred to as a "Reorganization") unless (i) the resulting, surviving
or acquiring corporation will have after such Reorganization no stock either
authorized or outstanding ranking prior to, or on a parity with, the Series B 8%
Preferred Stock or the stock of the resulting, surviving or acquiring
corporation issued in exchange therefor; (ii) each holder of shares of Series B
8% Preferred Stock immediately preceding such Reorganization will receive in
exchange therefor the same number of shares of stock, with substantially the
same preferences, rights and powers, of the resulting, surviving, or acquiring
corporation or the Corporation is the surviving corporation and the Series B 8%
Preferred Stock remains outstanding without change to its preferences, rights
and powers and (iii) notice of such transaction has been provided to all holders
of shares pursuant to the procedures set forth in Section 7(b) hereof.
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7. Conversion.
(a) Conversion Rights. Each holder of the Series B 8% Preferred
Stock will have the right to convert at any time and from time to time at least
ten percent (10%) or Two Thousand (2,000), whichever is less, of such holder's
Shares into Class B Common Stock at an exercise price of Five Dollars and fifty
cents ($5.50) per share of Class B Common Stock, subject to adjustment in
accordance with the provisions of Section 8 hereof (the "Exercise Price");
provided that the right to convert any Shares called for redemption shall
terminate at the close of business on the third business day prior to the date
fixed for such redemption unless default shall be made in the payment of the
Redemption Price, and upon any liquidation, dissolution or winding-up of the
affairs of the Corporation such right of conversion shall terminate at the close
of business on the third business day prior to the date fixed for payment of
distributable amounts on the Series B 8% Preferred Stock. Each Share held by
each holder will, without payment of any additional consideration by such
holder, be converted into that number of shares of Class B Common Stock
determined by dividing Twenty Five Dollars ($25.00) by the Exercise Price then
in effect ("Conversion Ratio"), with the total number of shares of Class B
Common Stock to be issued to such holder upon such conversion being rounded to
the nearest whole share. Any Shares which are not converted to Class B Common
Stock will remain outstanding until converted by the holders or redeemed by the
Corporation.
(b) Conversion Procedures. Each holder of Series B 8% Preferred
Stock desiring to exercise his right of conversion shall deliver to the
Corporation written notice of his election to convert, and shall surrender to
the Corporation the certificates for the Shares to be converted (properly
endorsed or assigned for transfer if the Board of Directors of the Corporation
shall so require). Upon receipt by the Corporation of any such notice of
election to convert Series B 8% Preferred Stock and upon surrender of the
certificates therefor, the Corporation shall, as soon as practicable, and in any
event within ten (10) business days after the surrender of such certificate(s)
and the receipt of such notice relating thereto, execute and deliver to the
converting holder of Series B 8% Preferred Stock certificates for the number of
full shares of Class B Common Stock to which he is entitled upon conversion. If
more than one stock certificate for Series B 8% Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Class B Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Shares represented by all the
certificates so surrendered; provided, however, that if less than the full
number of Shares evidenced by the surrendered certificate or certificates are
being converted, a new certificate or certificates, of like tenor, for the
number of Shares evidenced by such surrendered certificate or certificates less
the number of Shares converted. For all purposes related to the Shares being
converted, the rights of a converting holder of Series B 8% Preferred Stock as a
holder of such converted Shares shall cease, and the person or person in whose
name or names the certificates for Class B Common Stock issuable upon such
conversion are to be issued shall be deemed to have become the record holder or
holders of such Class B Common Stock at the close of business on the day on
which delivery of such notice or the surrender of the certificates for such
Shares (whichever shall last occur) shall be made.
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(c) Reservation of Common Stock. The Corporation will at all times
reserve and keep available for issuance upon exercise of the conversion rights
described in this Section 7 such number of its authorized but unissued shares of
Class B Common Stock as will be sufficient to permit the exercise in full of
such conversion rights, and upon issuance of shares of Class B Common Stock
pursuant to any exercise of such conversion rights such shares of Class B Common
Stock will be validly issued, fully paid and nonassessable.
(d) Taxes on Conversion. The Corporation will pay any and all stamp
or similar taxes that may be payable in respect of the issuance or delivery of
shares of Class B Common Stock on conversion of Shares pursuant to this Section
7. The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
shares of Class B Common Stock in a name other than that of the holder of the
Shares to be converted, and no such issuance or delivery shall be made unless
and until the person requesting such issuance has paid to the Corporation the
amount of any such tax, or has established to the satisfaction of the
Corporation that such tax has been paid.
(e) Upon conversion of any Shares into shares of Class B Common
Stock, the holder of such Shares shall be entitled to receive all accrued and
unpaid dividends on the Shares so converted to the date of conversion which the
Corporation, at its option, may pay in additional shares of Common Stock valued
at the Trading Price of the Common Stock on the date of notice described in
Section 7(b) hereof, or, if there is no such Trading Price on such date, at the
"Fair Market Value" (as defined in paragraph (i) of Section 8(b) hereof) of the
Common Stock on such date.
8. Anti-Dilution. (a) General. The initial Exercise Price upon
conversion of Series B 8% Preferred Stock into Class B Common Stock is set forth
in Section 7 hereof. Said Exercise Price will be subject to adjustment from time
to time in accordance with the provisions of this Section 8. Whenever the
Corporation issues or sells, or in accordance with Section 8(b) hereof is deemed
to have issued or sold, any shares of its Common Stock for a price per share
less than the Trading Price at the time of such issuance or sale or deemed
issuance or sale, as the case may be, or if there is no Trading Price at such
time, at a price per share less than the Fair Market Value of the Common Stock
at such time, then (except in the case of the securities and transactions
described in Section 8(c) hereof) immediately upon such issuance or sale or
deemed issuance or sale, as the case may be, the Exercise Price will be reduced
to a price determined by multiplying the Exercise Price in effect immediately
prior to such issuance or sale or deemed issuance or sale, as the case may be,
by a fraction, (i) the numerator of which is the sum of (A) the number of shares
of "Common Stock Deemed Outstanding" (as defined below) immediately prior to
such issuance or sale or deemed issuance or sale, as the case may be, and (B)
the number of shares of Common Stock that the maximum aggregate consideration
received or receivable by the Corporation upon such issuance or sale or deemed
issuance or sale, as the case may be, would purchase at the Trading Price in
effect immediately prior to such issuance or sale or deemed issuance or sale, as
the case may be, or, if there is no Trading Price at such time, at the Fair
Market Value of the Common Stock at such time, and (ii) the denominator of which
is the number of shares of Common Stock Deemed Outstanding immediately after
such issuance or sale or deemed
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issuance or sale, as the case may be. For purposes of this Section 8, the term
"Common Stock Deemed Outstanding" means, at any given time, the number of shares
of Common Stock actually outstanding at such time, plus the number of shares of
Common Stock deemed to be outstanding pursuant to paragraphs (i) and (ii) of
Section 8(b) hereof.
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 8(a) hereof (except in the
case of securities and transactions described in Section 8(c) hereof), the
following will be applicable:
(i) Warrants, Options or Other Rights. If the Corporation
issues, sells or grants any warrants, options or other rights to subscribe for,
purchase or otherwise acquire Common Stock or any stock, evidences of
indebtedness or other securities, directly or indirectly, convertible into or
exchangeable for Common Stock (such warrants, options or other rights being
herein called "Options" and such convertible or exchangeable stock or securities
being herein called "Convertible Securities") and the price per share of Common
Stock issuable upon exercise of such Options and/or upon conversion or exchange
of such Convertible Securities (the "Option Price") is less than the Trading
Price of the Common Stock at the time of the granting of such Options, or, if
there is no such Trading Price at such time, at a price per share less than the
Fair Market Value of the Common Stock at such time, then the total maximum
number of shares of Common Stock issuable upon exercise of such Options and/or
upon conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options will be deemed to be
outstanding and to have been issued and sold by the Corporation for the Option
Price. For purposes of this paragraph (i), the Option Price will be determined
by dividing (A) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Corporation
upon exercise of all such Options, plus, in the case of Options that relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the issuance of all such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the exercise of all such
Options or upon the conversion or exchange of all Convertible Securities
issuable upon the exercise of all such Options. Except as otherwise provided in
paragraphs (iii) and (iv) of this Section 8(b), no adjustment of the Exercise
Price will be made when Convertible Securities are actually issued upon exercise
of such Options or when Common Stock is actually issued upon exercise of such
Options or the conversion or exchange of such Convertible Securities. For
purposes of this paragraph (i) and paragraph (ii) of Section 8(b) and Section
7(e) hereof, "Fair Market Value" means an amount per share of Common Stock
determined, in good faith, by the Board of Directors; provided that, if the
holders of at least twenty-five percent (25%) of the outstanding Series B 8%
Preferred Stock ("Objecting Holders") notify the Corporation in writing, within
thirty (30) days after the date of the notice described in Section 8(f) hereof,
that they disagree with the Fair Market Value of the Common Stock as determined
by the Board of Directors and that they desire a determination of Fair Market
Value in accordance with clauses (A) through (E) of this paragraph (i), the
following shall apply:
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(A) the Objecting Holders shall select a nationally
recognized investment banking firm which shall be identified in the notice
described above;
(B) the Company within thirty (30) days thereafter shall
select a nationally recognized investment banking firm and notify the Objecting
Holders;
(C) the two investment banking firms shall each make a
determination of the Fair Market Value of the Common Stock and if the two
determinations differ by no more than five percent (5%) of the higher of the two
determinations, the Fair Market Value of the Common Stock shall be the average
of the two determinations;
(D) if the two determinations made under clause (C)
differ by more than five percent (5%) of the higher of the two determinations,
the two investment banking firms shall select a third nationally recognized
investment banking firm which will determine the Fair Market Value of the Common
Stock within the range of the two determinations made under clause (C); and
(E) the Company and the Objecting Holders shall bear the
costs of their respective investment banking firms and, if applicable, the cost
of the third investment banking firm shall be borne by the Company or the
Objecting Holders, as the case may be, whose determination made under clause C
is the furtherest from the determination made under clause D.
(ii) Convertible Securities. If the Corporation issues or
sells (or otherwise creates) Convertible Securities (other than Convertible
Securities deemed to be outstanding and to have been issued and sold as
described in paragraph (i) of this Section 8(b) and in respect of which
adjustment to the Exercise Price has been made in accordance with said
paragraph), and the price per share for which Common Stock is issuable upon
conversion or exchange of such Convertible Securities (the "Conversion Price")
is less than the Trading Price of the Common Stock at the time of such issuance
or sale, or, if there is no such Trading Price at such time, at a price per
share less than the Fair Market Value of the Common Stock at such time, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities will be deemed to be outstanding and
to have been issued and sold by the Corporation for the Conversion Price. For
purposes of this paragraph (ii), the Conversion Price will be determined by
dividing (A) the total amount, if any, received or receivable by the Corporation
as consideration for the issuance or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. Except as otherwise provided in paragraphs (iii)
and (iv) of this Section 8(b), no adjustment of the Exercise Price will be made
when Common Stock is actually issued upon the conversion or exchange of such
Convertible Securities.
(iii) Change in Option Price, Conversion Price or Conversion
Rate. If the Option Price provided for in any Options, the Conversion Price
provided for in any
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Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time (other
than under or by reason of provisions of the type set forth in this Section 8
that are designed to protect against dilution and that have no more favorable
effect on the holder of such Options or Convertible Securities than this Section
8 would have if this Section 8 were included in the instrument representing such
Options or Convertible Securities), then the Exercise Price in effect at the
time of such change will be readjusted at such time to the Exercise Price that
would have been in effect had such Options or Convertible Securities outstanding
at the time of such change provided for such changed Option Price, Conversion
Price or conversion rate at the time of the original grant, issuance or sale.
Such adjustment of the Exercise Price will be made whether the result is to
increase or decrease the Exercise Price then in effect; provided that no such
adjustment will increase the Exercise Price above the initial Exercise Price set
forth in Section 7 hereof.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option, or the termination of any right
to convert or exchange any Convertible Security, without the exercise of such
Option or the right to convert or exchange such Convertible Security, the
Exercise Price then in effect will be adjusted at the time of such expiration or
termination to the Exercise Price that would have been in effect had such Option
or Convertible Security never been granted or issued; provided that no such
adjustment will affect any shares of Common Stock issued upon conversion of
Shares of Series B 8% Preferred Stock prior to the date such adjustment is made.
(v) Calculation of Consideration. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold, as the case may be, for consideration that includes cash, then
the amount of cash consideration received and/or receivable by the Corporation
will be deemed to be the cash portion thereof. If any Common Stock, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold,
as the case may be, for consideration part or all of which is other than cash,
then the amount of the consideration other than cash received and/or receivable
by the Corporation will be the fair value thereof, except where such
consideration consists of securities for which there is a Trading Price in which
case the amount of such consideration received and/or receivable by the
Corporation will be the Trading Price thereof, in each case determined as of the
date that such Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold, as the case may be. If any Common
Stock, Options or Convertible Securities are issued in connection with any
merger, consolidation or other business combination in which the Corporation is
the surviving or resulting entity, then the amount of consideration therefor
will be deemed to be the fair value of such portion of the net assets and
business of the non-surviving or non-resulting entity or entities as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. For purposes of this paragraph (v) of Section 8(b), the
determination of fair value and any attribution of fair value to any Common
Stock, Options or Convertible Securities shall be made by the Board of Directors
of the Corporation in good faith.
(vi) If the Corporation shall be a party to any transaction,
including, without limitation, any merger, consolidation, sale of all or
substantially all of the
-12-
<PAGE> 13
Corporation's assets, liquidation or recapitalization of the Common Stock (a
"Transaction"), in which the Common Stock outstanding immediately prior to the
consummation of the Transaction shall be changed into, or exchanged for, (A)
different securities of the Corporation, (B) common stock or other securities of
another corporation, (C) interests in a noncorporate entity, or (D) other
property (including cash) or any combination of the foregoing, then, as a
condition of the consummation of any such Transaction, lawful and adequate
provision shall be made so that each holder of Shares shall be entitled, upon
conversion of such Shares, to receive an amount per Share so converted equal to
(Y) the aggregate amount of securities, interests, cash and/or other property
(payable in kind), as the case may be, into which or for which a share of Common
Stock was changed or exchanged in such Transaction times (Z) the number of
shares of Common Stock into which such Share was convertible immediately prior
to such Transaction.
(c) Excluded Securities and Transactions. The following securities
and transactions shall be excluded from the operation of Sections 8(a) and 8(b):
(i) the existence and any exercise of Common Stock Purchase
Warrants (A) issued to Bankers Trust Company and/or its affiliates and (B)
issued in connection with the sale of the Corporation's debt securities, in each
case for shares of Class C Common Stock in an amount not to exceed in the
aggregate ten percent (10%) of the fully diluted common equity of the
Corporation;
(ii) the existence of Two Million Two Hundred Forty Three
Thousand Three Hundred Twenty (2,243,320) shares of the Series A 10% Cumulative
Convertible Preferred Stock of the Corporation issued and outstanding on the
date hereof, and the conversion of outstanding shares of Series A 10% Cumulative
Convertible Preferred Stock into Class A Common Stock;
(iii) Four Hundred Ninety Thousand Eight Hundred Ninety Eight
(490,898) shares of Class A Common Stock issued and outstanding on the date
hereof;
(iv) Two Hundred Thousand (200,000) shares of Class B Common
Stock issued and outstanding on the date hereof; and
(v) any grant or exercise of options to purchase up to an
aggregate of Two Million Five Hundred Thousand (2,500,000) shares of Common
Stock pursuant to any employee stock plan or non-employee director stock plan
approved by the Board of Directors and, if required, by the stockholders of the
Corporation.
(vi) the issuance of additional shares of Series A 10%
Cumulative Convertible Preferred Stock to the Anchor Glass Container Corporation
Service Retirement Plan, the Pension Plan for Hourly Employees, Latchford Glass
Company and Associated Companies and/or the Anchor Glass Container Corporation
Retirement Plan for Salaried Employees pursuant to the Plan Termination
Agreement dated February 3, 1997 by and
-13-
<PAGE> 14
between Consumers Packaging Inc., the Corporation and the Pension Benefit
Guaranty Corporation.
(d) Stock Dividends; Subdivision or Combination of Common Stock. If
the Corporation, at any time after the date hereof (i) issues any shares of
Common Stock, Options or Convertible Securities as a dividend on Common Stock,
(ii) issues any shares of Common Stock, Options or Convertible Securities in
subdivision of outstanding shares of Common Stock, by reclassification or
otherwise, or (iii) combines outstanding shares of Common Stock, by
reclassification or otherwise, then the Exercise Price in effect immediately
prior to such action will be adjusted by multiplying it by a fraction, (x) the
numerator of which is the number of shares of Common Stock Deemed Outstanding
immediately prior to such action and (y) the denominator of which is the number
of shares of Common Stock Deemed Outstanding immediately following such action.
Such adjustment of the Exercise Price will be made whether the result is to
increase or decrease the Exercise Price then in effect; provided that no such
adjustment will increase the Exercise Price above the initial Exercise Price set
forth in Section 7 hereof.
(e) No De Minimis Adjustments. No adjustment of the Exercise Price
will be made if the amount of such adjustment would be less than one cent
($0.01) per share, but in such case any adjustment that otherwise would be
required to be made will be carried forward and will be made at such time and
together with the next subsequent adjustment that together with any adjustment
or adjustments so carried forward, amounts to not less than one cent ($0.01) per
share.
(f) Notice of Adjustment. Promptly upon any adjustment of the
Exercise Price, the Corporation will send written notice thereof to the holders
of Series B 8% Preferred Stock setting forth the adjusted Exercise Price and the
number of shares of Class B Common Stock issuable upon conversion of a Share and
also setting forth in reasonable detail the method of calculation of such
adjustment and number of shares, including any determination by the Board of
Directors of the Fair Market Value of the Common Stock. When appropriate, such
notice may be given in advance and included as part of any notice required to be
given pursuant to Section 8(g) hereof.
(g) No Impairment. The Corporation will not, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or other voluntary action, avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Corporation but will at all times in good faith assist in the carrying out of
the provisions of this Section 8 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Shares against impairment. Without limiting the generality of the
foregoing, the Corporation (i) will not permit the par value of any shares of
stock at any time receivable upon the conversion of the Shares to exceed the
Exercise Price then in effect, (ii) will take all such action as may be
necessary or appropriate in order that the Corporation may validly and legally
issue fully paid, nonassessable shares of stock on the conversion of the Shares,
(iii) will not take any action which results in any adjustment of the Exercise
Price if the total number of shares of Class B Common Stock issuable after the
action upon the conversion of all of the Shares will exceed
-14-
<PAGE> 15
the total number of shares of Class B Common Stock then authorized by the
Corporation's Certificate of Incorporation and available for the purpose of
issue once upon such conversion and (iv) will not take or permit any action
which results in any adjustment of the Exercise Price below a positive amount.
(h) If at any time after the date hereof:
(i) the Corporation shall pay any dividend in stock upon its
Common Stock or make any distribution (other than cash dividends) to the holders
of its Common Stock;
(ii) the Corporation shall offer for subscription or purchase
pro rata to the holders of its Common Stock any additional shares of stock of
any class or any other rights;
(iii) there shall be any reorganization or reclassification of
the capital stock of the Corporation, any consolidation, merger, or other
business combination of the Corporation with or into another entity, or a sale
or disposition of all or substantially all of the Corporation's assets; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then in each such case, the
Corporation shall give prior written notice to the holders of the Series B 8%
Preferred Stock at the addresses of such holders as shown on the books of the
Corporation of (A) the date and time on which the books of the Corporation shall
close or a record shall be taken for the purpose of such action and (B) the date
and time, if known, on which such action will, or is expected to, take place. A
copy of each such notice will be sent simultaneously to each transfer agent of
the Common Stock. Such notice will also specify the date as of which the holders
of Common Stock of record will participate in such action. Such written notice
will be given at least thirty (30) days prior to the record date or the subject
action, whichever is earlier.
9. No Preemptive Rights. The holders of Series B 8% Preferred Stock
shall have no preemptive rights, and no holders of the Series B 8% Preferred
Stock shall be entitled, as a matter of right, to subscribe for or purchase
shares of any class now or hereafter authorized, or to subscribe for or purchase
securities convertible into or exchangeable for shares of any class or to which
shall be attached or appertain any warrants or rights entitling the holder
thereof to subscribe for or purchase shares of any class, except such rights of
subscription or purchase, if any, at such price or prices and upon such terms
and conditions, as the Board of Directors in its discretion may from time to
time determine.
10. Enforcement of Rights. Any holder of Series B 8% Preferred Stock
may proceed to protect and enforce its rights and the rights of such holders by
any available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision of this
Certificate of Designation or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
-15-
<PAGE> 16
IN WITNESS WHEREOF, Anchor Glass Acquisition Corporation has caused
this Certificate to be signed by its Vice President and attested by its
Secretary this 5th day of February, 1997.
ATTEST: ANCHOR GLASS ACQUISITION CORPORATION
/s/ C. Kent May By:/s/ M. William Lightner, Jr.
- ------------------------------ --------------------------------------
Secretary Vice President
-16-
<PAGE> 1
EXHIBIT 4.1
ANCHOR GLASS CONTAINER CORPORATION,
as Issuer
CONSUMERS U.S., INC.,
as Guarantor
and
The Bank of New York,
as Trustee
-------------------
INDENTURE
Dated as of April 17, 1997
-------------------
$150,000,000
11 1/4% First Mortgage Notes due 2005
<PAGE> 2
Cross-Reference Table
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)........................................................................... 7.10
(a)(2).......................................................................... 7.10
(a)(3).......................................................................... N.A.
(a)(4).......................................................................... N.A.
(a)(5).......................................................................... 7.08; 7.10
(b)............................................................................. 7.08; 7.10; 14.02
(c)............................................................................. N.A.
311(a) ............................................................................. 7.11
(b)............................................................................. 7.11
(c)............................................................................. N.A.
312(a) ............................................................................. 2.05
(b)............................................................................. 14.03
(c)............................................................................. 14.03
313(a) ............................................................................. 7.06
(b)(1).......................................................................... N.A.
(b)(2).......................................................................... 7.06
(c)............................................................................. 7.06; 14.02
(d)............................................................................. 7.06
314(a) ............................................................................. 4.06; 4.08; 14.02
(b)............................................................................. 8.02
(c)(1).......................................................................... 14.04
(c)(2).......................................................................... 14.04
(c)(3).......................................................................... N.A.
(d)............................................................................. 4.16; 8.05; 10.10
(e)............................................................................. 14.05
(f)............................................................................. N.A.
315(a) ............................................................................. 7.01(b)
(b)............................................................................. 7.05; 14.02
(c)............................................................................. 7.01(a)
(d)............................................................................. 7.01(c)
(e)............................................................................. 6.11
316(a)(last sentence)............................................................... 2.09
(a)(1)(A)....................................................................... 6.05
(a)(1)(B)....................................................................... 6.04
(a)(2).......................................................................... N.A.
(b)............................................................................. 6.07
(c)............................................................................. 13.05
317(a)(1)........................................................................... 6.08
(a)(2).......................................................................... 6.09
(b)............................................................................. 2.04
318(a) ............................................................................. 14.01
(c)............................................................................. 14.01
</TABLE>
- ---------------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE............................................................................................................1
DEFINITIONS AND INCORPORATION BY REFERENCE.......................................................................1
SECTION 1.01. Definitions.................................................................................1
SECTION 1.02. Incorporation by Reference of TIA..........................................................29
SECTION 1.03. Rules of Construction......................................................................30
ARTICLE TWO...........................................................................................................30
THE NOTES.......................................................................................................30
SECTION 2.01. Form and Dating............................................................................30
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount...................................31
SECTION 2.03. Registrar and Paying Agent.................................................................32
SECTION 2.04. Paying Agent to Hold Assets in Trust.......................................................32
SECTION 2.05. Noteholder Lists...........................................................................33
SECTION 2.06. Transfer and Exchange......................................................................33
SECTION 2.07. Replacement Notes..........................................................................34
SECTION 2.08. Outstanding Notes..........................................................................34
SECTION 2.09. Treasury Notes.............................................................................34
SECTION 2.10. Temporary Notes............................................................................35
SECTION 2.11. Cancellation...............................................................................35
SECTION 2.12. Defaulted Interest.........................................................................35
SECTION 2.13. CUSIP Number...............................................................................36
SECTION 2.14. Deposit of Monies..........................................................................36
SECTION 2.15. Restrictive Legends........................................................................36
SECTION 2.16. Book-Entry Provisions for Global Securities................................................39
SECTION 2.17. Special Transfer Provisions................................................................40
ARTICLE THREE.........................................................................................................42
REDEMPTION......................................................................................................42
SECTION 3.01. Notices to Trustee.........................................................................42
SECTION 3.02. Selection of Notes to Be Redeemed..........................................................42
SECTION 3.03. Notice of Redemption.......................................................................42
SECTION 3.04. Effect of Notice of Redemption.............................................................43
SECTION 3.05. Deposit of Redemption Price................................................................44
SECTION 3.06. Notes Redeemed in Part.....................................................................44
ARTICLE FOUR..........................................................................................................44
COVENANTS.......................................................................................................44
SECTION 4.01. Payment of Notes...........................................................................44
SECTION 4.02. Maintenance of Office or Agency............................................................45
SECTION 4.03. Maintenance of Corporate Existence and Corporate Separateness..............................45
SECTION 4.04. Payment of Taxes and Other Claims..........................................................46
SECTION 4.05. Maintenance of Properties and Insurance....................................................46
SECTION 4.06. Compliance Certificate; Notice of Default..................................................47
SECTION 4.07. Compliance with Laws.......................................................................48
</TABLE>
i
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<TABLE>
<CAPTION>
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<S> <C>
SECTION 4.08. SEC Reports; Reports to Holders............................................................48
SECTION 4.09. Waiver of Stay, Extension or Usury Laws....................................................49
SECTION 4.10. Limitation on Restricted Payments..........................................................49
SECTION 4.11. Limitation on Transactions with Affiliates.................................................51
SECTION 4.12. Limitation on Indebtedness.................................................................53
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries...............53
SECTION 4.14. Limitations on Activities of the Parent Guarantor..........................................54
SECTION 4.15. Change of Control..........................................................................54
SECTION 4.16. Limitation on the Sale of Assets...........................................................56
SECTION 4.17. Limitation on Issuance and Sale of Capital Stock of Restricted Subsidiaries................60
SECTION 4.18. Limitation on Liens........................................................................60
SECTION 4.19. Subsidiary Guarantors......................................................................60
SECTION 4.20. Impairment of Security Interest............................................................61
SECTION 4.21. Restricted and Unrestricted Subsidiaries...................................................61
ARTICLE FIVE..........................................................................................................62
SUCCESSOR CORPORATION...........................................................................................62
SECTION 5.01. Merger, Consolidation or Sale of Assets....................................................62
SECTION 5.02. Successor Corporation Substituted..........................................................63
ARTICLE SIX...........................................................................................................64
DEFAULT AND REMEDIES............................................................................................64
SECTION 6.01. Events of Default..........................................................................64
SECTION 6.02. Acceleration...............................................................................65
SECTION 6.03. Other Remedies.............................................................................66
SECTION 6.04. Waiver of Past Defaults....................................................................66
SECTION 6.05. Control by Majority........................................................................67
SECTION 6.06. Limitation on Suits........................................................................67
SECTION 6.07. Rights of Holders To Receive Payment.......................................................67
SECTION 6.08. Collection Suit by Trustee.................................................................68
SECTION 6.09. Trustee May File Proofs of Claim...........................................................68
SECTION 6.10. Priorities.................................................................................68
SECTION 6.11. Undertaking for Costs......................................................................69
ARTICLE SEVEN.........................................................................................................69
TRUSTEE.........................................................................................................69
SECTION 7.01. Duties of Trustee..........................................................................69
SECTION 7.02. Rights of Trustee..........................................................................70
SECTION 7.03. Individual Rights of Trustee...............................................................72
SECTION 7.04. Trustee's Disclaimer.......................................................................72
SECTION 7.05. Notice of Default..........................................................................72
SECTION 7.06. Reports by Trustee to Holders..............................................................72
SECTION 7.07. Compensation and Indemnity.................................................................73
SECTION 7.08. Replacement of Trustee.....................................................................74
SECTION 7.09. Successor Trustee by Merger, Etc...........................................................74
SECTION 7.10. Eligibility; Disqualification..............................................................75
SECTION 7.11. Preferential Collection of Claims Against Company..........................................75
SECTION 7.12. Trustee's Application for Instructions from the Company....................................76
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
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----
<S> <C>
ARTICLE EIGHT.........................................................................................................76
COLLATERAL AND SECURITY DOCUMENTS...............................................................................76
SECTION 8.01. Security Documents.........................................................................76
SECTION 8.02. Recording..................................................................................77
SECTION 8.03. Possession of the Collateral and the Collateral Account....................................77
SECTION 8.04. Suits to Protect the Collateral............................................................78
SECTION 8.05. Release upon Termination of the Company's Obligations; Partial Release.....................78
SECTION 8.06. Actions by the Trustee.....................................................................80
ARTICLE NINE..........................................................................................................80
COLLATERAL ACCOUNT..............................................................................................80
SECTION 9.01. Collateral Account.........................................................................80
SECTION 9.02. Terms of Collateral Account................................................................81
SECTION 9.03. Representations, Warranties and Covenants Specific to the Collateral Account...............83
ARTICLE TEN...........................................................................................................84
COVENANTS SPECIFIC TO THE COLLATERAL PROPERTY...................................................................84
SECTION 10.01. Good Title; Authority; Priority: Maintenance of Title: Supplemental Indentures;
Registration, Recording and Filing; Closing Documents..................................................84
SECTION 10.02. Further Documentation to Assure Lien: Fees and Expenses...................................85
SECTION 10.03. Impairment of Collateral..................................................................87
SECTION 10.04. Obligations with Respect to Leases and Material Contracts.................................87
SECTION 10.05. Use and Configuration: Maintenance of Collateral Properties...............................88
SECTION 10.06. Payment of Taxes. Assessments: Compliance with Law........................................88
SECTION 10.07. Environmental Matters.....................................................................89
SECTION 10.08. Condemnation..............................................................................91
SECTION 10.09. Required Insurance Policies...............................................................91
SECTION 10.10. Withdrawal of Condemnation Proceeds and Insurance Proceeds................................96
SECTION 10.11. Inspection................................................................................99
ARTICLE ELEVEN........................................................................................................99
GUARANTEE OF NOTES..............................................................................................99
SECTION 11.01. Guarantee.................................................................................99
SECTION 11.02. Guarantee Unconditional, etc.............................................................100
SECTION 11.03. Limitation of Subsidiary Guarantor's Liability...........................................101
SECTION 11.04. Contribution.............................................................................102
SECTION 11.05. Release..................................................................................102
SECTION 11.06. Additional Guarantors....................................................................102
SECTION 11.07. Guarantors May Consolidate, Etc., On Certain Terms.......................................103
SECTION 11.08. Successors and Assigns...................................................................103
SECTION 11.09. Waiver of Stay, Extension or Usury Laws..................................................104
ARTICLE TWELVE.......................................................................................................104
DISCHARGE OF INDENTURE; DEFEASANCE.............................................................................104
SECTION 12.01. Termination of the Company's Obligations.................................................104
SECTION 12.02. Legal Defeasance and Covenant Defeasance.................................................105
SECTION 12.03. Conditions to Legal Defeasance or Covenant Defeasance....................................106
SECTION 12.04. Application of Trust Money...............................................................107
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 12.05. Repayment to the Company.................................................................108
SECTION 12.06. Reinstatement............................................................................108
ARTICLE THIRTEEN.....................................................................................................109
AMENDMENTS AND SUPPLEMENTS TO THE INDENTURE, NOTES
AND SECURITY DOCUMENTS...................................................................................109
SECTION 13.01. Without Consent of Holders...............................................................109
SECTION 13.02. With Consent of Holders..................................................................109
SECTION 13.03. Execution of Supplemental Indentures and Amendments to Security Documents................110
SECTION 13.04. Effect of Supplemental Indentures and Amendments to Security Documents...................111
SECTION 13.05. Reference in Notes to Supplemental Indentures............................................111
SECTION 13.06. Compliance with TIA......................................................................111
SECTION 13.07. Revocation and Effect of Consents........................................................111
SECTION 13.08. Notation on or Exchange of Notes.........................................................112
ARTICLE FOURTEEN.....................................................................................................112
MISCELLANEOUS..................................................................................................112
SECTION 14.01. TIA Controls.............................................................................112
SECTION 14.02. Notices..................................................................................112
SECTION 14.03. Communications by Holders with Other Holders.............................................113
SECTION 14.04. Certificate and Opinion as to Conditions Precedent.......................................114
SECTION 14.05. Statements Required in Certificate or Opinion............................................114
SECTION 14.06. Rules by Trustee, Paying Agent, Registrar................................................114
SECTION 14.07. Legal Holidays...........................................................................115
SECTION 14.08. Governing Law; Consent to Jurisdiction; Service of Process...............................115
SECTION 14.09. No Adverse Interpretation of Other Agreements............................................116
SECTION 14.10. No Recourse Against Others...............................................................116
SECTION 14.11. Successors...............................................................................116
SECTION 14.12. Duplicate and Counterpart Originals......................................................116
SECTION 14.13. Severability.............................................................................117
SECTION 14.14. Table of Contents, Headings, Etc.........................................................117
</TABLE>
iv
<PAGE> 7
INDENTURE, dated as of April 17, 1997, among Anchor Glass Container
Corporation, a Delaware corporation (the "Company"), Consumers U.S., Inc., a
Delaware corporation (the "Parent Guarantor"), and The Bank of New York, a New
York banking corporation, as Trustee (the "Trustee").
WHEREAS, the Company is the borrower under that certain loan
agreement, dated February 5, 1997, between Bankers Trust Company, as agent (the
"Agent") on behalf of certain lenders (the "Lenders"), the Lenders, and certain
guarantors named therein (the "Loan Agreement");
WHEREAS, the Agent and the Lenders have assigned the notes issued to
them by the Company under the Loan Agreement, together with all mortgages and
other collateral therefor, to the Trustee;
WHEREAS, the Company and the Trustee have agreed to amend and
restate the Loan Agreement in the form of an indenture and to amend and restate
the notes issued under the Loan Agreement in the form of the Notes (as defined
herein);
WHEREAS, the Company has duly authorized the creation of an issue of
11 1/4% First Mortgage Notes due 2005 (the "Initial Notes") and, if and when
issued in exchange for Initial Notes pursuant to the Indenture and the
Registration Rights Agreement, an issue of the Company's 11 1/4% First Mortgage
Notes due 2005 (the "Exchange Notes," and together with the Initial Notes, the
"Notes") and, to provide therefor, the Company and the Parent Guarantor have
duly authorized the execution and delivery of this Indenture. All things
necessary to make the Notes, when duly issued and executed by the Company, and
authenticated and delivered hereunder, the valid obligations of the Company and,
as guarantor, the Parent Guarantor, and to make this Indenture a valid and
binding agreement of the Company and the Parent Guarantor, have been done.
NOW THEREFORE, for good and valuable consideration, the parties
hereby amend and restate the Loan Agreement in its entirety as follows:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in Section 6.02(a).
"Account Collateral" has the meaning provided in Section 9.01.
"Account-Related Obligation" has the meaning provided in Section
9.01.
"Acquired Indebtedness" of any Person means Indebtedness of another
Person and any of its Subsidiaries existing at the time such other Person
becomes a Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person or at the time it merges or consolidates with the referent
Person or any of the referent Person's Subsidiaries (Restricted
<PAGE> 8
Subsidiaries in the case of the Company) or assumed by the referent Person or
any Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person in connection with the acquisition of assets from such other
Person and in each case not Incurred by such other Person or its Subsidiaries in
connection with, or in anticipation or contemplation of, such other Person
becoming a Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person or such acquisition, merger or consolidation.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means
the lesser of the amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including, without
limitation, the probable liability of such Subsidiary Guarantor with respect to
its contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Guarantee, of such Subsidiary Guarantor at such date and
(y) the present fair saleable value of the assets of such Subsidiary Guarantor
at such date exceeds the amount that will be required to pay the probable
liability of such Subsidiary Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any Guarantor by such Subsidiary
Guarantor in respect of the obligations of such Subsidiary Guarantor under its
Guarantee), excluding debt in respect of the Guarantee, as they become absolute
and matured.
"Affiliate" means, when used with reference to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, the referent Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct or cause the direction of management or policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise (and the terms "controlling" and "controlled" have
meanings correlative of the foregoing) or the ownership of more than 10% of the
Voting Stock of such Person; provided that Bankers Trust Company and The
Toronto-Dominion Bank and each of their Affiliates will not be deemed to be
affiliates of the Company and for purposes of payment to employee compensation,
a person shall not be deemed to be an Affiliate of the Company by virtue of his
or her status as an officer or director of the Company absent other elements of
control.
"Affiliate Transaction" has the meaning set forth in Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Anchor Acquisition" means the acquisition on February 5, 1997 by
the Company of certain assets and certain liabilities of Old Anchor pursuant to
the Asset Purchase Agreement dated December 18, 1996 among Consumers Packaging,
Old Anchor, Owens-Brockway Glass Container, Inc. (the rights and obligations of
Consumers Packaging thereunder having been assigned to the Company).
"all or substantially all" shall have the meaning given such phrase
in the Revised Model Business Corporation Act.
2
<PAGE> 9
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with the Company or any
Restricted Subsidiary or (ii) the acquisition by the Company or any Restricted
Subsidiary of assets of any Person comprising a division or line of business of
such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease, assignment or other disposition or series of
related sales, issuances, conveyances, transfers, leases, assignments or other
dispositions (including, without limitation, by merger or consolidation, and
whether by operation of law or otherwise) for value by the Company or by any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person (other than by a Restricted Subsidiary to the Company or another
Restricted Subsidiary) of (i) any Capital Stock of a Restricted Subsidiary held
or beneficially owned by the Company or any Restricted Subsidiary, (ii) any
other Property (excluding Capital Stock not covered in (i) or (iii)) of the
Company or of any Restricted Subsidiary or (iii) non-cash consideration received
by the Company or any Restricted Subsidiary pursuant to Section 4.16.
Notwithstanding the foregoing, Asset Sales shall not include (a) the creation of
any Permitted Lien, (b) any disposition of Bank Collateral, (c) the sale or
other disposition of inventory in the ordinary course of business, (d) the sale
or other disposition of and any item of machinery, equipment, furniture,
apparatus, tools, implements or other similar Property, the Fair Market Value of
which does not exceed $500,000 in a single or series of related transactions or
$2.5 million in the aggregate in any fiscal year, or (e) the sale of receivables
pursuant to a receivables securitization or similar program.
"Asset Sale Offer" has the meaning provided in Section 4.16.
"Attributable Indebtedness" means, in respect of a Sale and
Leaseback Transaction at the time of determination thereof the capitalized
amount of Indebtedness in respect of such transaction that would appear on the
face of a balance sheet of the lessee thereunder in accordance with GAAP.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Authority" means any national, federal, state, municipal or local
government or quasi-governmental agency or authority.
"Bank Collateral" has the meaning attributed to such term in the
Intercreditor Agreement in its form on the Issue Date.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect or any successor statute.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
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<PAGE> 10
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each day which is not a Saturday, a Sunday or
any day which banking institutions are not required to open in the City of New
York.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease that are
required to be classified and accounted for as a capital lease obligators under
GAAP and, for purposes of this definition, the amount of such obligations at any
date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP. Each Capitalized Lease Obligation shall be
deemed to be secured by a Lien on the property subject to the lease.
"Capital Stock" means (i) with respect to any person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or Canadian Government or issued
by any agency thereof and backed by the full faith and credit of the United
States or Canada, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having at least the second
highest rating obtainable from either Standard & Poor's Rating Group ("S&P") or
Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having at least the second highest rating obtainable from either
S&P's or Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $500,000,000; (v) shares of any money market mutual fund that (a) has
its assets invested continuously in the types of investments referred to in
clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000,
and (c) has at least the second highest rating obtainable from either S&P or
Moody's; and (vi) repurchase agreements with respect to, and which are fully
secured by a perfected security interest in, obligations of a type described in
clause (i) or clause (ii) above and are with any commercial bank described in
clause (iv) above.
"Casualty", with respect to any Collateral, means loss of, damage to
or destruction of all or any part of such Collateral.
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<PAGE> 11
"Change of Control" means an event or series of events by
which (a) (i) Permitted Holders shall cease to be the beneficial owner
(including, without limitation, economic interest and voting power), directly or
indirectly, of at least 40% (or after a Qualified Public Offering, 25%) of the
Fully-Diluted Voting Stock of Consumers Packaging, the Parent Guarantor or the
Company, (ii) the Parent Guarantor shall cease to be the owner (including,
without limitation, economic interest and voting power) directly of at least 40%
(or after a Qualified Public Offering, 25%) of the Fully-Diluted Voting Stock of
the Company or (iii) any Person or group (as defined under Rule 13d-3 under the
Exchange Act) other than one or more of the Permitted Holders or, in the case of
the Company, Smith Barney in its capacity as Escrow Agent for the creditors of
Old Anchor in connection with its Chapter 11 proceedings under the United States
Bankruptcy Code so long as it does not in fact exercise control over the
Company, becomes the beneficial owner (as defined under Rule 13d-3 under the
Exchange Act), directly or indirectly, of more of the Fully-Diluted Voting Stock
of Consumers Packaging, the Parent Guarantor or the Company, as the case may be,
than is then beneficially owned, directly or indirectly, by one or more of the
Permitted Holders; (b) during any period of two consecutive years or in the case
this event occurs within the first two years after Issue Date, such shorter
period as shall have begun on the Issue Date, individuals who at the beginning
of such period constituted the Board of Directors of the Company or Consumer
Packaging or the Parent Guarantor, as the case may be, on the Issue Date
(together with any new or replacement directors whose proposal for election by
the shareholders of the Company, Consumers Packaging or the Parent Guarantor, as
the case may be, or by the other directors was approved by a vote of 66 2/3% of
the directors of the Company or Consumers Packaging or the Parent Guarantor, as
the case may be, then still in office who were either directors on the Issue
Date or whose election or nomination for election was previously so approved)
shall cease for any reason to constitute a majority of the members of the Board
of Directors of the Company or Consumers Packaging or the Parent Guarantor, as
the case may be, then still in office; provided that if any Person or group
other than the applicable Permitted Holders is able to elect a majority of the
Board of Directors of Consumers Packaging or the Company or the Parent
Guarantor, as the case may be, pursuant to an agreement with one or more
Persons, a Change of Control shall be deemed to have occurred; (c) the Company
or Consumers Packaging or the Parent Guarantor, as the case may be, consolidates
with or merges with or into another Person or any Person consolidates with, or
merges with or into, the Company, Consumers Packaging or the Parent Guarantor,
as the case may be (in each case, whether or not in compliance with the terms of
the Indenture), in any such event pursuant to a transaction in which immediately
after the consummation thereof Persons owning a majority of the Voting Stock of
the Company or Consumers Packaging or the Parent Guarantor, as the case may be,
immediately prior to such consummation shall cease to own a majority of the
Voting Stock of the Company or Consumers Packaging or the Parent Guarantor, as
the case may be, or the surviving entity if other than the Company or Consumers
Packaging or the Parent Guarantor, as the case may be; or (d) the Company or
Consumers Packaging or the Parent Guarantor conveys, transfers or leases all or
substantially all of its assets.
"Change of Control Date" has the meaning provided in Section
4.15.
"Change of Control Offer" has the meaning provided in Section
4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
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<PAGE> 12
"Collateral" means (i) all of the Capital Stock of any
Restricted Subsidiary, (ii) non-cash consideration received as consideration for
an Asset Sale pursuant to Section 4.16, and Related Business Investments
acquired with Net Cash Proceeds from an Asset Sale, Casualty Proceeds or
Condemnation Proceeds, (iii) all Collateral Property and all of the other assets
(other than Capital Stock (except as provided for in clause (i) or (ii)) or cash
and Cash Equivalents except as expressly provided for in this clause (iii)),
whether now existing or hereafter from time to time acquired, by the Company or
any Restricted Subsidiary, including, without limitation, any and all real
property and leasehold interest in real property now or hereafter owned by the
Company or any Restricted Subsidiary, all Equipment, Shared Collateral, the
Collateral Account and all monies, Cash Equivalents securities and instruments
deposited or required to be deposited in the Collateral Account, Copyrights
(including all reissues and renewals thereof), Patents (including all reissues
and renewals thereof), Trademarks, Trade Secrets, Trade Secret Rights,
Contracts, Contract Rights, General Intangibles, Goods, Chattel Paper,
Instruments, Documents, and all proceeds and products of any and all of the
foregoing, (iv) any other property or assets securing the Notes from time to
time pursuant to this Indenture or any Security Document, in each case excluding
Bank Collateral, Purchase Money Assets and Capital Stock (except to the extent
covered by (i) or (ii) above); provided, that, all capitalized terms used in
this definition not otherwise defined in this Indenture are used as defined in
the Security Agreement.
"Collateral Account" means the collateral account established
by the Trustee pursuant to Article 9 of this Indenture.
"Collateral Property" means any and all real property and
leasehold interest (excluding as of the Issue Date leasehold interests not
specified on Schedule A) in real property (and all Equipment, Fixtures and
Improvements located thereon and on any leasehold properties not specified on
Schedule A) now or hereafter owned by the Company or any Restricted Subsidiary
other than Purchase Money Assets.
"Commodity Agreement" of any Person means any forward
contract, commodity swap, commodity option or other similar financial agreement
or arrangement relating to, or the value of which is dependent upon,
fluctuations in commodity prices.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
such successor.
"Condemnation" means any taking of the Collateral or any part
thereof, in or by condemnation, expropriation or similar proceeding, eminent
domain proceedings, seizure or forfeiture, pursuant to any law, general or
special, or by reason of the temporary requisition of the use or occupancy of
the Collateral, or any part thereof, by any Authority.
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<PAGE> 13
"Condemnation Proceeds" means any awards, proceeds, payment or
other compensation arising out of a Condemnation.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net Income plus
(ii) to the extent that any of the following shall have been taken into account
in determining Consolidated Net Income, (A) all net income taxes of such Person
and its Subsidiaries (Restricted Subsidiaries in the case of the Company) paid
or accrued in accordance with GAAP for such period (without including or taking
into account income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions of assets outside
the ordinary course of business), Consolidated Interest Expense, amortization
expense and depreciation expense (including depreciation or amortization expense
included in cost of goods sold), and (B) other noncash items (other than noncash
interest) reducing Consolidated Net Income, other than any noncash item which
requires the accrual of or a reserve for cash charges for any future period,
less other noncash items increasing Consolidated Net Income, all as determined
on a consolidated basis for such Person and its Subsidiaries (Restricted
Subsidiaries in the case of the Company) in conformity with GAAP.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense and (ii) the product of (x) the amount of all cash dividend payments on
any series of Preferred Stock or Disqualified Capital Stock of such Person and
of its Subsidiaries (Restricted Subsidiaries in the case of the Company) paid,
accrued or scheduled to be paid or accreted during such period times (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local tax rate
of such Person, expressed as a decimal.
"Consolidated Interest Coverage Ratio" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the Four
Quarter Period ending on or prior to the date of the transaction or event giving
rise to the need to calculate the Consolidated Interest Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the Incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (Restricted Subsidiaries
in the case of the Company) (and the application of the proceeds thereof) giving
rise to the need to make such calculation and any Incurrence of other
Indebtedness (and the application of the proceeds thereof), other than the
Incurrence or repayment (not resulting in a permanent reduction of available
borrowings) of Indebtedness in the ordinary course of business pursuant to
working capital facilities (including the Revolving Credit Facility), at any
time subsequent to the first day of the Four Quarter Period and on or prior to
the Transaction Date, as if such Incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period, (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (Restricted
Subsidiaries in the case of the Company) (including any Person who becomes a
Subsidiary (Restricted Subsidiary in the case of the Company) as a result of any
such Asset Acquisition) Incurring Acquired Indebtedness at any time
7
<PAGE> 14
subsequent to the to the first day of the Four Quarter Period and on or prior to
the Transaction Date), as if such Asset Sale or Asset Acquisition (including the
Incurrence of any such Indebtedness or Acquired Indebtedness and also including
or deducting any Consolidated EBITDA associated with such Asset Acquisition or
Asset Sale, respectively) occurred on the first day of the Four Quarter Period;
provided, that, the Consolidated EBITDA of any Person acquired shall be included
only to the extent includable pursuant to the definition of "Consolidated Net
Income". For purposes of this definition, (x) whenever pro forma effect is to be
given to any of the foregoing transactions, the pro forma calculations will be
determined in accordance with Regulation S-X promulgated by the Commission and
(y) the Company's Consolidated EBITDA, Consolidated Fixed Charges, Consolidated
Interest Expense and Consolidated Net Income for the second, third and fourth
quarters of 1996 shall be Pro Forma. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Interest Coverage Ratio", (1) interest on
Indebtedness determined on a fluctuating basis as of the Transaction Date
(including Indebtedness actually Incurred on the Transaction Date) and which
will continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (2) notwithstanding clause (1) above, interest
on Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by agreements relating to Interest Swap Obligations, shall be deemed
to accrue at the rate per annum resulting after giving effect to the operation
of such agreements; and (3) interest on Indebtedness Incurred in the ordinary
course of business pursuant to working capital facilities (including the
Revolving Credit Facility) shall be determined as if the average amount of
borrowings outstanding thereunder during the Four Quarter Period shall have been
outstanding on every day of such Four Quarter Period and interest had accrued at
the rate determined pursuant to the preceding clauses (1) or (2) (whether or not
such Indebtedness shall have been outstanding on the Transaction Date).
"Consolidated Interest Expense" means, with respect to any
Person for any period, the aggregate of the interest expense (without deduction
of interest income) of such Person and its Subsidiaries (Restricted Subsidiaries
in the case of the Company) for such period, on a consolidated basis, as
determined in accordance with GAAP and including, without duplication, (a) all
amortization of original issue discount; (b) the interest component of
Capitalized Lease Obligations paid or accrued by such Person and its
Subsidiaries (Restricted Subsidiaries in the case of the Company) during such
period; (c) net cash costs under all Interest Swap Obligations (including
amortization of fees); (d) all capitalized interest; (e) to the extent that such
Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the
Company) guarantees interest on any debt of any borrower, interest paid by such
borrower during such period on such debt but only to the extent of the amount of
the interest Guaranteed; (f) all amortization or write off of deferred financing
costs of such Person and its consolidated Subsidiaries (Restricted Subsidiaries
in the case of the Company) during such period (other than the write-off of
financing fees related to the Company's Senior Credit Agreement dated February
5, 1997) and any premium or penalty paid in connection with redeeming or
retiring Indebtedness of such Person and its consolidated Subsidiaries
(Restricted Subsidiaries in the case of the Company) prior to the Stated
Maturity thereof; and (g) the interest portion of any deferred payment
obligations for such period.
8
<PAGE> 15
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate net income (or loss) of such Person and its
Subsidiaries (Restricted Subsidiaries in the case of the Company) for such
period on a consolidated basis, determined in accordance with GAAP; provided
that there shall be excluded therefrom (a) after-tax gains from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains or losses, (c) the net income of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person or is merged or consolidated with the referent Person or any
Subsidiary of the referent Person, (d) the net income (but not loss) of any
Subsidiary (Restricted Subsidiary in the case of the Company) of the referent
Person to the extent that the declaration of dividends or similar distributions
by that Subsidiary of that income is restricted by a contract, operation of law
or otherwise, except to the extent of dividends or distributions paid in the
form of cash or Cash Equivalents to the referent Person or to a Subsidiary
(Restricted Subsidiaries in the case of the Company) of the referent Person by
such Person, (e) the net income of any Person, other than a Subsidiary
(Restricted Subsidiary in the case of the Company) of the referent Person,
except to the extent of dividends or distributions paid in the form of cash or
Cash Equivalents to the referent Person or to a Subsidiary (Restricted
Subsidiaries in the case of the Company) of the referent Person by such Person,
(f) any restoration to income of any contingency reserve except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earning of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" of any Person means the total of the
consolidated stockholders' equity of such Person, determined on a consolidated
basis in accordance with GAAP, less (without duplication) amounts attributable
to Disqualified Capital Stock of such Person.
"Consumers Packaging" means Consumers Packaging Inc., a
corporation organized under the federal laws of Canada.
"Contaminant" means any pollutant, contaminant (as those terms
are defined in 42 U.S.C. Section 9601(33)), toxic pollutant (as that term is
defined in 33 U.S.C. Section 1362(13)), hazardous substance (as that term is
defined in 42 U.S.C. Section 9601(14)), hazardous chemical (as that term is
defined by 29 CFR Section 1910.1200(c)), hazardous waste (as that term is
defined in 42 U.S.C. Section 6903(5)), or any state or local equivalent of such
laws and regulations, including, without limitation, radioactive material,
polychlorinated biphenyls, asbestos, petroleum, including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof, or any constituent of any such substance or waste.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date hereof is located at 101 Barclay Street,
Floor 21 West, New York, New York 10286.
9
<PAGE> 16
"Covenant Defeasance" has the meaning provided in Section
12.02.
"Currency Agreements" means, in respect of a Person, any
foreign exchange currency futures or options, currency swap agreements, forward
exchange rate agreements, exchange rate collar agreements, exchange rate
insurance or other similar agreements or arrangements, or combination thereof,
as to which such Person is a party or a beneficiary.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Defaulted Interest" has the meaning provided in Section 2.12.
"Depository" means The Depository Trust Company, its nominees
and successors.
"Discontinued Plant" means plants of the Company closed prior
to the Issue Date including, without limitation, those located in Dayville,
Connecticut and Houston, Texas, and one plant closed by the Company after the
Issue Date which is specified as such in an Officers' Certificate.
"Discontinued Plant Asset Sale" means an Asset Sale of a
Discontinued Plant.
"Discontinued Plant Closing Costs" means cash expenses
incurred by the Company and its Restricted Subsidiaries as a result of the
closing of a Discontinued Plant no later than 270 days after a Discontinued
Plant Asset Sale.
"Disqualified Capital Stock" means any Capital Stock that, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary date on which the Notes mature; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require the Company
to repurchase or redeem such Capital Stock upon the occurrence of a Change of
Control occurring on or prior to the first anniversary date on which the Notes
mature shall not constitute Disqualified Stock if (i) the change of control
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions applicable to the Notes contained in
Section 4.15 and (ii) such Capital Stock specifically provides that the Company
will not repurchase or redeem any such stock pursuant to such provisions prior
to the Company's repurchase of such Notes as are required to be repurchased
pursuant to Section 4.15.
"Environment" means all components of the earth, including,
without limitation, air (and all layers of the soil, underground spaces and
cavities and all land submerged under water) and water (and all surface and
underground water), organic and inorganic matter and living
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<PAGE> 17
organisms, the interacting natural systems that include the components referred
to above in this definition.
"Environmental Laws" means all Legal Requirements imposing
liability or standards of conduct for or relating to the protection of the
environment, including, without limitation, (i) any actual or potential Release
of any Contaminant into the Environment; (ii) the required notification of same;
(iii) preventive or remedial measures in connection with any event or occurrence
referred to in clause (i) of this definition above; and (iv) the manufacturing,
processing, use, handling, packaging, labeling, sale, storage, recycling,
disposal, destruction, incineration, or transportation of any Contaminant, or
any solicitation or offer to do any activity referred to in this clause (iv) in
connection with any Contaminant.
"Environmental Report" has the meaning set forth in Section
10.07(c).
"Equipment" means all "equipment" as defined in the UCC, now
or hereafter owned by the Company or any Restricted Subsidiary has or shall
acquire an interest, now or hereafter located on, attached to or contained in or
used or usable in connection with any Collateral Property, and shall also mean
and include all building materials, construction materials, personal property
constituting furniture, fittings, appliances, apparatus, leasehold improvements,
machinery, devices, interior improvements, appurtenances, equipment, plant,
furnishings, fixtures, computers, electronic data processing equipment,
telecommunications equipment and other fixed assets now owned or hereafter
acquired by the Company or any Restricted Subsidiary and now or hereafter used
in the operation of any Collateral Property, and all proceeds thereof and all
additions to, substitutions for, replacements of or accessions to any of the
items recited as aforesaid and all attachments, components, parts (including
spare parts) and accessories, whether installed thereon or affixed thereto, and
wherever located, now or hereafter owned by the Company or any Restricted
Subsidiary, and used or intended to be used in connection with, or with the
operation of any Collateral Property or the buildings, structures, or other
improvements now or hereafter located at any Collateral Property, or in
connection with any construction being conducted or which may be conducted
thereon, all regardless of whether the same are located on any Collateral
Property or are located elsewhere (including, without limitation, in warehouses
or other storage facilities or in the possession of or on the premises of a
bailee, vendor or manufacturer) for purposes of manufacture, storage,
fabrication or transportation and all extensions and replacements to, and
proceeds of, any of the foregoing.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock.
"Equity Offering" means an offering of nonredeemable Common
Stock of the Company to any Person other than the Company or any of its
Subsidiaries.
"Excess Proceeds Amount" has the meaning provided in Section
4.16.
"Event of Default" has the meaning provided in Section 6.01.
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<PAGE> 18
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto and the rules and
regulations promulgated by the SEC thereunder.
"Exchange Notes" has the meaning provided in the preamble to
this Indenture.
"Exchange Offer" means the registration by the Company under
the Securities Act pursuant to a registration statement of the offer by the
Company to each Holder of the Initial Notes to exchange all the Initial Notes
held by such Holder for the Exchange Notes in an aggregate principal amount
equal to the aggregate principal amount of the Initial Notes held by such
Holder, all in accordance with the terms and conditions of the Registration
Rights Agreement.
"Facility" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company or a
Restricted Subsidiary.
"Fair Market Value" or "Fair Value" means, with respect to any
Property, the price which could be negotiated in an arm's-length transaction,
for cash, between an informed, willing and able seller and an informed and
willing and able buyer, neither of whom is under undue pressure or compulsion to
complete the transaction. Fair Market Value shall be determined by the Company
acting reasonably and in good faith; provided, however, that if the value of the
aggregate consideration to be received by the Company or any of its Subsidiaries
from any Asset Sale could reasonably be expected to exceed (i) $5.0 million,
Fair Market Value shall be determined by the Board of Directors of the Company
as evidenced by a Board Resolution delivered to the Trustee or (ii) $10.0
million, Fair Market Value shall also be determined by an Independent Financial
Advisor in a written opinion addressed to the Trustee.
"Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing in the United States
that is, in the reasonable and good faith judgment of the Board of Directors of
the Company, qualified to perform the task for which such firm has been engaged.
"Fixtures" means all Equipment now owned or hereafter acquired
by the Company or any Restricted Subsidiary which is so related to the building
or land in which or on which it is located that is deemed fixtures or real
property under the laws of the State in which it is located, together with all
accessions, appurtenances, additions, replacements and substitutions for any of
the foregoing and the proceeds thereof.
"Four Quarter Period" means, in respect of any Person at any
time, the most recently completed four consecutive full fiscal quarters
(provided, that in the case of the Company, for the first fiscal quarter of
1997, shall be the period from February 5, 1997 through March 31, 1997).
"Fully-Diluted Voting Stock" means, in respect of any Person
at any time, the Voting Stock of such Person assuming that all outstanding
options, warrants or other rights to
12
<PAGE> 19
acquire such Voting Stock have been exercised and all outstanding securities
convertible into or exchangeable for such Voting Stock have been converted or
exchanged at such time, in each case in accordance with their terms in effect at
such time.
"Funding Guarantor" has the meaning set forth in Section
11.04.
"G&G Investments" means G&G Investments Inc., a Delaware
corporation.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are applicable as of the
date of determination.
"Global Note" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of
any Person, directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay for (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, that, the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranteed Obligations" has the meaning provided in Section
11.01.
"Guarantor" means the Parent Guarantor and any of the
Subsidiary Guarantors.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Improvements" means all buildings, structures, Fixtures and
improvements of every nature whatsoever to the extent such items are Fixtures,
are not owned by tenants or by equipment lessors that lease such property to the
Company or a Restricted Subsidiary, and are situated on the land comprising any
Collateral Property on the Issue Date or thereafter (including, without
limitation, gas and electric fixtures, radiators, heaters, engines and
machinery, boilers, ranges, elevators and motors, plumbing, heating and
ventilating fixtures, elevators, carpeting and other floor coverings, water
heaters, awnings and storm sashes, and cleaning apparatus which are or shall be
attached to the land or said buildings, structures or improvements and including
any additions, enlargements, extensions, modifications, repairs or replacements
thereto).
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"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring" shall
have meanings correlative to the foregoing); provided, that (A) any Indebtedness
of a Person existing at the time such Person becomes (after the Issue Date) a
Restricted Subsidiary (whether by merger, consolidation, acquisition or
otherwise) of the Company shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Restricted Subsidiary and (B) any amendment, modification
or waiver of any document pursuant to which Indebtedness was previously Incurred
shall be deemed (without duplication), as of the date of and after giving effect
to, such amendment, modification or waiver, to be an Incurrence of additional
Indebtedness unless such amendment, modification or waiver does not (i) increase
the principal or premium thereof or interest rate thereon (including by way of
original issue discount) or (ii) change to an earlier date the Stated Maturity
thereof or the date of any scheduled or required principal payment thereon or
the time or circumstances under which such Indebtedness shall be redeemed;
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time becoming Indebtedness will not be deemed an
Incurrence of such Indebtedness.
"Indebtedness" means with respect to any Person, without
duplication, (i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money, (ii) the principal of and
premium (if any) in respect of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all Capitalized Lease
Obligations of such Person, including, without limitation, Attributable
Indebtedness, (iv) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade accounts
payable in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all reimbursement obligations of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) all Indebtedness of others (including all dividends of other
Persons for the payment of which is) Guaranteed, directly or indirectly, by such
Person or that is otherwise its legal liability or which such Person has agreed
to purchase or repurchase or in respect of which such Person has agreed
contingently to supply or advance funds, (vii) net liabilities of such Person
under Interest Swap Obligations, Commodity Agreements and Currency Agreements,
(viii) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any Property (including, without limitation, leasehold interests and
any other tangible or intangible property) of such Person, whether or not such
Indebtedness is assumed by such Person or is not otherwise such Person's legal
liability; provided, that, if the obligations so secured have not been assumed
by such Person or are otherwise not such Person's legal liability, the amount of
such Indebtedness for the purposes of this definition shall be limited to the
lesser of the amount of such Indebtedness secured by such Lien or the Fair
Market Value of the Property subject to such Lien and (ix) all Disqualified
Capital Stock issued by such Person, with the amount of Indebtedness represented
by such Disqualified Capital Stock being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price,
but excluding accrued dividends if
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<PAGE> 21
any. For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, provided, that,
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the full amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP. Notwithstanding the foregoing, (x)
Indebtedness shall not include any endorsements for collection or deposit in the
ordinary course of business or any Indebtedness that has been defeased or
satisfied in accordance with the terms of the documents governing such
Indebtedness and is no longer considered Indebtedness under GAAP and (y) any
realization of a Permitted Lien on Bank Collateral shall not constitute the
Incurrence of Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Independent" when used with respect to any specified Person
means a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company or
any of its Subsidiaries, or in any Affiliate of the Company or any of its
Subsidiaries and (c) is not an officer, employee, promoter, trustee, partner,
director or person performing similar functions for the Company or any of its
Subsidiaries. Whenever it is provided in the Indenture that any Independent
Person's opinion or certificate shall be furnished to the Trustee, such Person
shall be appointed by the Company in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read this definition and
that the signer is Independent within the meaning thereof.
"Independent Financial Advisor" means a Financial Advisor that
is Independent.
"Initial Notes" has the meaning provided in the preamble to
this Indenture.
"Initial Purchasers" means BT Securities Corporation and
Toronto Dominion Securities (U.S.A.), Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a) (1), (2), (3)
or (7) under the Securities Act.
"Insurance Proceeds" means any payment, proceeds or other
amounts received at any time under any insurance policy as compensation in
respect of a Casualty[, provided, that, business interruption insurance proceeds
shall not constitute Insurance Proceeds.
"Intercompany Agreement" means the Intercompany Agreement
attached hereto as Exhibit F.
"Intercompany Indebtedness" means any Indebtedness of the
Company or any Restricted Subsidiary which, in the case of the Company, is owing
to any Restricted Subsidiary and which, in the case of any such Restricted
Subsidiary, is owing to the Company or any Restricted Subsidiary; provided, that
if as of any date any Person other than the Company or a
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<PAGE> 22
Restricted Subsidiary owns or holds such Indebtedness, or holds any Lien in
respect thereof, such Indebtedness shall no longer be Intercompany Indebtedness
permitted to be Incurred pursuant to Section 4.12.
"Intercreditor Agreement" means the Intercreditor Agreement
attached hereto as Exhibit G.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the obligations of any
Person under any interest rate swap agreement, interest rate cap, collar or
floor agreement or other similar financial agreement or other interest rate
hedge or arrangement designed to protect the Company or any of its Subsidiaries
against or manage exposure to fluctuations in interest rates.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
"Investment" by any Person means any direct or indirect (i)
loan, advance or other extension of credit or capital contribution (by means of
transfers of cash or other Property (valued at the Fair Market Value thereof as
of the date of transfer) to others or payments for Property or services for the
account or use of others, or otherwise); (ii) purchase or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidences of equity
ownership or Indebtedness issued by any other Person (whether by merger,
consolidation, amalgamation or otherwise (but excluding any merger,
consolidation or amalgamation subject to Article 5) and whether or not purchased
directly from the issuer of such securities or evidences of Indebtedness); (iii)
Guarantee or assumption of any Indebtedness or any other obligation of any other
Person; (iv) all other items that would be classified as investments (including,
without limitation, purchases of assets outside the ordinary course of business)
on a balance sheet of such Person prepared in accordance with GAAP; and (v) any
payment made by such Person to any other Person in order to obtain a commitment
from such other Person to purchase products or services from such Person, but
excluding the purchase of assets (which for this purpose shall not include any
equity or debt securities) used in a Related Business and excluding any trade
accounts receivable in the ordinary course of business and notes receivable from
employees received solely in exchange for the issuance by the Company to such
employees of Qualified Capital Stock. The amount of any Investment shall not be
adjusted for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.
"Issue Date" means the date of original issuance of the Notes.
"Legal Defeasance" has the meaning provided in Section 12.02.
"Legal Holiday" has the meaning set forth in Section 14.07.
"Legal Requirements" means any and all present and future
judicial and administrative rulings and decisions, and any and all present and
future Federal, state and local
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laws, ordinances, rules, regulations, permits and certificates, of any
Authority, in each case in any way applicable to the Company or the Collateral
(or the ownership or use thereof).
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge easement, restriction, covenant, right of way, adverse claim
affecting title to real or personal property, or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical effect of
any of the foregoing.
"Loan Agreement" has the meaning provided in the recitals
hereto.
"Loss Event" means a Condemnation or Casualty involving an
actual or constructive total loss or agreed or compromised actual or
constructive total loss of all or substantially all of any Collateral Property,
except where the Company reasonably concludes that Restoration of such
Collateral Property can be made in accordance with this Indenture and elects to
do so in an Officers' Certificate delivered to the Trustee within 90 days of the
relevant Condemnation or Casualty.
"Management Agreement" means the Management Agreement between
G&G Investments and the Company as in effect on the Issue Date.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, operations, properties, assets, financial condition or
prospects of the Company and its Restricted Subsidiaries taken as a whole, (ii)
the value of the Collateral or the amount which the Trustee and the Holders
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in liquidation of the Collateral, (iii) the ability of the
Company, a Subsidiary Guarantor or the Parent Guarantor to perform its
obligations under the Indenture, the Notes or the Security Documents or (iv) the
material rights and remedies of the Trustee and the Holders under the Indenture,
the Notes or the Security Documents.
"Maturity Date" means April 1, 2005.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Cash Proceeds" means, with respect to any Asset Sale,
cash proceeds of such Asset Sale (including Cash Equivalents) net of reasonable
transaction costs of sale including, but not limited to, (i) income taxes
reasonably estimated to be payable as a result of such Asset Sale, (ii) payment
of the outstanding principal amount of, premium or penalty, if any, and interest
on, any Indebtedness that is secured by a Permitted Lien on the property or
assets in question and that is required to be repaid under the terms thereof as
a result of such Asset Sale, (iii) any underwriting, brokerage or other
customary selling commissions and reasonable legal, advisory and other fees and
expenses, including title and recording expenses and reasonable expenses
incurred for preparing such assets for sale, associated therewith, and (iv)
payments of unassumed liabilities (not constituting Indebtedness) relating to
the assets sold at the time of, or within 30 days after, the date of such sale;
provided that the Net Cash Proceeds in the case of any
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<PAGE> 24
Discontinued Plant Asset Sale will be deemed to have been applied in accordance
with Section 4.16 if used to pay Discontinued Plant Closing Costs attributable
to such Discontinued Plant subject to a limit of up to $5 million per
Discontinued Plant and up to $20.0 million in the aggregate for all Discontinued
Plant Asset Sales from the Issue Date.
"Net Equity Proceeds" means (a) in the case of any sale by the
Company of Qualified Capital Stock of the Company, the aggregate net cash
proceeds received by the Company, after payment of expenses, commissions and the
like (including, without limitation, brokerage, legal, accounting and investment
banking fees and commissions) incurred in connection therewith, and (b) in the
case of any exchange, exercise, conversion or surrender of any outstanding
Indebtedness of the Company or any Restricted Subsidiary for or into shares of
Qualified Capital Stock of the Company, the amount of such Indebtedness (or, if
such Indebtedness was issued at an amount less than the stated principal amount
thereof, the accrued amount thereof as determined in accordance with GAAP) as
reflected in the consolidated financial statements of the Company prepared in
accordance with GAAP as of the most recent date next preceding the date of such
exchange, exercise, conversion or surrender (plus any additional amount required
to be paid in cash by the holder of such Indebtedness to the Company or to any
Restricted Subsidiary upon such exchange, exercise, conversion or surrender and
less any and all payments made to the holders of such Indebtedness, and all
other expenses incurred by the Company in connection therewith), in the case of
each of (i) and (ii) to the extent consummated after the Issue Date; provided
that the exchange, exercise, conversion or surrender of any Subordinated
Obligations shall not be or be deemed to be included in Net Equity Proceeds
unless such Subordinated Obligation was issued after the Issue Date.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes treated
as a single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"OI Assurance Agreement" means the OI Assurance Agreement
attached hereto as Exhibit H.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
amounts payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated
April 10, 1997, pursuant to which the Initial Notes were offered, and any
supplement thereto.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, any Vice-President, the Chief Financial Officer, the
Controller, the Treasurer, any Assistant Treasurer or the Secretary of the
Company or any Guarantor, as the case may be.
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<PAGE> 25
"Officers' Certificate" means a certificate signed by an
Officer and delivered to the Trustee that shall comply with Sections 14.04 and
14.05.
"Old Anchor" means Anchor Resolution Corp., a Delaware
corporation (formerly Anchor Glass Container Corporation).
"144A Global Note" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel for the Company, and who shall be reasonably
acceptable to the Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company
shall act as its own Paying Agent) for the Holders of such Notes;
provided that, if the Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Notes which have been paid pursuant to Section 2.07 or
in exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to this Indenture, other than any such Notes in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser in
whose hands such Notes are valid obligations of the Company; and
(iv) Notes which have been defeased pursuant to Article 12.
provided, however, that in determining whether the Holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which a Trust Officer of the Trustee actually knows to be so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
"Parent Guarantor" means (i) Consumers U.S., Inc., a Delaware
corporation, and (ii) any Person that becomes a Parent Guarantor pursuant to
Section 4.14.
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"Parent Guarantor Collateral" means the Capital Stock of the
Company held by the Parent Guarantor.
"Partial Loss" means any Casualty or Condemnation that does
not constitute a Loss Event.
"Paying Agent" has the meaning provided in Section 2.03.
"Permits" means all licenses, permits, variances and
certificates used in connection with the ownership, operation, improvement, use
or occupancy of any Collateral Property (including, without limitation, business
licenses, state health department licenses, licenses to conduct business and all
such other permits, licenses and rights, obtained from any Authority concerning
ownership, improvement, operation, use or occupancy of such Collateral
Property).
"Permitted Holders" means (a) in the case of Consumers
Packaging, (i) John J. Ghaznavi; (ii) the spouse, parents, siblings, descendants
(including children or grandchildren by adoption) of John J. Ghaznavi or of such
spouse or siblings; (iii) in the event of the incompetence or death of any of
John J. Ghaznavi or any of the Persons described in clause (ii), such Person's
estate, executor, administrator, committee or other personal representative in
each case who at any particular date shall beneficially own or have the right to
acquire, directly or indirectly, Voting Stock of Consumers Packaging; (iv) any
trusts created for the sole benefit of John J. Ghaznavi or the Persons described
in clauses (ii) or (iii) or any trust for the benefit of such trust; or (v) any
Person of which John J. Ghaznavi or any of the Persons described in clauses (ii)
or (iii) (x) "beneficially owns" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) on a fully-diluted basis all of the Voting Stock of such Person or
(y) is the sole trustee or general partner, or otherwise has the sole power to
manage the business and affairs, of such Person and (b) in the case of the
Company and the Parent Guarantor, Consumers Packaging and its Wholly-Owned
Subsidiaries.
"Permitted Indebtedness" means, without duplication, each of
the following:
(i) Indebtedness under the Notes and this Indenture, including
Indebtedness in respect of obligations of the Company to the Trustee;
(ii) Indebtedness outstanding from time to time pursuant to
the Revolving Credit Facility in an amount not to exceed the greater of (a)
$125.0 million and (b) the sum of 90% of the gross book value of the accounts
receivable of the Company and its Subsidiaries and 70% of the gross book value
of the inventory of the Company and its Subsidiaries, in each case calculated in
accordance with GAAP;
(iii) Indebtedness outstanding on the Issue Date;
(iv) Commodity Agreements; provided, however, that such
Commodity Agreements are entered into for the purpose of reducing risk in the
ordinary course of the financial management of the Company or any Restricted
Subsidiary and designed to protect the Company or such Restricted Subsidiary
against fluctuations in commodity prices;
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(v) Indebtedness Incurred in connection with (a) Interest Swap
Obligations and Currency Agreements relating to Indebtedness permitted pursuant
to the "Limitation on Indebtedness" covenant that are entered into for the
purpose of reducing risk in the ordinary course of the financial management of
the Company or any Restricted Subsidiary; provided, however, that the notional
amount of each such Interest Swap Obligation and Currency Agreement does not
exceed the principal amount of the Indebtedness to which the Interest Swap
Obligation or the Currency Agreement, as the case may be, relates, or (b)
Currency Agreements that are entered into in the ordinary course of the
financial management of the Company or any of its Restricted Subsidiaries and
designed to protect the Company or such Restricted Subsidiary against
fluctuations in foreign currency exchange rates;
(vi) Indebtedness of the Company or any Restricted Subsidiary
represented by Capitalized Lease Obligations, mortgage financings or other
purchase money obligations or obligations under other financing transactions
relating to capital expenditures, in each case Incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in a Related Business not to exceed (a) in any
fiscal year the lesser of (1) $10.0 million and (2) 25% of the Company's capital
expenditures as determined in accordance with GAAP for the prior fiscal year and
(b) $35.0 million in the aggregate outstanding at any one time;
(vii) additional Indebtedness Incurred by the Company or any
Restricted Subsidiaries not to exceed $10.0 million outstanding at any time;
(viii) Intercompany Indebtedness;
(ix) Refinancing Indebtedness;
(x) Indebtedness of any Person that becomes a Restricted
Subsidiary after the Issue Date which Indebtedness existed at the time such
Person becomes a Restricted Subsidiary; provided that (a) such Indebtedness was
not Incurred as a result of or in connection with or anticipation of such Person
becoming a Restricted Subsidiary and (b) to the extent the principal amount of
such Indebtedness and any other Indebtedness previously permitted pursuant to
this clause (x) exceeds $5.0 million in the aggregate at the time such
Restricted Subsidiary is acquired by the Company, immediately before and
immediately after giving effect to such Person becoming a Restricted Subsidiary
(as if such existing Indebtedness were Incurred on the first day of the Four
Quarter Period) the Company could Incur at least $1.00 of additional
Indebtedness in accordance with the Consolidated Interest Coverage Ratio test of
paragraph (a) of Section 4.12; and
(xi) reimbursement obligations relating to undrawn standby
letters of credit and obligations in respect of performance bonds and surety
bonds, in each case issued in the ordinary course of business.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents; (b) loans, Guarantees and reasonable advances to employees of the
Company or any Restricted Subsidiary made in the ordinary course of business of
the Company or such Restricted Subsidiary, as the case may be, in an aggregate
principal amount not exceeding $1.0 million at any time
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<PAGE> 28
outstanding; (c) Investments by the Company or by any Restricted Subsidiary in
the Company or a Restricted Subsidiary or a Person which will, upon the making
of such Investment, become a Restricted Subsidiary; (d) Investments by the
Company or by any Restricted Subsidiary in another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or any
Restricted Subsidiary in compliance with the provisions of Article 5; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (e) non-cash consideration received in accordance with Section 4.16;
(f) advances to suppliers and customers in the ordinary course of business; (g)
Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers or in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business; (h) guarantees by the Company and
its Restricted Subsidiaries of the obligations of one another under the
Revolving Credit Facility; (i) sales of goods or services on trade credit terms
consistent with the Company's and its Subsidiaries' past practices or otherwise
consistent with trade credit terms in common use in the industry and recorded as
accounts receivable on the balance sheet of the Person making such sale; and (j)
lease, utility and other similar deposits in the ordinary course of business;
provided, further, that any contribution, transfer or other disposition of
Collateral in excess of $1.0 million in the aggregate in any fiscal year by the
Company to any of its Restricted Subsidiaries, shall not constitute a Permitted
Investment.
"Permitted Liens" means, without duplication, each of the
following:
(i) Liens securing the Notes;
(ii) Liens for taxes or governmental assessments, charges,
levies or claims not yet delinquent or for which a bond has been posted in an
amount equal to the contested amount (including potential interest and penalties
thereon) not interfering in any material respect with the ordinary operation of
any Collateral or materially and adversely affecting the value thereof;
(iii) statutory Liens of landlords, carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in the
ordinary course of business of ownership and operation of the relevant property
relating to obligations either (a) not yet delinquent or (b) being contested in
good faith by appropriate proceedings and as to which appropriate reserves or
other provisions have been made in advance in accordance with GAAP, in each
case, not interfering in any material respect with the ordinary operation of any
Collateral Property or materially and adversely affecting the value thereof;
(iv) Liens in connection with workers' compensation,
unemployment insurance and other similar legislation, surety or appeal bonds,
performance bonds or other obligations of a like nature (in each case not
constituting Indebtedness) arising in the ordinary course of business not
interfering in any material respect with the ordinary operation of any
Collateral or materially and adversely affecting the value thereof;
(v) zoning restrictions, licenses, easements, servitudes,
rights of way, title defects, covenants running with the land and other similar
charges or encumbrances or restrictions
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<PAGE> 29
not interfering in any material respect with the ordinary operation of any
Collateral or materially and adversely affecting the value thereof;
(vi) assignments, leases, or subleases at Discontinued Plants
not materially and adversely affecting the value thereof;
(vii) Liens on any Collateral permitted under the Security
Document applicable thereto;
(viii) Liens granted by the Company or any Restricted
Subsidiary to secure Indebtedness Incurred pursuant to clause (vi) of the
definition of Permitted Indebtedness, in each case representing all or part of
the cost of purchase, lease, construction or improvement of Property acquired,
constructed or improved after the date hereof owed to a Person not an Affiliate
of the Company; provided, however, that (x) in any such case such Lien shall
extend only to the specific Property of the Company or any Restricted Subsidiary
leased, acquired, constructed or improved with the proceeds of such Indebtedness
and (y) prior to granting any such Lien, the Company shall provide the Trustee
with an Officers' Certificate stating that the Property subject to such Lien and
the Collateral could be operated independently and such Property could be
disposed of independently of the Collateral without interfering with the
continued operation and maintenance of the Collateral, and without impairing the
value of the Collateral or interfering with the Trustee's ability to realize
such value; provided further that (A) the aggregate amount of Indebtedness
secured by any such Lien shall not exceed the Fair Market Value (or, if less,
the cost) of the Property so acquired or leased and (B) such Liens shall not
encumber any other Property of the Company or of any Restricted Subsidiary and
shall attach to such Property within 60 days of the acquisition or lease of, or
completion of construction on, such Property;
(ix) Liens on the Bank Collateral and the Shared Collateral
securing the Revolving Credit Facility;
(x) Liens existing on the Issue Date; and
(xi) Liens on Property of a Person at the time such Person was
merged with the Company or a Restricted Subsidiary, Liens on acquired Property
existing at the time of acquisition thereof and Liens upon any Property of a
Person existing at the time such Person becomes a Restricted Subsidiary;
provided in each case (x) that such Property was not acquired with the proceeds
of any Asset Sale or as a replacement for any Collateral and (y) that such Liens
were not created in contemplation of such merger or acquisition, as the case may
be, and such Liens only extend to such merged or acquired Property.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
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"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means
the principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Principal Payment Default" has the meaning set forth in
clause (v) of Section 6.01.
"Private Placement Legend" means the legend initially set
forth on the Notes in the form set forth in Section 2.15.
"Pro Forma" shall mean for any period the pro forma
Consolidated EBITDA, Consolidated Fixed Charges, Consolidated Interest Expense
or Consolidated Net Income of the Company after giving effect to the offering of
the Notes on the Issue Date and the application of the net proceeds therefrom
and the Anchor Acquisition as if such transactions had occurred on January 1,
1996 and to any other transactions or events for which pro forma effect is to be
given pursuant to the definition of Consolidated Interest Coverage Ratio
calculated in accordance with Regulation S-X as promulgated by the Commission
applied to the audited financial statements of Old Anchor for the 1996 fiscal
year and, where necessary, the unaudited financial statements of such company
for the second and third fiscal quarters of 1996; it being understood that prior
to giving effect to any transactions or events for which pro forma effect is to
be given pursuant to the definition of Consolidated Interest Coverage Ratio that
Consolidated EBITDA for the Company for each of the second, third and fourth
fiscal quarters of 1996 shall be $21.6 million, $8.8 million and negative $9.9
million, respectively.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real or immovable,
personal or moveable or mixed, or tangible or corporeal, or intangible or
incorporeal, including, without limitation, Capital Stock in any other Person.
"Purchase Money Assets" means Property subject to a Lien in
accordance with clause (viii) of the definition of Permitted Liens.
"Qualified Capital Stock" means (i) any Capital Stock that is
not Disqualified Capital Stock and (ii) each warrant, right or option to acquire
Capital Stock that is not Disqualified Capital Stock other than any such
warrant, right or other option to acquire such Capital Stock that is, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary date on which the Notes mature.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
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"Qualified Public Offering" means an underwritten public
offering of the Common Stock of the Company pursuant to a Registration Statement
filed with the Commission in accordance with the Securities Act resulting in Net
Equity Proceeds of at least $75.0 million.
"Record Date" means the Record Dates specified in the Notes,
whether or not a Business Day.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Notes.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or a Restricted Subsidiary of Indebtedness of the Company or a
Restricted Subsidiary initially Incurred in accordance with Section 4.12,
including the Notes (other than pursuant to clause (ii), (iv), (v), (vi), (vii),
(viii) or (xi) of the definition of Permitted Indebtedness) that does not (i)
result in an increase in the aggregate principal amount of Indebtedness of such
Person as of the date of such proposed Refinancing (plus the amount of any
premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by such Person
in connection with such Refinancing) or (ii) create Indebtedness with (a) a
Weighted Average Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being Refinanced or (b) a final maturity earlier
than the final maturity of the Indebtedness being Refinanced; provided, that if
such Indebtedness being Refinanced is subordinate or junior to the Notes or any
Guarantee, then such Refinancing Indebtedness shall be subordinate to the Notes
or such Guarantee at least to the same extent and in the same manner as the
Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated April 17, 1997 among the Company and the Initial Purchasers for
the benefit of themselves and the Holders, as the same may be amended or
modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" has the meaning provided in Section
2.01.
"Related Business" means the businesses carried out by the
Company or a Restricted Subsidiary on the date hereof and any reasonable
extensions thereof, including, without limitation, the manufacture and sale of
plastic containers and plastic and metal closures.
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"Related Business Investment" means any expenditure by the
Company or a Restricted Subsidiary, as the case may be, to acquire assets (which
shall not include any equity or debt security) used in the ordinary course of a
Related Business of the Company or such Restricted Subsidiary, as the case may
be, which shall constitute Collateral.
"Release" means any releasing, spilling, emitting, emptying,
leaking, pumping, pouring, injecting, depositing, disposing, dumping, discharge,
dispersing, leaching, escaping, emanating or migrating of any Contaminant in,
on, into or onto the Environment, including without limitation the movement of
any Contaminant through or in the environment, the abandonment or discard of
barrels, containers, tanks or other receptacles containing any Contaminant, or
any release, emission or discharge other than permitted releases as those terms
are defined in any Environmental Laws.
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent or minimize the Release or threat of Release of
Contaminants; or (iii) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Restoration" or "Restore" means the physical repair,
restoration or rebuilding of all or any portion of the Collateral following any
Casualty or Condemnation other than a Loss Event.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Security" has the meaning assigned to such term in
Rule 144 (a) (3) under the Securities Act.
"Restricted Subsidiary" means, as of the date of
determination, any Subsidiary of the Company, other than an Unrestricted
Subsidiary.
"Revolving Credit Agreement" has the meaning set forth in the
definition of "Revolving Credit Facility."
"Revolving Credit Facility" means agreements with one or more
Persons or syndicates of Persons providing for financing for the Company and its
Subsidiaries, and all related security agreements, guarantees, notes and other
agreements relating to same, as the same may be amended, modified or
supplemented from time to time, and any agreement or agreements evidencing the
refinancing, modification, replacement, renewal, restatement, refunding,
deferral, extension, substitution or supplement thereof including, without
limitation, any arrangement involving a Wholly-Owned Subsidiary, the sole
activity of which is the financing of receivables, and including the revolving
credit facility under that certain Credit Agreement dated as of February 5, 1997
(the "Revolving Credit Agreement") among the Company, Bankers Trust Company, as
issuing bank, BT Commercial Corporation, as agent, PNC Bank, as issuing bank and
the financial institutions party thereto in their capacities as lenders
thereunder, and any security documents and guarantees delivered in connection
therewith.
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"Revolving Credit Facility Secured Creditors" means the agent
and the financial institutions party to the Revolving Credit Agreement described
in the definition of "Revolving Credit Facility" in their capacities as lenders
thereunder.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any Property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Security Agreement" means the Security Agreement dated as of
February 5, 1997 made by the Company in favor of Bankers Trust Company, as
agent, which was assigned by Bankers Trust Company and the Company in favor of
the Trustee for the benefit of the Holders as security for the Company's
obligations under the Indenture and the Notes.
"Security Documents" means all pledge agreements, mortgages,
security agreements, related uniform commercial code financing statements and
any and all contracts, instruments and other documents now or hereafter executed
and delivered in connection with this Indenture pursuant to which any Liens are
granted to the Trustee in any Collateral or in the Parent Guarantor Collateral
for the benefit of the Noteholders, including without limitation this Indenture.
"Shared Collateral" has the meaning assigned to such term in
the Intercreditor Agreement.
"Specified Subsidiary" means any Subsidiary of the Company
other than (x) an Unrestricted Subsidiary which is not organized under the laws
of the United States of America, any state thereof or the District of Columbia
or under the laws of Canada or any province thereof or (y) a Subsidiary of the
Company which would not constitute a "significant subsidiary" of the Company as
defined in Rule 1.02 of Regulation S-X promulgated by the Commission, except
that for purposes of this definition, all reference therein to ten (10) percent
shall be deemed to be references to five (5) percent.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
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"Subordinated Obligation" means any Indebtedness of the
Company, the Parent Guarantor or any Subsidiary Guarantor (whether outstanding
on the Issue Date or thereafter Incurred) which is subordinate or junior in
right of payment to the Notes, the Parent Guarantee or any Subsidiary Guarantee
pursuant to a written agreement or by operation of law.
"Subsidiary", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
"Subsidiary Guarantee" means the Guarantee of the Notes made
by a Subsidiary Guarantor.
"Subsidiary Guarantor" means each future Restricted
Subsidiary; provided that any Person constituting a Subsidiary Guarantor as
described above shall cease to constitute a Subsidiary Guarantor when its
Guarantee is released in accordance with the terms of the Indenture.
"Surviving Entity" means the Person (if other than the
Company) formed by any consolidation of the Company with any Person or into
which the Company is merged or the Person which acquires by conveyance, transfer
or lease the properties and assets of the Company and of the Company's
Subsidiaries as an entirety or virtually as an entirety.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, except as otherwise provided in Section 13.06.
"Trust Officer" means any officer of the Trustee assigned by
the Trustee to administer this Indenture, or in the case of a successor trustee,
an officer assigned to the department, division or group performing the
corporate trust work of such successor and assigned to administer this
Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the jurisdiction in which the relevant Collateral is located.
"Unrestricted Subsidiary" means (i) each Subsidiary of the
Company that the Company has designated pursuant to the provisions described in
Section 4.21 as an Unrestricted Subsidiary and that has not been redesignated a
Restricted Subsidiary and (ii) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
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"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Voting Stock" with respect to any Person, means securities of
any class of Capital Stock of such Person entitling the holders thereof (whether
at all times or only so long as no senior class of stock has voting power by
reason of any contingency) to vote in the election of members of the Board of
Directors (or equivalent governing body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means, in respect of any Person, a
Subsidiary of such Person (Restricted Subsidiary in the case of the Company),
all the Capital Stock of which (other than directors' qualifying shares) is
owned by such Person or another Wholly-Owned Subsidiary (which is a Restricted
Subsidiary in the case of the Company) of such Person.
"Work" has the meaning provided in Section 10.10.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
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(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular; and
(5) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or Depository rule
or usage. The Company and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the Notes, annexed
hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of a permanent global Note in registered form,
substantially in the form set forth in Exhibit A with the legends specified in
Section 2.15 (the "144A Global Note") and Notes offered and sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of a permanent global note in registered form, substantially in the form set
forth in Exhibit A with the legends specified in Section 2.15 (the "Regulation S
Global Note" and, together with the 144A Global Note, the "Global Notes"), in
each case deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of a Global Note may from time to time
be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.
Notes offered and sold in reliance on any other exemption from
registration under the Securities Act, other than as described in the preceding
paragraph, shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A with the legend
specified in Section 2.15 (the "Physical Notes"). Physical Notes shall initially
be
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registered in the name of the Depository or the nominee of such Depository and
be delivered to the Trustee as custodian for such Depository. Beneficial owners
of Physical Notes, however, may request registration of such Physical Notes in
their names or the names of their nominees.
In the event that one or more Global Notes is tendered
pursuant to the Exchange Offer, it or they shall be exchanged for a single,
permanent Global Note in fully registered form substantially in the form of
Exhibit B hereto with the legend specified in Section 2.15. Physical Notes
tendered pursuant to the Exchange Offer will be exchanged for permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit B unless the Holder thereof elects to exchange such Physical Note for a
beneficial interest for the Global Note issued pursuant to the Exchange Offer.
Each Exchange Note shall constitute an additional obligation of the Company and
the Guarantors.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount.
(a) Two Officers, one of whom shall be the Chairman of the
Board, the Chief Executive Officer, the President or the Chief Financial Officer
of the Company and each of whom shall have been duly authorized by all requisite
corporate actions of the Company, shall sign the Notes for the Company by manual
or facsimile signature. The Company's seal shall also be reproduced on the
Notes. If an Officer whose signature is on a Note was an Officer at the time of
such execution but no longer holds that office or position at the time the
Trustee authenticates the Note, the Note shall nevertheless be valid.
(b) A Note shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Note. The
signature of the Trustee shall be conclusive evidence that the Note has been
authenticated under this Indenture.
(c) The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed $150,000,000, and
(ii) Exchange Notes from time to time for issue only in exchange for a like
principal amount of Initial Notes, in each case upon written orders of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Notes to be authenticated, the date on which the Notes are
to be authenticated, the aggregate principal amount of Notes outstanding on the
date of authentication, whether the Notes are to be Initial Notes or Exchange
Notes, and shall further specify the amount of such Notes to be issued as Global
Notes, or Physical Notes. The aggregate principal amount of Notes outstanding at
any time may not exceed $150,000,000, except as provided in Section 2.07.
(d) The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to authenticate
Notes. Unless otherwise provided in the appointment, an Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
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Authenticating Agent. An Authenticating Agent has the same rights as an Agent to
deal with the Company and Affiliates of the Company.
SECTION 2.03. Registrar and Paying Agent.
(a) The Company shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New York, State of
New York) where (i) Notes may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (ii) Notes may be presented or
surrendered for payment ("Paying Agent") and (iii) notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Registrar shall keep a register of the Notes and of their transfer and exchange.
(b) The Company, upon prior written notice to the Trustee, may
have one or more co-Registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional Paying Agent. Neither the Company
nor any Affiliate of the Company may act as Paying Agent. The Company shall
enter into an appropriate agency agreement with any Agent not a party to this
Indenture, which agreement shall incorporate the provisions of the TIA and
implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee, in advance, of the name and address of any
such Agent. If the Company fails to maintain a Registrar or Paying Agent, or
fails to give the foregoing notice, the Trustee shall act as such.
(c) The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of demands and notices in connection with the
Notes, until such time as the Trustee has resigned or a successor has been
appointed. The Paying Agent or Registrar may resign upon 30 days' notice to the
Company.
SECTION 2.04. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by such Paying Agent for
the payment of principal of, premium, if any, and interest on, the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and the Company and such Paying Agent shall promptly
notify the Trustee of any Default by the Company or the Guarantors (or any other
obligor on the Notes) in making any such payment. The Company at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and
account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to a Paying Agent, such
Paying Agent shall have no further liability for such assets.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders and shall otherwise
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comply with TIA Section 312 (a). If the Trustee is not the Registrar, the
Company shall furnish or cause the Registrar to furnish to the Trustee at least
five Business Days before each Record Date and at such other times as the
Trustee may request in writing a list as of such date and in such form as the
Trustee may reasonably require of the names and addresses of the Holders,
including the aggregate principal amount of the Note held, and shall otherwise
comply with TIA Section 312 (a) which list may be conclusively relied upon by
the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.16 and 2.17, when
Notes are presented to the Registrar or a co-Registrar with a request to
register the transfer of such Notes or to exchange such Notes for an equal
principal amount of Notes of other authorized denominations, the Registrar or
co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, that any Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Company and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit registrations of
transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Section 2.02, 2.10, 3.06, 4.15, 4.16 or 13.05, in which
event the Company shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of any Note (i) during a period beginning
at the opening of business 15 days before the mailing of a notice of redemption
of Notes and ending at the close of business on the day of such mailing and (ii)
selected for redemption in whole or in part pursuant to Article 3, except the
unredeemed portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interests in such Global Notes
may be effected only through a book entry system maintained by the Holder of
such Global Note (or its agent), and that ownership of a beneficial interest in
the Note shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note claims that the Note has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Note if the Trustee's requirements are met. Such Holder must provide an
affidavit of lost certificate and an indemnity bond or other indemnity,
sufficient in the judgment of both the Company and the Trustee, to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer if
a Note is replaced. The Company may charge such Holder for its reasonable,
out-of-pocket expenses in replacing a Note, including
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reasonable fees and expenses of counsel. Every replacement Note shall constitute
an additional obligation of the Company and the Guarantors.
SECTION 2.08. Outstanding Notes.
(a) The Notes outstanding at any time are all the Notes that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. Subject to the provisions of Section 2.09, a Note does not cease to
be outstanding because the Company or any of its Affiliates holds the Note.
(b) If a Note is replaced pursuant to Section 2.07 (other than
a mutilated Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives an Opinion of Counsel that the replaced Note is held
by a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07.
(c) If on a Redemption Date or the Maturity Date the Paying
Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay
all of the principal and interest due on the Notes payable on that date and is
not prohibited from paying such money to the Holders thereof pursuant to the
terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or any of its Affiliates shall be considered as
though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes which a Trust Officer of the Trustee actually knows are
so owned shall be so considered. The Company shall notify the Trustee, in
writing, when it or any of its Affiliates repurchases or otherwise acquires
Notes, of the aggregate principal amount of such Notes so repurchased or
otherwise acquired.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate upon receipt of a written order of the Company pursuant to Section
2.02 definitive Notes in exchange for temporary Notes. Until such exchange,
temporary Notes shall be entitled to the same rights, benefits and privileges as
definitive Notes.
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SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel at the written direction of the Company and shall dispose of
all Notes surrendered for transfer, exchange, payment or cancellation in
accordance with its customary procedures. Subject to Section 2.07, the Company
may not issue new Notes to replace Notes that it has paid or delivered to the
Trustee for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, as of a recent date selected by the Company, with a copy to the Trustee,
a notice that states the subsequent special record date, the payment date and
the amount of defaulted interest, and interest payable on such defaulted
interest, if any, to be paid. Prior to the payment date set forth in the notice
referred to in the preceding sentence, the Issuer shall deposit with the Trustee
funds in an amount sufficient to pay any amounts due to Holders pursuant to this
Section 2.12.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest
Payment Date and on the Maturity Date, the Company shall have deposited with the
Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Paying Agent to remit payment
to the Holders on such Interest Payment Date or Maturity Date, as the case may
be.
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SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") on the face thereof until April 17, 1999, unless otherwise agreed by
the Company and the Holder thereof:
THIS SECURITY (AND ANY GUARANTEES THEREOF) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, RESOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET
FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT
IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY REOFFER, RESELL, ASSIGN, TRANSFER, PLEDGE,
ENCUMBER OR OTHERWISE DISPOSE OF THIS SECURITY EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF
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THIS SECURITY (THE FORM OF WHICH LETTER IS ATTACHED AS AN
EXHIBIT), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THE SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend on the
face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE
OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE DEPOSITARY,
OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS
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REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO.
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE.
Each Global Note that is a Restricted Security shall also bear
the following legend on the face thereof:
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.17 OF THE INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Securities.
(a) Each Global Note initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian, or
under any Global Note, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of any Global Note shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in any Global Note may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Section 2.17. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in any Global Note if (i) the Depository notifies the Company that it
is unwilling or
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unable to continue as Depository for any Global Note and a successor depositary
is not appointed by the Company within 90 days of such notice or (ii) an Event
of Default has occurred and is continuing and the Registrar has received a
written request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Note in an amount equal to the principal amount
of the beneficial interest in such Global Note to be transferred, and the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note
to beneficial owners pursuant to paragraph (b), such Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and make available for delivery, to
each beneficial owner identified by the Depository in exchange for its
beneficial interest in such Global Note, an equal aggregate principal amount of
Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.17, bear the legend regarding transfer restrictions applicable to
the Physical Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after April
17, 1999 or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons),
the proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto or (2) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has delivered to
the Registrar a certificate substantially in the form of Exhibit D
hereto; and
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(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in such Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and make available for delivery one or more Physical Notes of like
tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of Note stating, or has otherwise advised the Company
and the Registrar in writing, that the sale has been made in compliance
with the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in a Global Note, upon receipt by
the Registrar of instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
such Global Note in an amount equal to the principal amount of the
Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the circumstance contemplated by paragraph (a)(i)(x) of this Section
2.17 exist or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
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(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.16 or this Section
2.17. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Agent Members or
beneficial owners of interests in any Global Note) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 6
of the Notes, it shall notify the Trustee and the Paying Agent in writing of the
(i) paragraph of the Note pursuant to which such redemption is to be made, (ii)
the Redemption Date, (iii) the principal amount of the Notes to be redeemed and
(iv) the Redemption Price. The Company shall give each notice provided for in
this Section 3.01 at least 60 days (unless a shorter notice period shall be
satisfactory to the Trustee), but not more than 60 days before the Redemption
Date together with an Officers' Certificate stating that such redemption shall
comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes to Be Redeemed.
If fewer than all of the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if such Notes are not then listed on a national securities exchange, on a
pro rata basis, by lot or in such other fair and reasonable manner chosen at the
discretion of the Trustee; provided, however, that if a partial redemption is
made with the proceeds of a Public Equity Offering, selection of the Notes or
portion thereof for redemption shall be made by the Trustee only on a pro rata
basis, unless such method is otherwise prohibited. The Trustee shall make the
selection from the Notes outstanding and not previously called for redemption
and shall promptly notify the Company in writing of the Notes selected for
redemption and, in the case of any Note selected for partial redemption, the
principal amount thereof to be redeemed. In the event of partial redemption by
lot, the particular Notes to be
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redeemed shall be selected, unless otherwise provided herein, not less than 30
nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for Redemption. Notes in denominations
of $1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000. Provisions of this Indenture
that apply to Notes called for redemption also apply to portions of Notes called
for redemption.
SECTION 3.03. Notice of Redemption.
(a) At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail or cause to be mailed a notice of
redemption by first class mail, postage prepaid, to each Holder whose Notes are
to be redeemed, with a copy to the Trustee and any Paying Agent.
Each notice for redemption shall identify the Notes to be
redeemed (including CUSIP number) and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such
redemption is being made;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest,
if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the
Holders of such Notes is to receive payment of the Redemption Price
plus accrued interest, if any, upon surrender to the Paying Agent of
the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in the aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
(b) At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall
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have delivered to the Trustee at least 45 days (unless a shorter period is
acceptable to the Trustee) prior to the proposed redemption date an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any.
SECTION 3.05. Deposit of Redemption Price.
(a) By 11:00 a.m. on or before the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender in immediately
available funds sufficient to pay the Redemption Price plus accrued interest, if
any, of all Notes to be redeemed on that date. The Paying Agent shall promptly
return to the Company any U.S. Legal Tender so deposited which is not required
for that purpose, except with respect to monies owed as obligations to the
Trustee pursuant to Article Seven.
(b) If the Company complies with the preceding paragraph,
then, unless the Company defaults in the payment of such Redemption Price plus
accrued interest, if any, interest on the Notes to be redeemed will cease to
accrue on and after the applicable Redemption Date, whether or not such Notes
are presented for payment. If a Note is redeemed on or after an interest Record
Date but on or prior to the related Interest Payment Date, then any accrued and
unpaid interest shall be paid to the Person in whose name such Security was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate for the Holder a new
Note or Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
(a) The Company shall pay the principal of and interest on the
Notes on the dates and in the manner provided in the Notes and in this
Indenture. An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent
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holds on that date U.S. Legal Tender in immediately available funds designated
for and sufficient to pay the installment in full and is not prohibited from
paying such money to the Holders pursuant to the terms of this Indenture.
(b) The Company shall pay, to the extent such payments are
lawful, interest (including post-petition interest in any proceeding under a
Bankruptcy Law) on overdue principal and on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate borne by the Notes plus 2% per annum. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
(a) The Company shall maintain the office or agency required
under Section 2.03. The Company shall give prior written notice to the Trustee
of the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 14.02.
(b) The Company may also from time to time designate one or
more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, in the City of New York for such purposes. The
Company shall give prior written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
(c) The Company hereby designates the Corporate Trust Office
of the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. Maintenance of Corporate Existence and Corporate
Separateness.
(a) Except as otherwise permitted by Article 5, Section 4.14
and Section 4.16, each of the Company and the Parent Guarantor shall do or cause
to be done, at its own cost and expense, all things necessary to preserve and
keep in full force and effect its corporate existence in accordance with its
respective organizational documents and the material rights (charter and
statutory) and franchise of each of the Company and the Parent Guarantor, and
the Company shall do or cause to be done, at its own cost and expense, all
things necessary to preserve and keep in full force and effect the corporate
existence of each of the Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Restricted Subsidiary;
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provided, however, that the Company and the Parent Guarantor shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of the Restricted Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company or the
Parent Guarantor, as the case may be, shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and the Restricted Subsidiaries, taken as a whole, or the Parent
Guarantor.
(b) The Company, its Subsidiaries and the Parent Guarantor
will satisfy customary corporate formalities, including the holding of regular
board of directors' and shareholders' meetings and the maintenance of corporate
offices and records. The Company, its Subsidiaries and the Parent Guarantor will
not permit financial information regarding the Company or any of its
Subsidiaries to be provided to creditors of the Parent Guarantor, Consumers
Packaging or its other Affiliates without indicating that the assets and
financial performance of the Company and its Subsidiaries are separate from the
Parent Guarantor, Consumers Packaging and its other Affiliates and will not
provide financial support or assurances to such creditors. The Company, its
Subsidiaries and the Parent Guarantor will not permit financial information
regarding the Parent Guarantor to be provided to creditors of the Company, the
Company's Subsidiaries, Consumers Packaging or its other Affiliates without
indicating that the assets and financial performance of the Parent Guarantor is
separate from the Company, the Company's Subsidiaries, Consumers Packaging and
its other Affiliates and will not provide financial support or assurances to
such creditors.
SECTION 4.04. Payment of Taxes and Other Claims.
Each of the Company and the Parent Guarantor shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to taxes)
levied or imposed upon the Company or any of the Restricted Subsidiaries or the
Parent Guarantor, as the case may be, or any of their respective properties and
(ii) all lawful claims for labor, materials and supplies that, if unpaid, might
by law become a Lien upon the property of the Company or any of the Restricted
Subsidiaries or the Parent Guarantor, as the case may be; provided, however,
that the Company, the Restricted Subsidiaries or the Parent Guarantor, as the
case may be, shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of the Restricted
Subsidiaries to, maintain its material properties in good working order and
condition (subject to ordinary wear and tear) and make all reasonably necessary
repairs, renewals, replacements, additions, betterments and improvements thereto
to actively conduct and carry on its business; provided, however, that nothing
in this Section 4.05 shall prevent the Company or any of the Restricted
Subsidiaries from discontinuing the operation and maintenance of any of its
properties, if such discontinuance is, in the good faith judgment of the Board
of Directors of the Company or such
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Restricted Subsidiary, as the case may be, desirable in the conduct of their
respective businesses and is not disadvantageous in any material respect to the
Holders.
(b) The Company shall provide or cause to be provided, for
itself and each of the Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Board of Directors of the Company, are adequate and appropriate
for the conduct of the business of the Company and the Restricted Subsidiaries
in a prudent manner, with reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles, and by such methods as shall be customary, in
the good faith judgment of the Board of Directors of the Company, for companies
similarly situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) Each of the Company and the Parent Guarantor shall deliver
to the Trustee, within 120 days after the end of each fiscal year, an Officers'
Certificate signed by its principal executive officer, principal financial
officer or principal accounting officer stating that a review of the activities
of the Company and its Restricted Subsidiaries or the Parent Guarantor, as the
case may be, during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether each has
kept, observed, performed and fulfilled its Obligations under this Indenture,
and further stating, as to each such Officer signing such certificate, that to
the best of his or her knowledge each has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action each is taking or proposes to take with
respect thereto).
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.08 shall be
accompanied by a written statement of (x) the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Article 4, 5 or 6 of this Indenture
insofar as they relate to accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation and (y) if
any Restricted Subsidiary's or Guarantor's financial statements are not prepared
on a consolidated basis with the Company's, such Restricted Subsidiary's or
Guarantor's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements nothing has come to their attention which would
lead them to believe that any of the Restricted Subsidiaries or Guarantors is in
Default under this Indenture or, if any such Default has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
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(c) The Company and each of the Guarantors shall, so long as
any of the Notes are outstanding, deliver to the Trustee, forthwith upon any
Officer becoming aware of (i) any Default or Event of Default or (ii) any event
of default under any other mortgage, indenture or instrument as that term is
used in Section 6.01 hereof, an Officers' Certificate specifying such Default,
Event of Default or event of default and what action the Company or such
Guarantor, as the case may be, is taking or proposes to take with respect
thereto.
(d) The Company and each of the Guarantors shall also comply
with TIA Section 314(a)(4).
SECTION 4.07. Compliance with Laws.
The Company shall, and shall cause each of its Restricted
Subsidiaries to comply with all applicable Legal Requirements of any Authority
except to the extent that noncompliance could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. SEC Reports; Reports to Holders.
(a) The Company and each Guarantor will deliver to the Trustee
and each Holder within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents and
other reports, if any, which the Company or any Guarantor is required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company on or after
January 1, 1998 will file with the Commission, to the extent permitted, and
provide the Trustee and Holders with such quarterly and annual reports and such
other information that would be required to be contained in a filing with the
Commission if the Company were required to file such reports under Sections 13
and 15(d) of the Exchange Act within the time periods provided therein. Prior to
January 1, 1998, if the Company is not required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act, the Company will (a)
prepare and deliver to the Trustee and the Holders quarterly reports required by
a company subject to the reporting requirements of Section 13 and 15(d) within
the time periods specified therein and (b) issue a press release within 45 days
after the end of each fiscal quarter, including summary operating results for
the Company. In addition, the Company has agreed that, for so long as any Notes
remain outstanding, it will furnish to Holders and securities analysts and
prospective investors, upon their request, the information specified in Rule
144(A)(d)(4) under the Securities Act and any other information reasonably
requested by a Holder concerning the Company (including financial statements)
necessary in order to permit such Holder to sell or transfer Notes in compliance
with Rule 144A under the Securities Act. The Company will also comply with the
other provisions of 314(a) of the TIA.
(b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Company and each Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company or such Guarantor from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) the Company and
each Guarantor hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 4.10. Limitation on Restricted Payments
Neither the Company nor any of its Restricted Subsidiaries
will, directly or indirectly, (a) declare or pay any dividend or make any
distribution (other than dividends or distributions payable solely in Qualified
Capital Stock of the Company) to holders of the Company's Capital Stock other
than dividends or distributions paid to the Company or any Restricted
Subsidiary, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to acquire
shares of any class of such Capital Stock (other than Capital Stock, warrants,
rights or options held by the Company or any Restricted Subsidiary), other than
through the exchange therefor solely of Qualified Capital Stock of the Company,
(c) make any principal payment on, purchase, defease, redeem, prepay, decrease
or otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligation, (other than the purchase, repurchase or other acquisition of any
Subordinated Obligation in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of such purchase, repurchase or other acquisition, provided that any such
purchase, repurchase or other acquisition is done solely with the proceeds from
any Refinancing Indebtedness), (d) make any Investment (other than Permitted
Investments) in any Person or (e) make any payments to any Affiliate of the
Company (other than the Company and its Restricted Subsidiaries) as compensation
for management services, except through the issuance of Common Stock of the
Company that is Qualified Capital Stock) (each of the foregoing prohibited
actions set forth in clauses (a), (b), (c), (d) and (e) being referred to as a
"Restricted Payment"), unless such proposed Restricted Payment is made after the
earlier of (x) the date upon which the independent auditors of the Company have
completed and delivered to the Company a limited review of the Company's
financial statement for the third quarter of 1997 in accordance with the
procedures specified by the American Institute of Certified Public Accountants,
SAS No. 71, Interim Financial Information and (y) the date upon which the
Company has filed with the Commission its audited financial statements for the
fiscal year ended December 31, 1997 and at the time of such proposed Restricted
Payment or immediately after giving effect thereto (i) no Default or Event of
Default has occurred and is continuing or would result therefrom, (ii) the
Company could incur at least $1.00 of additional Indebtedness in accordance with
the Consolidated Interest Coverage Ratio test of paragraph (a) of Section 4.12
and (iii) the aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made subsequent
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to the Issue Date (the amount expended for such purposes, if other than in cash,
being the Fair Market Value of the relevant Property) does not exceed or would
not exceed the sum of: (A) 50% of the cumulative Consolidated Net Income (or, if
cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of
the Company during the period (treating such period as a single accounting
period) from April 1, 1997 to the last day of the last full fiscal quarter
preceding the date of the proposed Restricted Payment; (B) 100% of the aggregate
Net Equity Proceeds received by the Company from any Person (other than from a
Restricted Subsidiary) from the issuance and sale subsequent to the Issue Date
of Qualified Capital Stock of the Company (excluding any Qualified Capital Stock
of the Company with respect to which the purchase price thereof has been
financed directly or indirectly using funds (i) borrowed from the Company or
from any of its Subsidiaries, unless and until and to the extent such borrowing
is repaid or (ii) contributed, extended, Guaranteed or advanced by the Company
or by any of its Restricted Subsidiaries (including, without limitation, in
respect of any employee stock ownership or benefit plan, unless and until and to
the extent such borrowing is repaid); and (C) an amount equal to the net
reduction in any Investment made by the Company and its Restricted Subsidiaries
subsequent to the Issue Date in any Person (including if such reduction occurs
by reason of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary) resulting from (x) net cash proceeds (or the Fair Market Value of
property other than cash or Cash Equivalents, provided that such property
represents a return of capital in respect of any such Investment that was made
in the form of other property other than cash or Cash Equivalents) received by
the Company or its Restricted Subsidiaries as repayment of any loan or advance
or a return of capital in respect, or as consideration for the sale, of such
Investment (but only to the extent the Company elects to exclude such amounts
from the calculation of Consolidated Net Income for the purposes of clause (A)
above) or (y) the release or cancellation of a Guarantee constituting such
Investment, in each case, with respect to any such Investment, not to exceed the
amount of such Investment previously made by the Company or any Restricted
Subsidiary, that was treated as a Restricted Payment pursuant to this paragraph.
Notwithstanding the foregoing, these provisions do not
prohibit: (1) the payment of any dividend or making of any distribution within
60 days after the date of its declaration if the dividend or distribution would
have been permitted on the date of declaration; (2) the repurchase, redemption,
retirement or acquisition of Capital Stock of the Company or Subordinated
Obligations of the Company, or warrants, rights or options to acquire Capital
Stock of the Company, solely in exchange for shares of Qualified Capital Stock
of the Company; (3) any purchase or redemption of Subordinated Obligations made
in exchange for, or out of the proceeds of the substantially concurrent sale of
Refinancing Indebtedness or Indebtedness of the Company which is permitted to be
Incurred pursuant to the Consolidated Interest Coverage Ratio test of paragraph
(a) of Section 4.12; (4) the payment of management fees to G&G Investments under
the Management Agreement of up to $1.5 million in any calendar year; (5) the
repurchase of Capital Stock of the Company from current or former employees or
directors of the Company or any of its Subsidiaries pursuant to the terms of
agreements (including employment agreements) or plans approved by the Board of
Directors under which such persons purchase or sell or are granted the option to
purchase or sell such shares of Capital Stock to the extent such payments do not
exceed $500,000 in any fiscal year which to the extent not used in any fiscal
year, may be carried forward to the next succeeding fiscal year, provided that
the aggregate amount of all such
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payments that may be made pursuant to this clause (5) may not exceed $2.5
million; (6) dividends or other Restricted Payments to make payments permitted
by clauses (vii) and (viii) of paragraph (b) of Section 4.11; (7) dividends
payable on the Series A Preferred Stock pursuant to the terms thereof in an
aggregate amount not to exceed $3 million; (8) Investments in Unrestricted
Subsidiaries, partnerships or joint ventures involving the Company or its
Restricted Subsidiaries, in each case primarily engaged in a Related Business if
the aggregate amount of such Investments made pursuant to this clause (8) (less
an amount equal to the net reduction in any such Investment (including if such
reduction occurs by reason of the redesignation of an Unrestricted Subsidiary as
a Restricted Subsidiary) made subsequent to the Issue Date resulting from (x)
net cash proceeds (or the Fair Market Value of tangible property, provided that
such tangible property represents a return of capital in respect of an
Investment that was made in the form of other tangible property and not an
Investment that was made in the form of cash) received by the Company or its
Restricted Subsidiaries as repayment of any loan or advance or a return of
capital in respect, or as consideration for the sale, of such Investment or (y)
any release or cancellation of a Guarantee constituting such Investment (but
only to the extent the Company elects to exclude such amounts from the
calculation of Consolidated Net Income for the purpose of clause (A) of the
preceding paragraph), in each case, with regard to any Investment, not to exceed
the amount of such Investment previously made by the Company or any Restricted
Subsidiary pursuant to this clause (8) does not exceed $10 million; (9) the
purchase or redemption of any Indebtedness, to the extent required by the terms
of such Indebtedness following a Change of Control after the Company shall have
complied with the provisions under Section 4.15, including payment of the
applicable Change of Control purchase price; and (10) Investments in
Unrestricted Subsidiaries, partnerships or joint ventures organized and
operating principally in the United States involving the Company or its
Restricted Subsidiaries, in each case primarily engaged in a Related Business,
made in the form of contributions to such Unrestricted Subsidiaries,
partnerships or joint ventures of assets of Discontinued Plants; provided,
however, that, in the case of clauses (2), (3), (4), (5), (6), (7), (8), (9),
and (10) of this paragraph, no Default or Event of Default shall have occurred
or be continuing at the time of such payment or as a result thereof. In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date, amounts expended pursuant to clauses (1), (5), (7) and (9) shall, in
each case, be included in such calculation. No payment or other transfer to the
Company or a Restricted Subsidiary shall, in any event, constitute a Restricted
Payment except for a contribution, transfer or other disposition of Collateral
in excess of $1 million in the aggregate in any fiscal year by the Company to
any of its Restricted Subsidiaries.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) Neither the Company nor any Restricted Subsidiary will,
directly or indirectly, conduct any business or enter into or permit to exist
any transaction or series of related transactions (including, but not limited
to, the purchase, sale, conveyance, transfer, disposition, exchange or lease of
Property, the making of any payment, the making of any Investment, the giving of
any Guarantee, the rendering of services or the paying of any commission) with,
or for the benefit of, any of their Affiliates (each an "Affiliate
Transaction"), except under an agreement set forth in writing which is on terms
that are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could have been obtained in a comparable
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transaction on an arm's-length basis from a Person not an Affiliate of the
Company or such Restricted Subsidiary and if it involves a purchase, such
purchase is reasonably necessary in light of the operating requirements of the
Company and its Subsidiaries. If the Company or any Restricted Subsidiary enters
into an Affiliate Transaction (or a series of related Affiliate Transactions)
involving aggregate payments or other Property with a Fair Market Value in
excess of (i) $1.0 million, the Company or such Restricted Subsidiary shall,
prior to the consummation thereof, deliver to the Trustee an Officers'
Certificate certifying that such transaction or series of related transactions
complies with the foregoing provisions, (ii) $2.5 million, the Company or such
Restricted Subsidiary shall, prior to the consummation thereof, deliver to the
Trustee the Officers' Certificate specified in clause (i) above and an approval
by the Board of Directors of the Company (including a majority of the
independent directors thereof), such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction or series of related transactions complies with the foregoing
provisions and (iii) $5.0 million, the Company or such Restricted Subsidiary
shall, prior to the consummation thereof, deliver to the Trustee the Officers'
Certificate specified in clause (i) above, the Board Resolution specified in
clause (ii) above and a favorable opinion as to the fairness of such transaction
or series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor addressed to the Trustee.
(b) The foregoing restriction shall not apply to the following
transactions: (i) any transaction exclusively between the Company and any of its
Wholly-Owned Subsidiaries or exclusively between any Wholly-Owned Subsidiaries,
(ii) reasonable and customary fees paid to members of the Board of Directors of
the Company and of its Subsidiaries, (iii) loans and advances to employees,
officers and directors in the ordinary course of business in an aggregate
principal amount not to exceed $1.0 million at any one time outstanding and
advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business, (iv)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of the Company or any of its
Subsidiaries, as determined by the Board of Directors of the Company or any such
Restricted Subsidiary or the senior management thereof in good faith, including,
without limitation, issuances of stock, payment of bonuses and other
transactions pursuant to employment or compensation agreements, stock option
agreements, indemnification agreements and other arrangements in effect on the
Issue Date or substantially similar thereto, (v) the payment of the management
fees to G&G Investments under the Management Agreement of up to $3.0 million in
any calendar year, (vi) other Restricted Payments made pursuant to the first
paragraph of Section 4.10, (vii) payments or other transactions pursuant to any
tax sharing arrangement between the Company and any other Person with which the
Company files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes but only to the extent that amounts payable
from time to time by the Company under any such agreement do not exceed the
corresponding tax payments that the Company would have been required to make to
any relevant taxing authority had the Company not joined in such consolidated or
combined return, but instead had filed returns including only the Company and
(viii) transactions pursuant to the Intercompany Agreement. The Company will not
amend the Intercompany Agreement unless such amendment is in writing and the
Company determines that it contains terms no less favorable to the Company
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than could have been obtained in comparable transactions on an arm's-length
basis from a Person not an Affiliate of the Company, such determination to be
evidenced by an Officers' Certificate and a Board Resolution stating that a
majority of the Board of Directors (including a majority of the independent
directors thereof) have determined that such amendment complies with the
foregoing provisions.
SECTION 4.12. Limitation on Indebtedness.
(a) Neither the Company nor any of its Restricted Subsidiaries
will, directly or indirectly, Incur any Indebtedness (including, without
limitation, any Acquired Indebtedness) other than Permitted Indebtedness;
provided, however, the Company or any Restricted Subsidiary may Incur
Indebtedness (including, without limitation, Acquired Indebtedness), if (i) no
Default or Event of Default shall have occurred and be continuing on the date of
the proposed Incurrence thereof or would result as a consequence of such
proposed Incurrence and (ii) immediately before and immediately after giving
effect to such proposed Incurrence, the Consolidated Interest Coverage Ratio of
the Company and its Restricted Subsidiaries is at least equal to 2.50 to 1.0.
(b) Neither the Company nor any of its Restricted Subsidiaries
will, directly or indirectly, Incur Capitalized Lease Obligations, except
pursuant to clause (vi) of the definition of Permitted Indebtedness.
(c) Neither the Company nor any Restricted Subsidiary may,
directly or indirectly, in any event Incur any Indebtedness which by its terms
(or by the terms of any agreement governing such Indebtedness) is expressly
subordinated to any other Indebtedness of the Company or such Restricted
Subsidiary, as the case may be, unless such Indebtedness is also by its terms
(or by the terms of any agreement governing such Indebtedness) made expressly
subordinate to the Notes to the same extent and in the same manner, and so long
as, such Indebtedness is subordinated pursuant to subordination provisions that
are no more favorable to the holders of any other Indebtedness of the Company or
such Restricted Subsidiary, as the case may be.
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
Neither the Company nor any of its Subsidiaries will, directly
or indirectly, create or otherwise cause or permit or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions to the Company
or to any Restricted Subsidiary (i) on its Capital Stock or (ii) with respect to
any other interest or participation in, or measured by, its profits; (b) make
loans or advances or pay any Indebtedness or other obligation owed to the
Company or to any Restricted Subsidiary; or (c) sell, lease or transfer any of
its Property to the Company or to any Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable law;
(2) this Indenture and the Security Documents; (3) customary nonassignment
provisions of any contract or any lease governing a leasehold interest of the
Company or any Restricted Subsidiary; (4) any instrument governing Indebtedness
Incurred in accordance with and pursuant to clause (x) of the definition of
Permitted Indebtedness; provided that such encumbrance or restriction is not,
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and will not be, applicable to any Person, or the Property of any Person, other
than the Person, or the Property of the Person, becoming a Restricted
Subsidiary; (5) restrictions imposed by Liens granted pursuant to clauses (vi),
(viii) and (ix) of the definition of Permitted Liens solely to the extent such
Liens encumber the transfer or other disposition of the assets subject to such
Liens; (6) any restriction or encumbrance contained in contracts for the sale of
assets to be consummated in accordance with this Indenture solely in respect of
the assets to be sold pursuant to such contract; (7) any encumbrance or
restriction contained in Refinancing Indebtedness Incurred to Refinance the
Indebtedness issued, assumed or Incurred pursuant to an agreement referred to in
clause (2), (4) or (5) above or clause (8) or (9) below; provided, that the
provisions relating to such encumbrance or restriction contained in any such
Refinancing Indebtedness are no less favorable to the Company or such Restricted
Subsidiary or to the Holders in any material respect in the reasonable and good
faith judgment of the Board of Directors of the Company than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (4), (5), (8) or (9) as the case may be; (8) any agreement
in effect on the Issue Date; and (9) the Revolving Credit Facility.
SECTION 4.14. Limitations on Activities of the Parent
Guarantor.
The Parent Guarantor will not (a) Incur any Indebtedness other
than (i) the Guarantee or (ii) a guarantee of the Indebtedness permitted under
clause (ii) of the definition of Permitted Indebtedness, (b) make any
Investments other than in the Company, (c) grant or suffer to exist a Lien in
respect of any Capital Stock of the Company held by it other than the security
interest granted to secure the Notes or sell or transfer any of such Capital
Stock to any Affiliate other than in a transaction pursuant to clause (e), (d)
carry on any business other than the holding of Capital Stock of the Company or
(e) merge or consolidate with or into, or sell substantially all of its assets
to, any Person other than a U.S. corporation that succeeds to the Parent
Guarantor's obligations under this Indenture, the Parent Guarantee and any
Security Document and is in compliance with and becomes subject to this covenant
except for a merger or consolidation in which the Parent Guarantor is the
surviving corporation and following such merger or consolidation is in
compliance with this covenant.
SECTION 4.15. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company
shall make an offer to repurchase all outstanding Notes pursuant to the offer
described in paragraph (b) below (the "Change of Control Offer") at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase.
(b) Within 30 days following the date upon which the Change of
Control occurred (the "Change of Control Date"), unless the Company already
mailed a notice of redemption pursuant to Section 3.03 the Company shall send,
by first class mail, a notice to each Holder, with a copy to the Trustee, which
notice shall govern the terms of the Change of Control Offer. The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Change of Control Offer. Such notice
shall identify the Notes (including CUSIP number) and shall state:
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(1) that the Change of Control Offer is being made pursuant to
this Section 4.15 and that all Notes tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed, other than
as may be required by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than five Business Days prior
to the Change of Control Payment Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Notes the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided that each Note purchased and
each new Note issued shall be in an original principal amount of $1,000
or integral multiples thereof;
(8) the circumstances and relevant facts regarding such Change
of Control; and
(9) that the Change of Control Offer must remain open for at
least 20 Business Days and until the close of business on the Change of
Control Payment Date.
By 11:00 a.m. on or before the Change of Control Payment Date,
the Company shall (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S.
Legal Tender sufficient to pay the purchase price plus accrued interest, if any,
of all Notes so tendered and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price
plus accrued interest, if any, and the Trustee shall promptly authenticate and
mail to such Holders new Notes equal in principal amount to any unpurchased
portion of the Notes surrendered. Any Notes not so accepted shall be promptly
mailed by the Company to the Holder thereof. For purposes of this Section 4.15,
the Trustee shall act as the Paying Agent.
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Any amounts remaining after the purchase of Notes pursuant to
a Change of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Section
14(e) of the Exchange Act, if applicable, the provisions of Rule 13e-4 and Rule
14e-1, if applicable, and any other tender offer rules under the Exchange Act or
other relevant United States federal and state securities legislation which may
then be applicable and will file Schedule 13E-4 or Schedule 13E-4F or any other
schedule required thereunder in connection with any offer by the Company to
repurchase Notes pursuant to a Change of Control Offer. To the extent the
provisions of any U.S. federal or state securities laws or regulations conflict
with the provisions under this Section 4.15, the Company shall comply with the
applicable U.S. federal or state securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.15 by virtue
thereof. Notes repurchased pursuant to a Change of Control Offer shall be
delivered to the Trustee for cancellation pursuant to Section 2.11.
SECTION 4.16. Limitation on the Sale of Assets.
(a) Neither the Company nor any of its Restricted Subsidiaries
will consummate or permit, directly or indirectly, any Asset Sale, unless (i)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of each such Asset Sale at least equal to the Fair
Market Value of the Property subject to such Asset Sale, (ii) (x) at least 75%
of the consideration received by the Company or such Restricted Subsidiary is in
the form of cash or Cash Equivalents, (or, in the case of an Asset Sale of
Discontinued Plants, at least 50% of such consideration is in such form,);
provided that this requirement with respect to cash or Cash Equivalents shall
not apply with respect to Investments made pursuant to clause (10) of the second
paragraph of Section 4.10, and provided further that the aggregate Fair Market
Value of the consideration other than in the form of cash or Cash Equivalents
that may be received pursuant to clause (x) shall not exceed $5.0 million in the
aggregate held (including the amount of any such consideration not collected or
written off by the Company or any of its Restricted Subsidiaries but excluding
any such consideration received in consideration for Discontinued Plants) by the
Company and its Restricted Subsidiaries at any one time and (y) any such
consideration shall not consist of inventory or accounts receivable or other
Bank Collateral, (iii) such Asset Sale is not made by the Company to any of its
Restricted Subsidiaries, (iv) the Company shall cause the Net Cash Proceeds
received in respect thereof to be deposited in the Collateral Account and the
other consideration received to become Collateral as and when received by the
Company or by any Restricted Subsidiary, (v) no Default or Event of Default
shall have occurred and be continuing on the date of such proposed Asset Sale or
would result as a consequence of such Asset Sale and (vi) such Asset Sale will
not materially adversely affect or materially impair the value of the remaining
Collateral or materially interfere with the Trustee's ability to realize such
value and will not materially impair the maintenance and operation of the
remaining Collateral.
(b) The Company shall apply or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds of such Asset Sale and any Insurance
Proceeds or Condemnation Proceeds, as the case may be, resulting from a Loss
Event, within 270 days of consummation of such Asset
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Sale or the collection of such Insurance Proceeds or Condemnation Proceeds, as
the case may be, for the following purposes, individually or in combination:
(1) (i) to purchase or otherwise invest in Related Business
Investments which shall constitute additional Collateral under the
relevant Security Documents and which shall be subject to a first
priority Lien in favor of the Trustee for the benefit of the Holders,
subject to Liens permitted under the Security Documents in respect of
the relevant item of Collateral; provided, that (x) any Property
constituting a Related Business Investment shall not consist of
inventory or accounts receivable or other Bank Collateral and (y) such
purchase or Investment shall be made by the Company or such Restricted
Subsidiary, or (ii) to purchase Notes in open-market transactions;
provided, that the Company shall be deemed to have applied such Net
Cash Proceeds, Insurance Proceeds or Condemnation Proceeds pursuant to
this clause (ii) in satisfaction of the requirements of this Section
4.16 in an amount equal to the lesser of (x) the purchase price paid in
such open-market transactions and (y) 100% of the principal amount of
the Notes repurchased; provided, further that the aggregate amount of
Net Cash Proceeds, Insurance Proceeds or Condemnation Proceeds that may
be deemed to be applied pursuant to this clause (ii) shall not exceed
$5.0 million in the aggregate from the Issue Date;
(2) with respect to any Net Cash Proceeds, Insurance Proceeds
or Condemnation Proceeds remaining after application pursuant to the
preceding subparagraph (b)(1) (the "Excess Proceeds Amount"), the
Company shall make an offer to repurchase Notes (an "Asset Sale Offer")
in an amount (expressed as an integral multiple of $1,000) equal to the
maximum aggregate principal amount of Notes that may be purchased with
the Excess Proceeds Amount at a purchase price equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase in accordance with the procedures set
forth in this Section 4.16. The Company may defer the Asset Sale Offer
until the aggregate unutilized Excess Proceeds Amount equals or exceeds
$10.0 million resulting from one or more Asset Sales or Loss Events (at
which time, the entire unutilized Excess Proceeds Amount, and not just
the amount in excess of $10.0 million, shall be applied as required
pursuant to this paragraph). All amounts remaining after the
consummation of any Asset Sale Offer pursuant to this paragraph shall
remain subject to the Lien of the Security Documents and may be used by
the Company only to purchase or otherwise invest in Related Business
Investments (which shall constitute additional Collateral under the
Security Documents) other than inventory or accounts receivables or
other Bank Collateral or to purchase Notes in open market transactions.
(c) Each notice of an Asset Sale Offer shall be mailed by
first class mail to the record Holders as shown on the register of Holders not
less than 30 days nor more than 60 days before the payment date for the Asset
Sale Offer, with a copy to the Trustee, and shall comply with the procedures set
forth in this Indenture. Upon receiving notice of the Asset Sale Offer, Holders
may elect to tender their Notes in whole or in part in integral multiples of
$1,000 principal amount in exchange for cash. To the extent Holders properly
tender Notes in an amount exceeding the Excess Proceeds Amount, Notes of
tendering Holders will be purchased on a pro rata basis (based on amounts
tendered). An Asset Sale Offer shall remain open for a period of 20 Business
Days and until the close of business on the payment date of the Asset Sale Offer
or such
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longer period as may be required by law. Each notice of an Asset Sale Offer
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer and shall identify the Notes
(including CUSIP number) and shall state the following terms:
(i) that the Asset Sale Offer is being made pursuant to this
Section 4.16 and that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes
tendered in a Asset Sale Offer plus accrued interest at the expiration
of such offer exceeds the aggregate amount of the Asset Sale Offer, the
Company shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so
that only Notes in denominations of $1,000 or multiples thereof shall
be purchased);
(ii) the purchase price (including the amount of accrued
interest) and the payment date for the Asset Sale Offer;
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the payment date for the
Asset Sale Offer;
(v) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior
to the payment date for the Asset Sale Offer;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than five Business Days prior
to the payment date for the Asset Sale Offer, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Notes the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased; and
(vii) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided that each Note purchased and
each new Note issued shall be in an original principal amount of $1,000
or integral multiples thereof;
By 11:00 a.m. on or before the payment date for the Asset Sale
Offer, the Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Asset Sale Offer which are to be purchased in
accordance with item (b)(1) above, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the purchase price plus accrued interest, if any, of
all Notes to be purchased and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount
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equal to the purchase price plus accrued interest, if any. For purposes of this
Section 4.16, the Trustee shall act as the Paying Agent.
If an offer is made to repurchase the Notes pursuant to an
Asset Sale Offer, the Issuer will comply with the requirements of Section 14(e)
of the Exchange Act, if applicable, the provisions of Rule 13e-4 and Rule 14e-1,
if applicable, and any other tender offer rules under the Exchange Act or other
relevant United States Federal and state securities legislation which may then
be applicable and will file Schedule 13E-4 or Schedule 13E-4F or any other
schedule required thereunder in connection with any offer by the Company to
purchase Notes pursuant to an Asset Sale. Notes repurchased pursuant to an Asset
Sale Offer shall be delivered to the Trustee for cancellation.
(d) All Net Cash Proceeds, Insurance Proceeds and Condemnation
Proceeds from Loss Events and non-cash consideration from Asset Sales, including
all Excess Proceeds Amounts, shall be deposited in the Collateral Account and be
subject to the perfected first priority Lien in favor of the Trustee subject to
Liens permitted under the Security Documents in respect of the relevant item of
Collateral. To the extent not applied as set forth above, such Excess Proceeds
Amounts shall remain on deposit in the Collateral Account in accordance with
this Indenture and the Security Documents. Excess Proceeds Amounts so deposited
in the Collateral Account may be withdrawn from such Collateral Account pursuant
to Section 4.16(b)(2) and Article 9.
(e) Notwithstanding the foregoing, any disposition of
Collateral that is governed under and complies with Article 5 shall not be
deemed to be an Asset Sale, as the case may be, except that in the event of the
transfer of substantially all (but not all) of the Property of the Company and
its Subsidiaries to a Person in a transaction permitted under Article V, the
successor corporation shall be deemed to have sold the Collateral not so
transferred for purposes of this covenant, and shall comply with the provisions
of this covenant with respect to such deemed sale as if it were an Asset Sale.
In addition, the Fair Market Value of such Property of the Company or its
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.16.
(f) If an offer is made to repurchase the Notes pursuant to an
Asset Sale Offer, the Company will comply with the requirements of Section 14(e)
of the Exchange Act, if applicable, the provisions of Rule 13e-4 and Rule 14e-1,
if applicable, and any other tender offer rules under the Exchange Act or other
relevant United States Federal and state securities legislation which may then
be applicable and will file Schedule 13E-4 or Schedule 13E-4F or any other
schedule required thereunder in connection with any offer by the Company to
purchase Notes pursuant to an Asset Sale Offer. Notes repurchased pursuant to
this Section 4.16 shall be delivered to the Trustee for cancellation pursuant to
Section 2.11.
SECTION 4.17. Limitation on Issuance and Sale of Capital Stock
of Restricted Subsidiaries.
The Company will not permit (i) any Restricted Subsidiary to
issue any Capital Stock other than to the Company or a Restricted Subsidiary; or
(ii) any Person (other than the
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Company or a Restricted Subsidiary) to, directly or indirectly, own or control
any Capital Stock of any Restricted Subsidiary (other than directors' qualifying
shares); provided, however, that clauses (i) and (ii) will not prohibit any sale
of 100% of the shares of the Capital Stock of any Restricted Subsidiary owned by
the Company or any Restricted Subsidiary effected in accordance with Section
4.16 or 5.01.
SECTION 4.18. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist or remain in effect any Liens upon any Property of the
Company or of any of its Restricted Subsidiaries, whether owned on the Issue
Date or acquired after the Issue Date, or on any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits thereon other
than Permitted Liens.
SECTION 4.19. Subsidiary Guarantors.
If at any time on or after the Issue Date, and at any time
that any of the Obligations remain outstanding, the Company or any Restricted
Subsidiary establishes or creates a Restricted Subsidiary, the Company (or the
Restricted Subsidiary directly owning Capital Stock of such other Restricted
Subsidiary) shall (i) cause each such Restricted Subsidiary to execute and
deliver to the Trustee a supplemental indenture pursuant to which each such
Restricted Subsidiary shall guarantee the Obligations of the Company on a senior
basis together with an opinion of counsel (which counsel may be an employee of
the Company) to the effect that the supplemental indenture has been duly
executed and delivered by each such Restricted Subsidiary and is in compliance
in all material respects with the terms of the Indenture, and (ii) sign a Pledge
Agreement substantially in the form attached hereto as Exhibit E comply with the
terms and provisions of such Pledge Agreement, including, without limitation,
deliver to the Trustee for the benefit of the Noteholders the Capital Stock of
any such Restricted Subsidiary, sign the stock powers with respect to such
Capital Stock in blank and execute and deliver the supplemental indenture
referred to in clause (i) of this Section 4.19. Any Restricted Subsidiary
acquiring title to any Collateral Property shall agree in writing to be bound by
the terms of any Security Document applicable to such Collateral Property.
SECTION 4.20. Impairment of Security Interest.
Neither the Company nor any of its Subsidiaries will take or
omit to take any action which action or omission could reasonably be expected to
have the result of materially and adversely affecting or materially impairing
the security interests in favor of the Trustee, on behalf of itself and the
Holders, with respect to the Collateral. Neither the Company nor any of its
Subsidiaries will enter into any agreement or instrument that by its terms
requires the proceeds received from any sale of Collateral (except, in the case
of Shared Collateral, the Revolving Credit Facility and the Intercreditor
Agreement) to be applied to repay, redeem, defease or otherwise acquire or
retire any Indebtedness of any Person prior to the repayment in full of the
Notes or clause (viii) of the definition of Permitted Liens.
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SECTION 4.21. Restricted and Unrestricted Subsidiaries.
(a) The Board of Directors of the Company may designate or
redesignate any Subsidiary to be an Unrestricted Subsidiary if (i) the
Subsidiary to be so designated does not, directly or indirectly, own any Capital
Stock or Indebtedness of, or own or hold any Lien on any property or assets of,
the Company or any other Restricted Subsidiary, (ii) the Subsidiary to be so
designated is not obligated by any Indebtedness or Lien that, if in default,
would result (with the passage of time or notice or otherwise) in a default on
any Indebtedness of the Company or any Restricted Subsidiary and (iii) either
(a) the Subsidiary to be so designated has total assets of $1,000 or less or (b)
such designation is effective immediately upon such Person becoming a Subsidiary
of the Company or of a Restricted Subsidiary and the amount of the Investment by
the Company or any of its Restricted Subsidiaries in such Subsidiary would be
permitted under Section 4.10. Unless so designated as an Unrestricted
Subsidiary, any Person that becomes a Subsidiary of the Company or any
Restricted Subsidiary will be classified as a Restricted Subsidiary. Except as
provided in the first sentence of this paragraph, no Restricted Subsidiary may
be redesignated as an Unrestricted Subsidiary. Subject to the next paragraph, an
Unrestricted Subsidiary may not be redesignated as a Restricted Subsidiary.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition, the redesignation of an Unrestricted Subsidiary
or otherwise) unless after giving effect to such action, transaction or series
of transactions, on a pro forma basis, (i) the Company could Incur at least
$1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage
Ratio test of paragraph (a) of Section 4.12, (ii) such Restricted Subsidiary
could then Incur under Section 4.12 all Indebtedness as to which it is obligated
at such time, (iii) no Default or Event of Default would occur or be continuing,
and (iv) there exist no Liens with respect to the property or assets of such
Restricted Subsidiary other than Permitted Liens.
(c) Any such designation by the Board of Directors of the
Company will be evidenced to the Trustee by promptly filing with the Trustee a
copy of the resolution of such board giving effect to such designation and an
Officers' Certificate certifying that such designation complies with the
foregoing provisions.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets.
(a) The Company will not, and will not permit any Restricted
Subsidiary to, in a single transaction or series of related transactions,
consolidate or merge with or into any Person (other than the consolidation,
merger or amalgamation of a Wholly-Owned Subsidiary with another Wholly-Owned
Subsidiary or into the Company), or sell, assign, transfer, lease, convey or
otherwise dispose of (or cause or permit any Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's assets (determined
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on a consolidated basis for the Company and the Company's Subsidiaries) unless:
(i) either (1) the Company, in the case of a transaction involving the Company,
or such Restricted Subsidiary, in the case of a transaction involving Restricted
Subsidiary, shall be the surviving or continuing corporation or (2) the Person
(if other than the Company or such Restricted Subsidiary) formed by such
consolidation or into which the Company or such Restricted Subsidiary is merged
or the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the Company's
Subsidiaries (the "Surviving Entity") (x) shall be a corporation organized and
validly existing under the laws of the United States or any State thereof or the
District of Columbia and (y) shall expressly assume, as primary obligor, by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, and premium, if any, and interest on all of the Notes and the
performance of every covenant of the Notes, the Indenture and the Security
Documents on the part of the Company to be performed or observed, in the case of
a transaction involving the Company or the performance of every covenant of the
Subsidiary Guarantee, the Indenture and the Security Documents on the part of
such Restricted Subsidiary to be performed or observed, in the case of a
transaction involving a Restricted Subsidiary, and in each such case, the
Company shall have taken all steps necessary to protect and perfect the security
interests granted or purported to be granted under the Security Documents; (ii)
in the case of a transaction involving the Company immediately after giving
effect to such transaction and the assumption contemplated by clause (i)(2)(y)
above (including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness Incurred or anticipated to be Incurred in connection with
or in respect of such transaction), the Company or such Surviving Entity, as the
case may be, shall be able to Incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Interest Coverage Ratio test of paragraph (a) of
Section 4.12; provided, that, in determining the "Consolidated Interest Coverage
Ratio" of the resulting transferee or Surviving Entity, such ratio shall be
calculated as if the transaction (including the Incurrence of any Indebtedness
or Acquired Indebtedness) took place on the first day of the applicable Four
Quarter Period; (iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness Incurred or anticipated to be Incurred and any Lien granted in
connection with or in respect of the transaction) no Default and no Event of
Default shall have occurred or be continuing; (iv) in the case of a transaction
involving the Company, immediately after giving effect to such transaction and
the assumption contemplated by clause (i)(2)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness Incurred
or anticipated to be Incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, shall
have a Consolidated Net Worth which is not less than the Consolidated Net Worth
of the Company immediately prior to such transaction or series of transactions;
(v) in the case of a sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's assets, the Surviving
Entity shall have received the Company's assets as an entirety or virtually as
an entirety; and (vi) the Company or the Surviving Entity shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply
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with the applicable provisions of this Indenture and that all conditions
precedent in this Indenture relating to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by sale,
assignment, transfer, lease, conveyance or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties or
assets of one or more Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
SECTION 5.02. Successor Corporation Substituted.
Upon any such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition in accordance with the
foregoing, the successor Person formed by such consolidation or into which the
Company is merged or to which such sale, assignment, transfer, lease, conveyance
or other disposition is consolidated or made will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor had been named as the Company therein,
and thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture, the Notes and the
Security Documents.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
The following constitute an "Event of Default":
(i) the failure to pay interest on any Note for a period of 30
days or more after such interest becomes due and payable; or
(ii) the failure to (x) pay the principal of or premium, if
any, on any Note, when such principal becomes due and payable, at
maturity, upon repurchase (including, without limitation, pursuant to a
Change of Control Offer or an Asset Sale Offer), upon acceleration,
upon redemption or otherwise or (y) make a Change of Control Offer or
an Asset Sale Offer within the required period; or
(iii) a default in the observance or performance of any of the
agreements or covenants contained in Section 5.01 or clause (e) of
Section 4.14 or the granting by the Company, any Restricted Subsidiary
or the Parent Guarantor of any Lien to secure Indebtedness in excess of
$100,000 (other than a Permitted Lien);
(iv) a default in the observance or performance of any of the
other agreements or covenants contained in this Indenture which default
continues for a period of 30 days after
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the Company receives written notice specifying the default from the
Trustee or from Holders of at least 25% in principal amount of the
outstanding Notes; or
(v) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company or of any Specified
Subsidiary of the Company, whether such Indebtedness now exists, or is
created after the date of this Indenture, which default (a) is caused
by a failure to pay at final maturity the principal of or premium, if
any, on such Indebtedness after any applicable grace period provided in
such Indebtedness on the date of such default (a "Principal Payment
Default"), or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount
of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Principal Payment
Default or the maturity of which has been so accelerated, is of at
least $10.0 million in the aggregate; or
(vi) one or more judgments in an aggregate amount in excess of
$10.0 million (which are not covered by third-party insurance as to
which the insurer is solvent and has not disclaimed coverage) being
rendered against the Company or any Specified Subsidiary of the Company
and such judgments remain undischarged, or unstayed or unsatisfied for
a period of 60 days after such judgment or judgments become final and
non-appealable; or
(vii) the Company or any Specified Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or
for substantially all of its property, (D) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(E) makes a general assignment for the benefit of its creditors, or (F)
takes any corporate action to authorize or effect any of the foregoing;
or
(viii) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any Bankruptcy
Law, which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of
the Company or any Specified Subsidiary, (B) appoint a Custodian of the
Company or any Specified Subsidiary or for substantially all of its
property or (C) order the winding-up or liquidation of its affairs; and
such judgment, decree or order shall remain unstayed and in effect for
a period of 60 consecutive days.
(ix) (a) a default in the observance or performance of any
covenant or agreement contained in any Security Document which default
continues for 15 days after notice has been given to the Company by the
Trustee or the holders of at least 25% in principal amount of the
outstanding Notes, or (b) for any reason other than the satisfaction in
full and discharge of all obligations secured thereby, any of the
Security Documents cease to be in full force and effect (other than in
accordance with their respective terms), or any of the Security
Documents cease to give the Trustee the Liens, rights, powers and
privileges
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purported to be created thereby, or any Security Document is declared
null and void, or the Company or any of its Restricted Subsidiaries
denies any of its obligations under any Security Document, in each case
with respect to Collateral the aggregate value of which is in excess of
$5.0 million or the Collateral becomes subject to one or more Liens
other than Permitted Liens securing one or more obligations in excess
of $5.0 million in the aggregate; or
(x) any Guarantee of a Specified Subsidiary or the Parent
Guarantor is declared null and void or ceases to be in full force and
effect (except as permitted under this Indenture) or any Guarantor
shall deny or disaffirm its obligations under its Guarantee.
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default
specified in Section 6.01(vii) or (viii) above with respect to the Company or
the Parent Guarantor) occurs and is continuing and has not been waived pursuant
to Section 6.04, then and in every such case the Trustee or the Holders of not
less than 25% in aggregate principal amount of the then outstanding Notes may
declare the unpaid principal of, premium, if any, and accrued and unpaid
interest on, all the Notes then outstanding to be due and payable, by a notice
in writing to the Company (and to the Trustee, if given by Holders) and upon
such declaration such principal amount, premium, if any, and accrued and unpaid
interest will become immediately due and payable. If an Event of Default
specified in Section 6.01(vii) or (viii) above occurs with respect to the
Company or the Parent Guarantor, all unpaid principal of, and premium, if any,
and accrued and unpaid interest on, the Notes then outstanding will
automatically become due and payable without any declaration or other act on the
part of the Trustee or any Holder.
(b) The Trustee shall, within 90 days after the occurrence of
any Default or Event of Default actually known to it, give to the Holders notice
of such Default; provided, that, except in the case of a Default or an Event of
Default in the payment of principal of, or interest on, any Note, the Trustee
shall be protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interest of the Holders.
(c) The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may rescind an acceleration
and its consequences if all existing Events of Default (other than the
nonpayment of principal of and premium, if any, and interest on the Notes which
has become due solely by virtue of such acceleration) have been cured or waived
and if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
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The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 13.02, the Holders of a
majority in principal amount of the outstanding Notes by notice to the Trustee
may waive any existing Default or Event of Default and its consequences, except
a Default in the payment of the principal of or interest on any Note as
specified in clauses (i) and (ii) of Section 6.01 or a Default in respect of any
term or provision of the Notes or the Indenture that cannot be modified or
amended without the consent of all Noteholders. When a Default or Event of
Default is waived, it is cured and ceases; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the outstanding Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. Subject to Section 7.01, however,
the Trustee may refuse to follow any direction that the Trustee reasonably
believes conflicts with any law or this Indenture, that the Trustee determines
may be unduly prejudicial to the rights of another Noteholder; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction; and provided further that this provision shall
not affect the rights of the Trustee set forth in Section 7.01(d).
SECTION 6.06. Limitation on Suits.
A Noteholder may not pursue any remedy with respect to this
Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) Holders of at least 25% in principal amount of the
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to
be incurred in compliance with such request;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of satisfactory
indemnity; and
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(5) during such 60-day period the Holders of a majority in
principal amount of the outstanding Notes do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with
the request.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over such
other Noteholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of and interest on a Note,
on or after the respective due dates expressed in such Note, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in clause (i) or (ii) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Notes for the whole amount of
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest at the rate set forth in Section
4.01 and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relating to the Company or any
Guarantor (or any other obligor upon the Notes), any of their respective
creditors or any of their respective property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Noteholder to make
such payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Noteholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. The Company's payment obligations
under this Section 6.09 shall be secured in accordance with the provisions of
Section 7.07 hereunder. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceeding.
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SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article 6, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the
Company directly without the Trustee, to Holders for their collection
costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
principal and interest, respectively; and
Fourth: to the Company or, to the extent the Trustee collects
any amount pursuant to Article 11 hereof from any Guarantor, to such
Guarantor, or to such party as a court of competent jurisdiction shall
direct.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Noteholders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of
more than 10% in principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
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(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not herein expressly provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
(g) The Trustee shall, on the date hereof, enter into the
Intercompany Agreement (substantially in the form of Exhibit F hereto), the
Intercreditor Agreement (substantially in the form of Exhibit G hereto) and may
enter into similar agreements in connection with the Revolving Credit Agreement
or any other Revolving Credit Facility and the OI Assurance Agreement
(substantially in the form of Exhibit H hereto).
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SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note, or other evidences of
indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document unless
the Trustee has reason to believe that such fact or matter is not true.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers'
Certificate, an Opinion of Counsel or both, which shall conform to
Sections 14.04 and 14.05. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or indirectly
or by or through agents or attorneys and the Trustee shall not be
responsible for the misconduct or negligence of any agent or attorney
appointed with due care.
(d) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent,
order, bond, note, other evidences of indebtedness, or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the
Company or any Guarantor, to examine the books, records, and premises
of the Company or any Guarantor, personally or by agent or attorney and
to consult with the officers and representatives of the Company or any
Guarantor, including the Company's accountants and attorneys of the
Company or any Guarantor.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.
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(h) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is
in fact such a default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Notes and
this Indenture.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company or any Guarantor, or their respective Affiliates with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The recitals contained herein and in the Notes shall be taken
as statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is actually known to the Trustee, the Trustee shall mail to each
Noteholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal of, or interest on, any Note,
including an accelerated payment, and the failure to make payment on the Change
of Control Payment Date pursuant to a Change of Control Offer or on the payment
date for an Asset Sale Offer, and except in the case of a failure to comply with
Article 5 hereof, the Trustee may withhold the notice if and so long as its
Board of Directors, the executive committee of its Board of Directors or a
committee of its directors and/or Trust Officers determines in good faith that
withholding the notice is in the interest of the Noteholders.
SECTION 7.06. Reports by Trustee to Holders.
(a) Within 60 days after each March 15, the Trustee shall, to
the extent that any of the events described in TIA Section 313(a) occurred
within the previous twelve months, but not otherwise, mail to each Noteholder a
brief report dated as of such date that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b), (c) and (d).
(b) A copy of each report at the time of its mailing to
Noteholders shall be mailed to the Company and filed with the SEC and each stock
exchange, if any, on which the Notes are listed. The Company shall promptly
notify the Trustee if the Notes become listed on any stock exchange and the
Trustee shall comply with TIA Section 313(d).
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SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its services. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture. Such expenses shall include the
reasonable fees and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall jointly and severally
indemnify each of the Trustee (or any predecessor Trustee) and its agents,
employees, stockholders and directors and officers for, and hold them harmless
against, any and all loss, liability, damage, claim or expense including taxes
(other than taxes based on the income of the Trustee) incurred by them except
for such actions to the extent caused by any negligence, bad faith or willful
misconduct on their part, arising out of or in connection with the
administration of this trust including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
acceptance, exercise or performance of any of their rights, powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. At the Trustee's sole
discretion, the Company shall defend the claim and the Trustee shall cooperate
and may participate in the defense; provided that any settlement of a claim
shall be approved in writing by the Trustee. Alternatively, the Trustee may at
its option have separate counsel of its own choosing and the Company shall pay
the reasonable fees and expenses of such counsel; provided that the Company will
not be required to pay such fees and expenses if it assumes the Trustee's
defense and there is no conflict of interest between the Company and the Trustee
in connection with such defense as reasonably determined by the Trustee. The
Company need not pay for any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Notes on all assets or money
held or collected by the Trustee, in its capacity as Trustee, except assets or
money held in trust to pay principal of or interest on particular Notes. The
Trustee's right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness of the Company
(even though the Notes may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(vii) or 6.01(viii) occurs, such
expenses and the compensation for such services are intended to constitute
expenses of administration under any Bankruptcy Law; provided, however, that
this shall not affect the Trustee's rights as set forth in the preceding
paragraph or Section 6.10.
The provisions of this Section shall survive the termination
of this Indenture.
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SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing.
The Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee by so notifying the Company and the Trustee in writing and
may appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Noteholder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee
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corporation is otherwise eligible hereunder, be the successor Trustee; provided
that such corporation shall be otherwise qualified and eligible under this
Article 7.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in
the case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA Section 310(a)(2). The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to
the Company, as obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein. The provisions of TIA Section 311 shall apply to the Company
and each Guarantor, as obligor on the Notes.
SECTION 7.12. Trustee's Application for Instructions from the
Company.
Any application by the Trustee for written instructions from
the Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any Officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of any omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE EIGHT
COLLATERAL AND SECURITY DOCUMENTS
SECTION 8.01. Security Documents.
(a) As general and continuing collateral security for the due
repayment and satisfaction of all present and future indebtedness, liabilities
and obligations of any kind whatsoever, under, in connection with or relating to
this Indenture, including without limitation, the Notes (including the
Guarantees thereof) and any ultimate unpaid balance thereof and to
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secure the due performance of all of the other present and future obligations of
the Company, the Restricted Subsidiaries and the Parent Guarantor to the Trustee
(including obligations under Section 7.07 hereof) and the Holders under this
Indenture, each Security Document and the Notes (including the Guarantees
thereof), the Company for all purposes, has entered into the Security Documents
and granted a first priority security interest (subject to Permitted Liens) in
the Collateral as security for the Notes and the Company and each Restricted
Subsidiary will enter into any future Security Documents and will grant a first
priority security interest (subject to Permitted Liens) with respect to
Collateral acquired after the Issue Date as security for the Notes (or the
relevant Subsidiary Guarantee) and the Parent Guarantor has entered into the
Security Documents with respect to the Parent Guarantor Collateral and will
grant a first priority security interest in any Capital Stock of the Company
acquired after the Issue Date as security for the Parent Guarantee. In the event
of any conflict between this Indenture and any other Security Document, this
Indenture shall be controlling.
(b) The Company represents, covenants and agrees that it has,
at all relevant times has had, and that it and its Restricted Subsidiaries shall
at all times have, full right, power and lawful authority to grant, bargain,
sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and
confirm the property constituting the Collateral, in the manner and form done in
the Security Documents, or intended to be done, free and clear of all Liens,
pledges, charges and encumbrances whatsoever (other than Permitted Liens), and
that (i) it will forever warrant and defend the title to the same against the
claims of all persons whatsoever (except as to Permitted Liens), (ii) it and its
Restricted Subsidiaries, as applicable, will execute, acknowledge and deliver to
the Trustee such further assignments, transfers, assurances or other instruments
as the Trustee may reasonably require or request, and (iii) it and its
Restricted Subsidiaries, as applicable, will do or cause to be done all such
acts and things as may be necessary or proper, or as may be required by the
Trustee, to assume and confirm to the Trustee the Collateral, or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of the Security Documents, this Indenture and the
Notes. The Company and each Restricted Subsidiary further covenants and agrees
that each Security Document, as applicable, creates or will create, as the case
may be, a valid first-ranking Lien (subject to Permitted Liens) on the
Collateral subject thereto. The Parent Guarantor makes the foregoing
representations, covenants and agreements with respect to the Parent Guarantor
Collateral exclusive of any references to Permitted Liens.
SECTION 8.02. Recording.
Each of the Company, the Restricted Subsidiaries and the
Parent Guarantor, as applicable, will cause, at the Company's expense, this
Indenture and each Security Document, and all amendments or supplements thereto,
to be registered, recorded and filed and/or re-recorded and/or re-filed and/or
renewed in such manner and in such place or places, if any, as may be required
by law in order to preserve, protect and maintain the perfected first-ranking
Liens (subject to Permitted Liens) of the Security Documents and all parts of
the Collateral and the Parent Guarantor Collateral and to effectuate and
preserve the security of the Holders and all rights of the Trustee. The Company
will pay all mortgage, mortgage recording, stamp, intangible or other similar
taxes, charges or fees required to be paid by any Person under applicable Legal
Requirements in connection with the execution, delivery, recordation, filing,
perfection or enforcement of any of the Security Documents.
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The Company shall furnish to the Trustee by April 15 in each
year beginning with the year 1998, an Opinion or Opinions of Counsel, dated as
of such date, either stating that, in the opinion of such counsel, such action
has been taken with respect to the recording, registering, filing, re-recording,
re-registering and re-filing of (x) this Indenture, (y) the Security Documents,
and all supplemental indentures and amendments thereto, and (z) financing
statements, continuation statements or other instruments of further assurances,
as is necessary to maintain the Lien of each such Security Document and reciting
the details of such action or referring to prior Opinions of Counsel in which
such details are given, and stating that all financing statements and
continuation statements have been executed and filed that are necessary to
preserve and protect the rights of the Holders and the Trustee hereunder, the
rights of the Trustee under the Security Documents, or stating that, in the
opinion of such counsel, no such action is necessary to maintain such Liens.
SECTION 8.03. Possession of the Collateral and the Collateral
Account.
(a) Until the occurrence of an Event of Default, the Company
or the relevant Restricted Subsidiary may possess, manage, operate and enjoy, as
applicable, the Collateral in accordance with the terms of the Security
Documents. Until the occurrence of an Event of Default, the Parent Guarantor may
possess, manage, operate and enjoy, as applicable, the Parent Guarantor
Collateral in accordance with the terms of the Security Documents.
(b) Notwithstanding the foregoing, all amounts received by the
Trustee for the release of any part of the Collateral (including Net Cash
Proceeds in the case of an Asset Sale), all Condemnation Proceeds or Insurance
Proceeds in respect of the Collateral received by the Trustee, and all amounts
of money, securities, letters of credit and other evidences of indebtedness
deposited with or held by the Trustee in accordance with this Indenture and any
Security Document shall be held by the Trustee, as security for the obligations
of the Company and the Restricted Subsidiary under this Indenture and the
Security Documents until applied in accordance with the terms of this Indenture.
Neither receipt by the Trustee, nor any application whatsoever by the Trustee of
Net Cash Proceeds, Condemnation Proceeds or Insurance Proceeds, or other amounts
under this subsection (b) shall operate as payment or novation of the
indebtedness of the Company or the Restricted Subsidiaries under this Indenture
or the Security Documents, or as a reduction of the mortgages, pledges and
charges created under the Security Documents, notwithstanding any law, usage or
custom to the contrary.
SECTION 8.04. Suits to Protect the Collateral.
The Trustee shall have power to institute and to maintain such
suits and proceedings as it may deem expedient to prevent any impairment of the
Collateral or the Parent Guarantor Collateral by any acts which may be unlawful
or in violation of this Indenture or any of the Security Documents, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interests and the interests of the Holders in the Collateral or the Parent
Guarantor Collateral and in the principal, interest, issues, profits, rents,
revenues and other income arising therefrom, including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of, or
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compliance with, such enactment, rule or order would impair the security
hereunder or under any of the Security Documents, or be prejudicial to the
interests of the Holders or the Trustee.
SECTION 8.05. Release upon Termination of the Company's
Obligations; Partial Release.
(a) In the event that the Company delivers an Officers'
Certificate certifying that all obligations under this Indenture and the Notes
have been satisfied and discharged by complying with the provisions of Sections
12.01, 12.02 and 12.03, the Trustee shall (i) to the extent the satisfaction and
discharge of the Security Documents is given in accordance with Section 12.01,
12.02 and 12.03 deliver to the Holders a notice stating that the Trustee, on
behalf of the Holders, disclaims and gives up any and all rights it has in and
to the Collateral and the Parent Guarantor Collateral and under this Indenture
and the Security Documents (except for Section 10.07(e)), and, upon and after
the receipt by the Holders of such notice, the Trustee shall not be deemed to
hold any of the Collateral pursuant to this Indenture and the Security Documents
on behalf of the Trustee for the benefit of the Holders; or (ii) otherwise
disclaim and give up any and all rights it has in and to the Collateral and the
Parent Guarantor Collateral, and any rights it has under any of the Security
Documents, and the Trustee shall not be deemed to hold any of the Collateral or
the Parent Guarantor Collateral for the benefit of the Holders.
(b) The release of any Collateral or Parent Guarantor
Collateral from the terms hereof or from the terms of any of the Security
Documents, or the release, in whole or in part, of the Lien created hereby or by
any and all of the Security Documents, will not be deemed to impair the Lien
described in Section 8.01 in contravention of the provisions of this Indenture
if and to the extent the Collateral or Lien are released pursuant to, and in
accordance with, the Security Documents and pursuant to, and in accordance with,
the terms hereof. The Trustee and each of the Holders acknowledge that a release
of any of the Collateral or any part of the Lien in accordance with the terms of
any of the Security Documents and the terms hereof will not be deemed for any
purpose to be an impairment of the Lien in contravention of the terms of this
Indenture. To the extent applicable, the Company shall comply and shall cause
its Restricted Subsidiaries to comply with Section 314 of the TIA relating to
the release of property or securities from the security interest in the
Collateral. Any certificate or opinion required by Section 314 of the TIA shall
be set forth in an Officer's Certificate, except in cases in which Section 314
(d) of the TIA requires that such certificate or opinion be made by an
independent person. Upon receipt of an Officers' Certificate in connection with
the satisfaction of the conditions set forth in Section 4.16 or 10.10, as
applicable, with respect to an Asset Sale or the taking of any Collateral
pursuant to a Condemnation, the Trustee shall release the relevant items of
Collateral. The Parent Guarantor Collateral may be released upon receipt of an
Officers' Certificate to the effect that the conditions set forth in Section
4.14(c) in connection with the sale thereof have been satisfied.
(c) So long as no Event of Default shall have occurred and be
continuing or would result, the Company or the relevant Restricted Subsidiary
may, without any prior release or consent by the Trustee, conduct ordinary
course activities in respect of the Collateral which do not individually or in
the aggregate adversely affect the value of the Collateral, including (i)
selling or otherwise disposing of Collateral as permitted pursuant to clause (d)
of the definition of Asset
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Sale; (ii) abandoning, terminating, canceling, releasing or making alterations
or substitutions of any Intangibles which constitute Collateral; (iii)
surrendering or modifying any franchise, license or permit constituting
Collateral; (iv) altering, repairing, replacing, changing the location or
position of and adding to the structures, machinery, systems, equipment,
fixtures and appurtenances; (v) demolishing, dismantling, tearing down or
scrapping any Collateral or abandoning any thereof; (vi) granting a nonexclusive
license of any intellectual property; and (vii) abandoning intellectual property
which has become obsolete and is not used in the business.
(d) In the event that the Company or a Restricted Subsidiary
has sold, exchanged or otherwise disposed of or proposes to sell, exchange or
otherwise dispose of any portion of this Collateral in accordance with this
Section 8.05 and the other relevant provisions of the Indenture, and the Company
requests the Trustee to furnish a written disclaimer, release or quitclaim, in
each case to be prepared by the Company or such Restricted Subsidiary, of any
interest in such property under this Indenture and the Security Documents, upon
being satisfied that the Company or such Restricted Subsidiary, as the case may
be, is selling, exchanging or otherwise disposing of the Collateral in
accordance with this Section 8.05 and the other relevant provisions of this
Indenture, the Trustee shall execute, acknowledge and deliver to the Company (in
proper recordable or registrable form) such an instrument after the satisfaction
of the conditions set forth herein. Notwithstanding the preceding sentence, all
purchasers and grantees of any property or rights purporting to be released
herefrom shall be entitled to rely upon any release executed by the Trustee
hereunder as sufficient for the purposes of this Indenture and as constituting
good and valid release of the property therein described from the Lien of this
Indenture and the Security Documents. No purchaser or grantee of any property or
rights purporting to be released herefrom and from the Security Documents shall
be bound to ascertain the authority of the Trustee to execute the release or to
inquire as to the existence of any conditions herein prescribed for the exercise
of such authority.
SECTION 8.06. Actions by the Trustee.
Subject to the provisions of the Security Documents and
Article 13, the Trustee may in its sole discretion and without the consent of
the Holders take all actions it deems necessary or appropriate in order to (i)
enforce any of the terms of the Security Documents and (ii) to collect and
receive all amounts payable in respect of the obligations of the Company, the
Parent Guarantor and the Subsidiary Guarantors under the Security Documents and
this Indenture. The Trustee shall have the power to institute and maintain such
suits and proceedings as it may deem expedient in order to prevent any
impairment of the Collateral or the Parent Guarantor Collateral by any act that
may be unlawful or in violation of this Indenture or the Security Documents, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and those of the Holders in the Collateral or the Parent
Guarantor Collateral. No duty beyond that set forth in Section 7.01 is imposed
on the Trustee pursuant to this Section 8.06.
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ARTICLE NINE
COLLATERAL ACCOUNT
SECTION 9.01. Collateral Account.
The Company hereby acknowledges the establishment of the
Collateral Account. As collateral security for the due, full and prompt payment
or performance when due of all of the Account-Related Obligations (as defined
below), the Company hereby (and each Restricted Subsidiary by becoming a
Guarantor) grants to the Trustee on behalf of the Holders a continuing
first-ranking Lien (subject to Permitted Liens) upon and security interest in,
and pledges and assigns to the Trustee on behalf of the Holders, all of the
right, title and interest in and to the Collateral Account and all funds on
deposit from time to time therein of the Company and each Restricted Subsidiary,
together with all cash and non-cash proceeds and all investments made pursuant
to Section 9.02(d), together with all proceeds thereof and interest, earnings
and distributions with respect thereto, inclusive of all increments thereto
(collectively, the "Account Collateral"), except for Account Collateral
distributed in accordance with the terms of this Indenture, until the
termination of the Collateral Account pursuant to the terms of this Indenture.
"Account-Related Obligations" means all of the present and future indebtedness,
liabilities and obligations of any kind whatsoever, under, in connection with or
relating to this Indenture, including, without limitation, the Notes and any
ultimate unpaid balance thereof and to secure the due performance of all of the
other present and future obligations of the Company, the Restricted Subsidiaries
and the Parent Guarantor to the Trustee (including obligations under Section
7.07 of this Indenture) and the Holders. From the date hereof and continuing
until after satisfaction and discharge of this Indenture pursuant to Article 12
of this Indenture, the Collateral Account shall be maintained with and managed
by the Trustee, and the Trustee shall act with respect thereto only in
accordance with this Indenture.
SECTION 9.02. Terms of Collateral Account.
(a) (i) From the date hereof and up and to satisfaction and
discharge of this Indenture pursuant to Article 12, there shall be
established by the Company a Collateral Account with the Trustee in the
name "Anchor Glass Container Corporation, subject to the lien and
security interest in favor of The Bank of New York, as "Trustee" (or in
the event a successor Trustee is appointed under this Indenture, a
similar account shall be established consistently showing the name of
such Trustee) which account shall be under the sole dominion and
control of the Trustee acting in accordance with this Indenture.
(ii) The Company and its Restricted Subsidiaries shall have no
right under the terms of the Collateral Account established pursuant to
clause (i) above, so long as any Note is Outstanding or other payments
are due under this Indenture, to withdraw or instruct any Person to
withdraw on its behalf any money from the Collateral Account. No
passbook, certificate of deposit or other similar instrument evidencing
the Collateral Account shall be issued, and the Trustee shall retain
all contracts, receipts and other papers governing or evidencing the
Collateral Account. The Company shall deposit, or shall have deposited
as required by this Indenture, from time to time into the Collateral
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Account all Net Cash Proceeds from any Asset Sale in the manner
required by Section 4.16, as well as any Insurance Proceeds or
Condemnation Proceeds received in respect of a Loss Event or of a
Partial Loss in the manner required by Sections 4.16 or 10.10, as
applicable. In addition, any income received by the Company, any
Restricted Subsidiary or the Trustee with respect to the balance from
time to time standing to the credit of the Collateral Account shall be
deposited in the Collateral Account, and shall be applied to purchase
Related Business Investment as provided for in Section 4.16 or 10.10,
or applied to purchase Notes as provided for in Section 4.16, or
applied to Restoration pursuant to Section 10.10 in the event of a
Partial Loss. All right, title and interest in and to the Account
Collateral shall vest in the Trustee, shall constitute part of the
Collateral hereunder and shall not constitute payment of the
obligations of the Company, any Restricted Subsidiary or the Parent
Guarantor under the Indenture or any Security Document or under the
Notes, whether principal, premium, interest (including Defaulted
Interest, and whether or not accruing after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Company, any Restricted Subsidiary or the
Parent Guarantor ) or otherwise, until applied thereto as hereinafter
provided. In the event that any amount is required to be deposited in
the Collateral Account as aforesaid, the Company shall take such
actions at its sole expense as shall be required to ensure that the
Trustee has from the date of such deposit a first-ranking Lien and
security interest (subject to Permitted Liens) on such deposit for the
benefit of the Trustee and the Holders. Upon receipt by the Trustee of
an appropriate Opinion of Counsel pursuant to Section 14.04 and in
accordance with the TIA, the Company shall take such steps as shall be
required to ensure that the Trustee has from the date of such deposit a
first-ranking Lien (subject to Permitted Liens) on such deposit for its
benefit and for the benefit of the Holders.
(iii) For so long as the Notes are Outstanding, the Trustee
shall not exercise any right of set-off or recoupment or similar right
that it may otherwise have against the Collateral Account to satisfy
obligations of the Company, any Restricted Subsidiary or the Parent
Guarantor to the Trustee (other than those obligations that may have
arisen under the Security Documents and in respect of the Collateral).
(b) Except as otherwise provided in Section 4.16, 10.10 or
subsection (c) of this Section 9.02, no amount (including interest on amounts on
deposit in the Collateral Account) shall be paid or released to or for the
account of, or withdrawn by or for the account of, the Company or any other
Person from the Collateral Account.
(c) The balance from time to time standing to the credit of
the Collateral Account shall be released by the Trustee and distributed to the
Company or any other Person entitled thereto only as permitted under Sections
4.16 or 10.10; provided that the Trustee shall not distribute to the Company or
such other Person any such funds at any time a Default or an Event of Default
shall have occurred and is continuing. If immediately available cash on deposit
in the Collateral Account is not sufficient to make any such permitted
distribution, the Trustee shall liquidate as promptly as practicable Cash
Equivalents as required to obtain sufficient cash to make such distribution and,
notwithstanding any other provision of Sections 4.16 and 10.10 or this Section
9.02, such distribution shall not be made until such liquidation has taken
place. In order
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to obtain the release of amounts on deposit in the Collateral Account at the
time of purchase of Notes pursuant to an Asset Sale Offer, the Company shall
deliver to the Trustee an Officers' Certificate to the effect that (i) no
Default or Event of Default exists or will result therefrom, (ii) such amounts
constitute Net Cash Proceeds or Insurance Proceeds or Condemnation Proceeds
relating to a Loss Event, (iii) the amounts to be withdrawn will concurrently be
used to purchase Notes tendered pursuant to an Asset Sale Offer and (iv) all
conditions in connection therewith have been complied with including the
applicable provisions of Section 4.16. In order to obtain the release of amounts
on deposit in the Collateral Account in order to purchase a Related Business
Investment, the Company shall deliver to the Trustee an Officers' Certificate to
the effect that (i) no Default or Event of Default exists or will result
therefrom, (ii) such amounts constitute Net Cash Proceeds, Insurance Proceeds or
Condemnation Proceeds, as the case may be, (iii) the amounts to be withdrawn
will concurrently be used to make a Related Business Investment and (iv) all
conditions in connection therewith have been complied with, including the
applicable provisions of Section 4.16 in the case of an Asset Sale or Loss Event
or Section 10.10 in the case of a Partial Loss. In order to obtain the release
of amounts on deposit in the Collateral Account in order to purchase Notes in
open market transactions, the Company shall deliver to the Trustee an Officers'
Certificate to the effect that (i) no Default or Event of Default exists or will
result therefrom, (ii) such amounts constitute Net Cash Proceeds, Insurance
Proceeds or Condemnation Proceeds relating to a Loss Event, (iii) the amounts to
be withdrawn will concurrently be used to purchase Notes in open market
transactions and (iv) all conditions in connection therewith have been complied
with, including the applicable provisions of Section 4.16. Withdrawal of amounts
on deposit in the Collateral Account for purposes of Restoration is governed by
Section 10.10
(d) The Trustee shall invest from time to time amounts on
deposit in the Collateral Account pursuant to written direction from two
Officers of the Company delivered to the Trustee in Cash Equivalents maturing
within 30 days from the date of acquisition thereof, or a longer period (not
exceeding one year) if the Company certifies to the Trustee that the funds are
set aside either: (x) to purchase or invest in Related Business Investments
pursuant to Section 4.16 or 10.10 in the event of an Asset Sale, Casualty or
Condemnation, respectively; (y) to purchase Notes to the extent permitted by
Section 4.16 in the case of an Asset Sale or Loss Event or (z) to Restore the
relevant Collateral in accordance with Section 10.10(c). Such investments
described above shall be held in the name of the Trustee and shall be under the
sole dominion and control of the Trustee, pursuant to this Article 9, subject to
the rights of the Trustee under Article 7. Each such investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Trustee (or, in the case
of clause (2) of this sentence, in the name of the Depository or its
nominee), which (1) are promptly upon acquisition delivered (together
with any appropriate instruments of transfer) to, and held by, the
Trustee or an agent thereof (which shall not be the Company or any of
its Affiliates) in the State of New York or (2) held by or on behalf of
the Depository or its nominee, and credited to a securities account of
the Trustee maintained with the Depository; or
(ii) maintained in book-entry form on the records of a Federal
Reserve Bank and registered in the name of the Trustee, as depositary,
in a book-entry securities account
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maintained with respect to such investment with the Federal Reserve
Bank in the Federal Reserve District in which the Corporate Trust
Office is located. The Company shall bear the risk of any fees, taxes
or other charges or realized losses incurred on such investments (or
reinvestments or liquidations thereof), and if any such realized loss
shall occur on a day when the Company would not be permitted pursuant
to subsection (a) of this Section 9.02 to withdraw monies from the
Collateral Account, the Company shall promptly remit an amount equal to
the amount of any such loss to the Trustee for credit to the Collateral
Account.
SECTION 9.03. Representations, Warranties and Covenants
Specific to the Collateral Account.
The Company and each Subsidiary Guarantor represent, warrant
and covenant that the Lien and security interest on the Account Collateral
granted pursuant to Section 9.01 is and will remain (and the Company will make
or cause its Restricted Subsidiaries to make, as applicable, all such future
filings and take all such future actions as may be necessary or desirable in
order to ensure that it remains) a legal, valid, binding and enforceable Lien
and security interest, securing the Account-Related Obligations, ranking prior
and superior to all other Liens thereon (other than Permitted Liens), and
covenants that it shall take all necessary action to cause and maintain a
perfected first-ranking Lien (subject to Permitted Liens) in such Collateral
Account. The Company represents and warrants that as of the date hereof, all
filings and other actions necessary or desirable for the purpose of registering
notice of, perfecting and establishing the first-ranking of such Lien (subject
to Permitted Liens) and security interest have been duly made or taken. The
Company agrees that at any time upon the reasonable request of the Trustee, the
Company and its Restricted Subsidiaries will, at the Company's sole expense,
execute, acknowledge, deliver, record and/or file such documents or instruments
in form reasonably satisfactory to the Trustee, and do such acts and things as
may be reasonably necessary, desirable or proper to carry out more effectively
the purposes of such Lien and security interest or to further assure, evidence,
preserve or protect the perfection, ranking or other benefits thereof.
ARTICLE TEN
COVENANTS SPECIFIC TO THE COLLATERAL PROPERTY
SECTION 10.01. Good Title; Authority; Priority: Maintenance of
Title: Supplemental Indentures; Registration, Recording and Filing; Closing
Documents.
(a) The Company represents, warrants and covenants that (i) it
and its Restricted Subsidiaries, as applicable, are and will be the sole owner
of, and have and will have good and indefeasible title in fee to (or in the case
of Collateral Properties which constitute leasehold interests, valid leasehold
interests with respect to) the real property comprising part of each Collateral
Property, and it and its Restricted Subsidiaries , as applicable, has good title
to the balance of each such Collateral Property, and are now lawfully seized and
possessed of the Collateral subject to the Liens created by the Security
Documents (and any Permitted Liens); (ii) it and each of its Restricted
Subsidiaries, as applicable, has, will have and at all relevant times has had,
good right and lawful authority to hypothecate, mortgage, pledge, assign,
charge, cede and
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transfer all of the Collateral as provided in the Security Documents; (iii) the
Collateral is, and will be, free and clear of any Lien, except Permitted Liens;
(iv) each Security Document, as applicable, creates and constitutes, and will
create and constitute a valid and enforceable uninterrupted and perfected
first-ranking Lien (subject to Permitted Liens) on the Collateral; and (v) each
representation and warranty contained in the Loan Agreement regarding the
Collateral Properties was true and complete when made and is true and complete
in all material respects on the date hereof.
(b) The Company hereby does and the Company and each of its
Restricted Subsidiaries will forever warrant and defend the title (subject to
Permitted Liens) to the Collateral against the claims and demands of all Persons
whomsoever and fully and effectively maintain the security created by the
applicable Security Documents. The Company further represents and warrants that
each of the material contracts, leases and agreements described in the Security
Documents is in full force and effect and no defaults, waivers or indulgences
exist thereunder.
(c) The Company shall promptly after the execution thereof
properly file or record, or cause the relevant Restricted Subsidiaries to
property file or record, as applicable, the Security Documents in the
appropriate public records, where the filing or registration thereof may be
necessary or advisable, and shall as applicable, from time to time renew the
same, if such renewal is necessary or advisable to maintain such security.
(d) Except as permitted by the Security Documents or this
Indenture, the Company shall keep in effect, and shall cause its Restricted
Subsidiaries to keep in effect, all material rights and appurtenances to or that
constitute a part of the Collateral.
(e) The Company hereby acknowledges that the Security
Documents include, without limitation, each of the Security Documents as defined
in the Loan Agreement, including, without limitation, the mortgages, security
agreements and UCC financing statements delivered by the Company to Bankers
Trust Company, as agent, pursuant to the Loan Agreement. As a condition to the
effectiveness of this Indenture, such Security Documents have been assigned to
the Trustee.
SECTION 10.02. Further Documentation to Assure Lien: Fees and
Expenses.
(a) The Company and each of its Restricted Subsidiaries shall,
at the Company's sole cost and expense, promptly do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, charges, mortgages,
assignments, notices of assignment, transfers and assurances which may be
necessary or advisable from time to time to assure, perfect and maintain without
interruption, convey, assign, transfer, hypothecate and confirm unto the Trustee
the property and rights thereby conveyed, hypothecated or otherwise assigned, or
which the Company hereunder or thereunder may be bound to convey, hypothecate or
otherwise assign or cause to be assigned to the Trustee, or which may facilitate
the performance of the terms of the first-ranking Lien (subject to Permitted
Liens) and any other Liens created under applicable Security Documents, or the
filing, registering or recording of such applicable Security Document. The
Parent Guarantor makes the foregoing covenant in respect of the Parent Guarantor
Collateral.
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(b) The Company and its Restricted Subsidiaries, as
applicable, shall promptly (i) deliver to the Trustee such supplemental
agreements, documents or notices containing further descriptions of properties
(including replacements and additions to the Collateral) mortgaged or intended
to be mortgaged by the applicable Security Document, as may be necessary or
advisable to give the Trustee valid and enforceable first-ranking Liens (subject
to Permitted Liens) upon such properties as contemplated by the granting clauses
or the charging provisions of such applicable Security Document, and (ii) cause
at all times to be kept registered, recorded and filed the applicable Security
Document, any and all supplemental trust deeds and instruments of hypothecation,
mortgage, pledge, assignment, charge, cession and transfer or further assurance,
any required financing and continuation statements and all other required papers
in such manner and in such places as may be required by law, or which may be
necessary or advisable, in order fully to perfect, preserve and protect the
uninterrupted Liens (subject to Permitted Liens) of the applicable Security
Document as a mortgage, pledge, assignment, charge, cession and transfer of
immovables and movables and interest therein. The Company shall promptly pay or
cause to be paid all taxes, fees and other charges in connection with such
recording and/or filing.
(c) The Company and each of its Restricted Subsidiaries shall
from time to time execute and do or cause to be executed and done all such
assurances and things as may be necessary or desirable for facilitating the
realization of the Collateral, for exercising all the powers, authorities and
discretion conferred upon the Trustee under such Security Document and for
confirming to any purchaser of any of the Collateral, whether held by the
Trustee under the applicable Security Documents or by judicial proceedings, the
title to the properties so sold, and that it shall give or cause to be given all
notices and directions as may be necessary or desirable in connection therewith.
(d) If any Authority in any jurisdiction in which any of the
Collateral Property is located or any political subdivision thereof (including a
municipality) shall levy, assess or charge any tax, imposition or assessment
upon the Security Documents relating to the obligations or the interest of the
Trustee, in any of the Collateral (other than income, franchise or similar taxes
imposed on the Trustee or on the Holders), the Company or the relevant
Restricted Subsidiary shall pay all such taxes, assessments and impositions to,
for or on account of the Trustee when due and payable and shall furnish promptly
to the Trustee proof of such payment. Notwithstanding the foregoing, the Company
or the relevant Restricted Subsidiary may contest such amount paid or payable in
accordance with the procedures set forth in Section 10.06(d).
(e) The Company shall not acquire or lease, or permit any
Restricted Subsidiary to acquire or lease, any real property unless (i) no Event
of Default shall exist on the date the Company or such Restricted Subsidiary
enters into any binding agreement for such acquisition or upon the closing of
such acquisition, (ii) the real property or leasehold interest so acquired shall
be free of Liens other than Permitted Liens, (iii) concurrently with the
acquisition or lease (but only in the case of a ground lease) of any such real
property, the Trustee shall receive, at the Company's expense, a recorded first
priority mortgage and security agreement (or leasehold mortgage and security
agreement in the case of leased property) with respect to such real property,
satisfactory to the Trustee, and the Trustee shall also receive a Title
Insurance Policy insuring such mortgage and security agreement as a first
priority lien (subject to Permitted Liens) on such real property and a legal
opinion with respect to such mortgage and security agreement
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reasonably satisfactory to the Trustee, and (iv) the Company or such
Restricted Subsidiary shall execute and file UCC-1 statements, and enter into
any additional Security Documents or required amendments to the Security
Documents, as required to give the Trustee a first priority perfected security
interest (subject to Permitted Liens) in the personal property constituting
Collateral located on such real property.
(f) Notwithstanding anything to the contrary, none of the
foregoing provisions shall require the Company or any Restricted Subsidiary to
grant a security interest as security for the Notes in any leasehold interest
held by the Company or any Restricted Subsidiary to the extent that the grant of
such security interest would be prohibited under the applicable lease so long as
(a) such lease was not entered into in order to circumvent the obligations of
the Company and the Restricted Subsidiaries under the Indenture and the Security
Documents, (b) no Improvements or Equipment constituting Collateral are located
on any premises subject to such lease and (c) no Net Cash Proceeds, Insurance
Proceeds or Condemnation Proceeds were used in any part to acquire such
leasehold interest.
SECTION 10.03. Impairment of Collateral.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, (i) incur or suffer to exist
any Lien upon any of the Collateral other than Permitted Liens, (ii) take any
action or omit to take any action with respect to the Collateral that would or
could be reasonably expected to have the result of adversely affecting,
impairing or failing to maintain without interruption the security interests in
the Collateral under this Indenture or the Security Documents, or (iii) grant
any interest whatsoever (other than Permitted Liens) in any of the Collateral to
any other Person (other than the Company or the Trustee), or suffer to exist any
such interest.
SECTION 10.04. Obligations with Respect to Leases and Material
Contracts.
(a) Without prejudice to Section 10.03 and subject to Section
4.18, if the Company or a Restricted Subsidiary shall be permitted to enter into
any lease or sublease with respect to any of the Collateral Property, the
Company or such Restricted Subsidiary shall not (i) execute any assignment of
any such assigned lease or sublease or of the rents or any part thereof other
than pursuant to the applicable Security Document, (ii) accept any prepayments
of any installment of rents or other amounts to become due thereunder for a
period exceeding one month (except for a security deposit), or (iii) enter into
or modify any such assigned lease in any fashion which will (x) interfere in any
material respect with the ordinary operation of such Collateral Property or (y)
materially and adversely affect the value of such Collateral Property or the
security provided by the applicable Security Document, without the prior written
consent of the Trustee.
(b) The Company shall furnish to the Trustee annually on each
May 15 a written statement in respect of any or all of the leases that include
any of the Collateral Properties, setting forth the space occupied, if any, the
portion of the Collateral Property demised thereby, the rentals or other amounts
payable thereunder, and such other information as the Trustee may reasonably
request (to the extent reasonably available to the Company).
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(c) The Company shall notify the Trustee annually, within 90
days from the end of each of its fiscal years, of the existence of any and all
leases or leasing contracts in respect of any part of the Collateral.
SECTION 10.05. Use and Configuration: Maintenance of
Collateral Properties.
(a) The Company represents and warrants that (i) the
Collateral Properties are served by all utilities required or necessary for the
current use thereof, (ii) all streets necessary to serve the Collateral
Properties are substantially completed and serviceable and have been dedicated
and accepted as such by each governmental authority having jurisdiction and
(iii) the Company has access to the Collateral Properties from public roads or
by way of recorded easements sufficient to allow the Company to conduct its
business as conducted presently at such Collateral Properties.
(b) The Company and its Restricted Subsidiaries shall, at all
times, make or cause to be made such expenditures by means of renewals,
replacements, repairs, maintenance or otherwise as shall be necessary to
maintain, preserve and keep the Collateral Properties in good working order,
condition and repair (ordinary wear and tear excepted), in a state of good
operating efficiency, and shall not commit any waste on or with respect to the
Collateral Properties that has the effect of reducing materially the value of
such Collateral or any other property of the Company or its Restricted
Subsidiaries constituting Collateral.
(c) The Company and its Restricted Subsidiaries shall duly
observe and conform to all covenants, terms and conditions under or upon which
any part of the Collateral is held.
SECTION 10.06. Payment of Taxes. Assessments: Compliance with
Law.
(a) Unless contested in accordance with the provisions of
subsection (d) below (and subject to Section 4.18), the Company and its
Restricted Subsidiaries shall pay and discharge, from time to time when the same
shall become due, all immovable and other taxes, special assessments, levies,
permits, inspection and license fees, all utility charges, including water and
sewer rents and charges, and all other public charges, imposed upon or assessed
against the Collateral or any part thereof or upon the revenues, rents, issues,
income and profits of the Collateral or any part thereof, including, without
limitation, those arising in respect of the occupancy, use or possession
thereof.
(b) From and after the occurrence and during the continuance
of an Event of Default, the Company and its Restricted Subsidiaries shall pay
directly to the Trustee for deposit into the Collateral Account, on the first
day of each month, an amount reasonably estimated by the Trustee to be equal to
one-twelfth (1/12th) of the annual taxes, assessments and other items required
to be discharged by the Company and its Restricted Subsidiaries under subsection
(a) above. Such amounts shall be held by the Trustee in the Collateral Account
and (at the time that any payment is due pursuant to subsection (a) above) the
Trustee shall release an amount to make such payment and to apply such amount to
the payment that is due. If the amounts so deposited by the Company and its
Restricted Subsidiaries into the Collateral Account under this subsection (b)
prove insufficient to pay the amounts required to be discharged by the Company
and its
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Restricted Subsidiaries, then, upon demand, the Company and its Restricted
Subsidiaries shall pay directly to the Trustee for deposit into the Collateral
Account such additional amounts. In the event that the Notes become immediately
due and payable upon maturity or acceleration, or the Collateral becomes
enforceable otherwise, the Trustee may apply all or any part of the sums held
pursuant to this subsection (b) to payment and performance of the Company's
obligations in accordance with this Indenture and the applicable Security
Document, until such time, if any, that such acceleration is rescinded in
accordance with this Indenture.
(c) The Company currently has and shall maintain and cause its
Restricted Subsidiaries to maintain in full force and effect all material
Permits now or hereafter required by any Authority (including, without
limitation, building ordinances and codes and zoning requirements to operate or
use and occupy the Collateral Properties for their intended uses or that
otherwise relate to the Collateral Property). Unless contested in accordance
with the provisions of subsection (d) below, the Company shall comply and cause
its Restricted Subsidiaries to comply promptly in all respects with all
requirements set forth in the permits and all requirements of any law,
ordinance, rule, regulation or requirement of any Authority related to all or
any part of the Collateral or the condition, use or occupancy of all or any part
thereof or any recorded deed of restriction, declaration, covenant running with
the land or otherwise, now or hereafter in force, except in such cases where
such noncompliance would not have a material adverse effect on the condition,
use, operation or value of the relevant Collateral. The Company shall not
initiate or consent to any change in the zoning or any other permitted use
classification of any Collateral Property which could reasonably be expected to
have a material adverse effect on the Lien under the applicable Security
Document or the value of any Collateral Property.
(d) The Company may at its own expense contest the amount or
applicability of any of the obligations described in subsections (a) and (c)
above by appropriate legal proceedings, prosecution of which operates to prevent
the collection thereof and the sale or forfeiture of the Collateral or any part
thereof to satisfy the same; provided, however, that in connection with such
contest, the Company shall (i) have made provision for the payment of such
contested amount on the Company's books if and to the extent required by GAAP or
(ii) pay directly to the Trustee for deposit into the Collateral Account a sum
sufficient to pay and discharge such obligation and all interest and penalties
related thereto, which amounts shall be released for concurrent payment of such
obligations upon receipt by the Trustee of an Officers' Certificate.
Notwithstanding the foregoing provisions of this subsection (d), (1) no contest
of any such obligations may be pursued by the Company if such contest would (y)
expose the Trustee or any Holder to any criminal liability or any additional
civil liability for failure to comply with such obligations, or (z) have a
material adverse effect on the Collateral and (2) if at any time payment of any
obligation imposed upon the Company shall become necessary to prevent the
delivery of a sale conveying the Collateral or any portion thereof because of
nonpayment, the Company shall pay the same in sufficient time to prevent the
delivery of such sale by any Authority.
SECTION 10.07. Environmental Matters.
(a) The Company (i) shall be, and shall cause its Restricted
Subsidiaries to be, at all times in compliance in all material respects with all
applicable Environmental Laws and (ii)
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shall ensure, and shall cause its Restricted Subsidiaries to ensure, that the
condition of all property forming part of the Collateral is in compliance in all
material respects with Environmental Laws.
(b) The Company shall, and shall cause its Restricted
Subsidiaries to, promptly provide notice to the Trustee of any written notice
received to the effect that any of them is or may reasonably be likely to become
liable to any Person or Authority in an amount in excess of one million dollars
($1,000,000) as a result of: (i) any violation or alleged violation by any of
them of any Environmental Laws, (ii) any administrative or judicial complaint or
order filed against any of them alleging a violation of any Environmental Laws,
(iii) any breach or alleged breach of any environmental certificate, approval or
permit relating to the installations or operations at the Collateral Properties,
or (iv) any liability arising out of the Release or threatened Release of any
Contaminant into the Environment or for any damages resulting from such Release.
(c) Upon reasonable request and at reasonable intervals, the
Company shall, and shall cause its Restricted Subsidiaries to, provide the
Trustee with updated information concerning any matter for which notice is
provided under subparagraph (b) above. In addition, the Company shall, and shall
cause its Restricted Subsidiaries to, submit to the Trustee an annual report
("Environmental Report") providing an update of the status of each
environmental, health or safety compliance, hazard or liability issue identified
in any notice required pursuant to subparagraph (b), above.
In the event the Company or the Restricted Subsidiaries
receives any written notice from any Authority, or if there is a change in
Environmental Laws, either of which is reasonably likely to give rise to a
Material Adverse Effect on any Collateral Property, the Company shall undertake
an environmental assessment, evaluating potential costs to correct or meet such
change in law, using qualified engineers or environmental consultants, for any
property affected by such notice or change in law and forming part of the
Collateral, which assessments shall be treated as confidential by the Trustee.
(d) The Company shall, and shall cause its Restricted
Subsidiaries to, diligently undertake any Remedial Action required under
Environmental Laws in the event of (i) any violation of any Environmental Laws,
(ii) any Release of any Contaminant on any property forming part of the
Collateral or owned by the Company or its Restricted Subsidiaries or (iii) any
other Release or threatened Release of a Contaminant into the Environment
occurring in the course of the operations of the Company or its Restricted
Subsidiaries or originating from said property; provided, however, that the
Company and its Restricted Subsidiaries shall have no obligations under this
subparagraph (d) to the extent any of them is diligently prosecuting a defense
or other legal challenge to any alleged liability or requirement for Remedial
Action.
(e) The Company hereby undertakes, to the extent permitted by
applicable law, to indemnify the Holders, as well as the Trustee, their
officers, directors, employees, agents and shareholders, and agrees to hold each
of them harmless from and against any and all losses, liabilities, damages,
reasonable costs, expenses and claims of any and every kind whatsoever, arising
out of or related to:
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(i) defending and/or counter-claiming or claiming over against
third parties in respect of any environmental action or matter relating
to any property that forms part of the Collateral, and
(ii) any cost, liability or damage arising out of the
disposition or settlement of any environmental action entered into by
the Trustee relating to any property that forms part of the Collateral,
and which at any time or from time to time may be paid or incurred by,
or asserted against the Trustee for, with respect to or as a direct or
indirect result of (a) the presence in contravention of any
Environmental Law (or any governmental directive given to the Company
or any of its Restricted Subsidiaries) on or under, or the Release from
any property that forms part of the Collateral, or any other property
owned or occupied by the Company or any of its Restricted Subsidiaries,
of any Contaminant into the Environment and (b) a failure on the part
of the Company or its Restricted Subsidiaries to comply with any
Environmental Laws.
The provisions of any undertakings and indemnifications set
out in this Section 10.07 shall survive the satisfaction of the Company's
obligations under the Notes, and its release from all other obligations under
this Indenture and the Security Documents. Notwithstanding the foregoing, the
indemnity provided by the Company and its Restricted Subsidiaries pursuant to
this Section 10.07(e) shall not apply to any liabilities or costs arising out of
the gross negligence, willful misconduct or bad faith of the Trustee.
SECTION 10.08. Condemnation.
If there shall occur any Condemnation or commencement of
proceedings thereof that constitutes a Loss Event or that affects Collateral
that has a fair market value exceeding two hundred and fifty thousand dollars
($250,000), the Company shall immediately notify the Trustee upon receiving
notice of such Condemnation or commencement of proceedings therefor. Any such
Condemnation Proceeds are hereby assigned to the Trustee and shall be deposited
directly into the Collateral Account to be held subject to the terms of this
Indenture and the applicable Security Documents, provided that, so long as no
Event of Default has occurred and is continuing, such Condemnation Proceeds need
not be so deposited unless either (i) such Condemnation constitutes a Loss
Event, or (ii) such Condemnation Proceeds exceed five hundred thousand dollars
($500,000). The Company shall take all steps necessary to notify the condemning
authority of such assignment.
SECTION 10.09. Required Insurance Policies.
The Company shall maintain in full force the insurance
coverages in respect of the Collateral required by this Section 10.09 as
follows:
(A) Policies to be Maintained:
The Company shall take out and maintain at all times the
following policies of insurance relating to the Collateral Properties and their
operation with financially sound and reputable insurers:
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(1) "All Risks" Property Insurance: Property insurance on an
"all risks" basis against physical loss of, damage to or impairment of
the material improvements, machinery and equipment by fire and other
risks and hazards covered by a standard extended coverage insurance
policy (including, without limitation, broad form property damage),
riot and civil commotion, vandalism and malicious mischief (as well as
burglary and theft if not covered by a separate insurance policy, and
wind storm insurance with respect to Collateral Properties located on
the ocean coast), on the "All Risk" or "Special" form, including
coverage of the risks of earthquake and flood (with respect to
Collateral Properties located in an area having special flood hazards
and in which flood insurance has been made available under the national
Flood Insurance Act of 1968 (and any amendment or successor act
thereto)). All such insurance shall be for not less than full
replacement cost value without deduction for physical depreciation,
with limits and sublimits, if any, consistent with Subsection (B)
below. The policy will apply in connection with construction,
renovation, replacement and expansion.
(2) Business Interruption Insurance: Business interruption
insurance in an aggregate annual amount of $285.0 million written on a
gross earnings form to cover the actual loss sustained, including loss
of earnings, fixed costs and debt service, resulting from interruption
of business operations due to physical loss of, damage to or impairment
of any material improvements, machinery and equipment.
(3) Boiler and Machinery Insurance: Comprehensive broad form
boiler and machinery insurance to cover physical loss or damage, which
insurance shall be for not less than full replacement cost value, with
limits and sublimits, if any, consistent with Subsection (B) below.
(4) Comprehensive General Liability Insurance:
Comprehensive general liability insurance to cover all sums
which the Company or its Restricted Subsidiaries shall become obligated
containing minimum limits per occurrence of Five Million Dollars
($5,000,000) to pay by reason of liability imposed by law upon the
insured or assumed by the insured under any contract for damages
because of bodily injury or property damage, including in connection
with any construction. Such insurance shall include the policy
extensions commonly referred to as:
(i) Blanket written and oral contractual liability;
(ii) Owner's and contractor's protective liability;
(iii) Personal injury liability;
(iv) Employer's liability;
(v) Property damage on a broad form basis;
(vi) Non-owned automobile liability;
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(vii) Non-owned watercraft liability;
(viii) Named peril pollution liability, including legal
liability for any evacuation; and
(ix) Products and completed operations liability.
(5) Automobile Liability Insurance: Automobile liability
insurance on all vehicles owned, leased, hired, operated or licensed by
or in the name of the Company for bodily injury, death or property
damage, including loss of use thereof.
(6) Umbrella Liability Insurance. Excess or umbrella liability
insurance in respect of the insurance required by paragraphs (4) and
(5) of this Subsection 10.09(A) in the aggregate in excess of the
underlying limits of the policies taken out pursuant to said paragraphs
(4) and (5).
(B) Deductibles and Multiple Insureds:
Deductibles, limits and sublimits in connection with any
insurance policies required under this Section 10.09 whose amounts are not
otherwise provided herein shall be for such amounts as would be purchased by a
prudent Person engaged in the business of the Company and similarly situated
with the Company. If any such policies insure others as well as the Company, it
will contain a cross-liability or severability of interests clause.
(C) Other Policies to be Maintained:
Notwithstanding anything contained in this Section 10.09, the
Company shall take and maintain all such other insurance policies as may be
required from time to time by any applicable statute, regulation, decree or
court order. Moreover, the Company shall obtain such additional insurance from
time to time as may be advisable in accordance with industry practice or to
compensate for the effects of inflation.
If any insurance required to be maintained by the Company
under this Section 10.09 is not available on a commercially reasonable basis as
a result of changes in the insurance market occurring after the date hereof, the
Company may so advise the Trustee, and the Company shall procure such insurance
most closely approximating the required insurance which is not available at
commercially reasonable rates as determined by a Person qualified to survey
risks and to recommend insurance coverage for companies in the business in which
the Company is engaged that is not an employee, officer or director or Affiliate
of the Company or any of its Affiliates selected by the Company (an "Independent
Insurance Expert"), as specified in a certificate of such Independent Insurance
Expert delivered to the Trustee, provided that this provision shall not relieve
the Company of the obligation of maintaining the insurance as required in
Section 10.09 (A) (1), (2) or (3).
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(D) Policy Requirements:
(1) Parties Protected. The interest of the Trustee under this
Indenture and as mortgagee and secured creditor in the Collateral under
the Security Documents shall be noted as loss payee upon all property
policies taken out by the Company relating to the Collateral, whether
or not required by this Section 10.09. Each of the said policies will
contain a mortgage clause and a breach of conditions endorsement or
extension, in form and substance customary in the industry. The
interests of other hypothecary creditors may also be noted upon
property policies or protected by a mortgage clause, provided that
their encumbrances relate to property other than the Collateral.
Each of the said policies will contain a waiver of subrogation
by the insurer against the Trustee and against the other hypothecary
creditors whose interests are noted, and all of their directors,
officers and employees.
Each policy of insurance referred to in paragraphs (A) (1),
(2), (3) and (4) shall provide for automatic assignment to the Trustee
and coverage for a minimum of sixty days, regardless of the policy
expiration date, after the Trustee shall have taken possession or
become owner of the material improvements, machinery and/or equipment.
Each liability policy written on a claims made basis shall provide that
if it remains in force at the time the Security Documents are
discharged, the claims reporting period will be continued for one year
after the expiration date of the policy.
The Trustee shall be named as additional insureds under all
liability policies taken out by the Company relating to the Collateral,
including, without limitation, those referred to in paragraphs (A) (4)
and (6).
(2) Notice Requirements in Policies: All insurance policies
shall provide for sixty days' prior written notice of cancellation,
termination or material change to the Trustee and the other hypothecary
creditors whose interests are noted.
(3) Insurer Form of Policy: All insurance policies required by
this Indenture and the Security Documents shall be taken out with
reputable insurers which are rated A:V or better as to claims paying
ability by A.M. Best and which are licensed to do business as required.
All such policies shall be in form acceptable to an Independent
Insurance Expert, as evidenced with respect to each policy by a
certificate of such Independent Insurance Expert to such effect
delivered to the Trustee on or before the renewal date for such policy.
All insurance shall provide primary coverage for the risks
insured, without right of contribution of any other insurance carried
by or on behalf of the Trustee with respect to its interest in the
material improvements, machinery and equipment.
All insurance shall be endorsed to provide that, inasmuch as
the policy is written to cover more than one insured, all terms,
conditions, insuring agreements and endorsements,
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with the exception of insurers limits of liability, shall operate in
the same manner as if there were a separate policy covering each
insured.
(4) No Co-insurance: No property policies shall permit
co-insurance.
(E) Company's Obligations Concerning Insurance:
(1) Payment of Premiums: The Company will pay punctually all
premiums payable for all insurance taken out and maintained by it and
will promptly furnish the Trustee with proof of such payment.
(2) Delivery of Policies. Renewals and Amendments: The
Company shall promptly deliver to the Trustee copies of all
certificates and policies of insurance taken out by it, certified by
the insurer or its authorized representative in each case. The Company
shall also provide evidence (which may include cover notes or binders)
of every renewal or replacement of a policy at least ten days prior to
its expiration date. If any policy is materially and adversely amended
the Company shall promptly provide the Trustee with a certified copy of
such amendment.
(3) Annual Certificate of Insurance: The Company will on or
before the renewal date of each policy in each year deliver to the
Trustee certificates of insurance issued by each of its insurers, in
form and substance satisfactory to the Trustee, certifying which
policies of insurance have been obtained or renewed and listing all
policies in force. In addition, the Company shall deliver a certificate
stating the following in respect of each such policy:
(i) the policy limits;
(ii) the insurance companies or underwriters carrying the
insurance;
(iii) the effective and expiration dates of the policy; and
(iv) that the policy complies with the provisions of Section
10.09 (D).
(4) Compliance with Policy Requirements: The Company shall
comply with all material requirements of all policies of insurance and
in particular will promptly inform each of its insurers of all material
events and matters which it is necessary to disclose to such insurer to
preserve or obtain coverage. Without limiting the generality of the
foregoing, the Company shall not in its use and occupancy of the
Collateral Properties (including, without limitation, in the making of
any alteration thereto) take any action that could reasonably be
expected to be the basis for termination, revocation or denial of any
insurance coverage required to be maintained under this Indenture or
that could reasonably be expected to be the basis for a defense to any
claim under any insurance policy maintained in respect of the
Collateral.
(5) Amount of Coverage: Wherever the Company is required to
maintain insurance coverage for full replacement cost value or for full
indemnity, it shall make due
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allowance for the anticipated effect of inflation or increases in
costs, expenditures or revenues, as may be reasonably foreseeable.
(6) Notification of Trustee and Filing of Proofs of Claim: In
the event of any Loss Event or Partial Loss with respect to any
Collateral in excess of two hundred and fifty thousand dollars
($250,000) in the reasonable estimation of the Company, the Company
shall notify the Trustee and any other hypothecary creditor whose
interest is noted of such occurrence within thirty days of the date of
the occurrence and shall do or cause to be done all such acts and
things as may be necessary or advisable to obtain prompt payment of all
insurance proceeds in relation thereto in accordance with the terms
hereof, including (without limitation) the timely filing of interim and
final proofs of loss with insurers subject, however, to the provisions
of Section 10.10.
(F) No Obligation on Trustee:
The Trustee makes no representation or warranty as to the
sufficiency or adequacy of the insurance coverage required to be maintained
pursuant to this Section 10.09. The Trustee shall have no obligation to verify
any information or statement contained in any certificate or policy delivered to
it.
SECTION 10.10. Withdrawal of Condemnation Proceeds and
Insurance Proceeds.
(a) In the event of any Loss Event or Partial Loss (unless, in
the case of a Partial Loss, (i) no Event of Default has occurred and is
continuing, and (ii) the Insurance Proceeds or Condemnation Proceeds therefrom
do not exceed five hundred thousand dollars ($500,000)), (1) the Insurance
Proceeds or Condemnation Proceeds therefrom shall be paid directly to the
Trustee for deposit in the Collateral Account, and (2) the Company shall take
such actions, at its sole expense, as are necessary to ensure that the Trustee
has from the date of such deposit a first-ranking Lien (subject to Permitted
Liens) on such Insurance Proceeds or Condemnation Proceeds pursuant to the
applicable Security Document or this Indenture. The Company or the relevant
Restricted Subsidiary shall apply all such Insurance Proceeds or Condemnation
Proceeds, other than those resulting from Loss Events, to commencement and
completion of Restoration of the Collateral affected by the relevant Casualty or
Condemnation. The Company or the relevant Restricted Subsidiary shall apply all
such Insurance Proceeds or Condemnation Proceeds resulting from Loss Events in
accordance with Section 4.16(b).
(b) In connection with any Partial Loss, the Company shall
take such actions, at its sole expense, as are necessary to permit the Trustee
to release such Insurance or Condemnation Proceeds from the Lien thereon in
accordance herewith. Upon the receipt of an appropriate Opinion of Counsel in
accordance with this Indenture and the TIA (if applicable), and any related
documentation, the Trustee shall release to the Company the Insurance Proceeds
or Condemnation Proceeds from such Casualty or Condemnation on deposit in the
Collateral Account (less the cost of recovering and paying out such Insurance
Proceeds or Condemnation Proceeds, including attorneys' fees, expenses and costs
allocable to inspecting the Work (as defined below) and the plans and
specifications therefor) in order to enable the Company to
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Restore the relevant Collateral to at least its general utility and value prior
to the relevant Casualty or Condemnation, only in accordance with the following
procedures:
(1) if the cost of the work to be completed (the "Work"),
estimated by the Company, shall exceed two million dollars
($2,000,000), the Work shall be under the charge of an architect,
engineer or construction manager (who may be an employee of the
Company) and, before the Company commences any Work, other than
temporary Work to protect property to prevent interference with
business and Restoration work, an independent consulting engineer
selected by the Company shall have approved the plans and
specifications for the Work; it being nevertheless understood that said
plans and specifications shall provide for such Work that, upon
completion thereof, the improvements shall be at least equal in general
utility and value to the Improvements that were on the site prior to
the Condemnation or Casualty;
(2) each request for payment shall be made on no less than 10
nor more than 30 days' prior notice to the Trustee and shall be
accompanied by a certificate to be made by such architect, engineer or
construction manager, if supervision is required by such a person under
clause (1) of this Section 10.10(b), and by an Officers' Certificate,
stating (i) that all of the Work completed has been done substantially
in compliance with the approved plans and specifications, if any is
required under said clause (1), (ii) that the sum requested is required
to pay, or to reimburse the Company for the cost incurred in connection
with, such Work (giving a brief description of the services and
materials provided in connection with such Work), (iii) that the sum
requested, when added to all proceeds previously paid out by the
Trustee, does not exceed the value of the Work done (including
downpayments made to suppliers related to the Work in accordance with
customary practice) as of the date of such certificate (less any
retainer set forth in the relevant construction contract, if
applicable, which shall contain customary provisions) and (iv) that the
amount of Insurance Proceeds or Condemnation Proceeds, as the case may
be, from the relevant Casualty or Condemnation remaining in the
Collateral Account, together with the Insurance Proceeds or
Condemnation Proceeds which will thereafter become available in
connection therewith (together with any funds of the Company other than
Condemnation Proceeds or Insurance Proceeds deposited by the Company in
the Collateral Account for purposes of completion of such Work), will
at all times be sufficient to complete the Restoration (giving in
reasonable detail an estimate of the cost of such completion);
(3) each request shall be accompanied by waivers of Liens
(conditional as to the current request and unconditional as to prior
requests) covering that part of the Work for which payment or
reimbursement is being requested and by appropriate evidence that there
has not been filed with respect to the Collateral Property any
mechanic's or other Lien or instrument for the retention of title in
respect of any part of the Work not discharged of record (other than
Permitted Liens);
(4) any Work shall, once commenced, be prosecuted diligently
to completion in a good and workmanlike manner in material compliance
with all applicable Legal Requirements;
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(5) each request shall be accompanied by an Officers'
Certificate dated not more than 10 days prior to the date of such
request to the effect that no Default or Event of Default shall have
occurred and be continuing;
(6) the request for any payment after the Work has been
completed shall be accompanied by a copy of any certificate or
certificates required by law to render occupancy of the relevant
Collateral Property legal;
(7) the buildings, equipment or other improvements or fixtures
covered by the Work shall be subject to the Lien of and security
interest created by the Security Documents (subject only to Permitted
Liens) and the Trustee shall have received an Opinion of Counsel
satisfactory to it to this effect;
(8) each request shall be accompanied by the documentation
required under Section 314(d) of the TIA; and
(9) during the performance of any such Work, the Company shall
procure and maintain the insurance coverages required under Section
10.09 hereof, including business interruption insurance covering the
entire period of Restoration.
(c) All Restoration shall be completed within 270 days from
the receipt of the Insurance Proceeds or Condemnation Proceeds from the relevant
Casualty or Condemnation.
(d) In the event that any Condemnation Proceeds or Insurance
Proceeds, as the case may be, remain on deposit in the Collateral Account
following payment of all costs in connection with the Restoration of a
Collateral Property to substantially its prior value and general utility, such
funds shall remain on deposit in the Collateral Account and will be made
available by the Trustee to the Company from time to time for Related Business
Investments which shall constitute additional Collateral and shall be made
subject to a first-ranking Lien of the Trustee (subject to Permitted Liens) in
accordance with substantially the same procedures as those set forth in Section
4.16, provided, that any amounts on deposit in respect of Collateral owned or
held by the Company may be applied only to Related Business Investments owned or
held by the Company. In the event that any funds of the Company other than
Insurance Proceeds or Condemnation Proceeds deposited by the Company in the
Collateral Account for purposes of completing the relevant Work in accordance
with this Section 10.10 remain at such time, such funds shall be returned to the
Company. In the event that, following a Partial Loss resulting from a
Condemnation, it is determined by the engineering firm engaged pursuant to
Section 10.10(b)(1) that Restoration of the relevant Collateral Property is
impossible or impracticable or that the Condemnation did not materially and
adversely affect the then current or anticipated operations of the Collateral
Property, the Condemnation Proceeds may be used in their entirety to purchase or
otherwise invest in Related Business Investments, in accordance with
substantially the same procedures set forth in Section 4.16.
(e) Event of Default: If an Event of Default has occurred and
is continuing under this Indenture, the Notes or any Security Document, the
Trustee may, notwithstanding anything herein contained, apply any Insurance
Proceeds, Condemnation Proceeds, proceeds from business
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interruption insurance deposited in the Collateral Account pursuant hereto, or
any amounts held by it or held in the Collateral Account, to the satisfaction of
the obligations of the Company and the Subsidiary Guarantee under this Indenture
and the Notes. If an event has occurred which, with the passage of time after
notice, may become an Event of Default, the Trustee shall be entitled to hold
any such proceeds or amounts pending expiration of the notice period.
SECTION 10.11. Inspection.
The Company shall, and shall cause each of its Restricted
Subsidiaries to, permit authorized representatives of the Trustee (i) to inspect
and obtain copies of all records and documents relating to the properties of the
Company or its Subsidiaries constituting Collateral in the possession of any
federal, state or municipal authorities and shall sign or cause to be signed any
documents required for this purpose, and (ii) to visit and inspect the
properties of the Company or its Restricted Subsidiaries constituting
Collateral, and any or all books, records and documents in the possession of the
Company relating to the Collateral, and to make copies and take extracts
therefrom and to visit and inspect the Collateral, all upon reasonable prior
notice and at such reasonable times during normal business hours and as often as
may be reasonably requested.
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Guarantee.
(a) Each Guarantor hereby jointly and severally irrevocably
and unconditionally guarantees, as a primary obligor and not a surety, to each
Noteholder of a Note now or hereafter authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the Obligations of the
Company hereunder or thereunder, (i) the due and punctual payment of the
principal, premium, if any, interest (including post-petition interest in any
proceeding under any Bankruptcy Law whether or not an allowed claim in such
proceeding) on overdue principal, premium, if any, and interest, if lawful on
such Note, and (ii) all other monetary Obligations payable by the Company under
this Indenture (including under Section 7.07 hereof) and the Notes (all of the
foregoing being hereinafter collectively called the "Guaranteed Obligations"),
when and as the same shall become due and payable, whether by acceleration
thereof, call for redemption or otherwise (including amounts that would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code), in accordance with the terms of any such Note and of this
Indenture, subject, however, in the case of (i) and (ii) above, to the
limitations set forth in Section 11.04 hereof. Each Guarantor hereby agrees that
its Obligations hereunder shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any failure to enforce the provisions of any such
Note or this Indenture, any waiver, modification or indulgence granted to the
Company with respect thereto, the recovery of any judgment against the Company,
any action to enforce the same, by the Noteholders or the Trustee, the recovery
of any judgment against the Company, any action to enforce the same, or any
other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. Each Guarantor hereby waives
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diligence, presentment, filing of claims with a court in the event of a merger
or bankruptcy of the Company, any right to require a proceeding first against
the Company, the benefit of discussion, protest or notice with respect to any
such Note or the Indebtedness evidenced thereby and all demands whatsoever, and
covenants that this Guarantee shall not be discharged as to any such Note except
by payment in full of the principal thereof, premium, if any, and all accrued
interest thereon.
(b) Each Guarantor further agrees that this Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Noteholder or the Trustee to any Note held for payment of the
Guaranteed Obligations.
(c) Each Guarantor agrees that it shall not be entitled to,
and hereby irrevocably waives, any right of subrogation in relation to the
Noteholders or the Trustee in respect of any Guaranteed Obligations. Each
Guarantor further agrees that, as between such Guarantor, on the one hand, and
the Noteholders and the Trustee, on the other hand, (x) the maturity of the
Guaranteed Obligations may be accelerated as provided in Article 6 for the
purposes of such Guarantor's Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Guaranteed Obligations, and (y) in the event of any declaration of acceleration
of such Guaranteed Obligations as provided in Article 6 hereof, such Guaranteed
Obligations (whether or not due and payable) shall forthwith become due and
payable by such Guarantor for the purpose of this Article 11.
(d) Each Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Noteholder in enforcing any rights under this Article 11.
(e) The Guarantee set forth in this Article 11 shall not be
valid or become obligatory for any purpose with respect to a Note until the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee.
(f) Each Subsidiary Guarantee is secured by a first priority
security interest (subject to Permitted Liens) in the Collateral owned or held
by the relevant Subsidiary Guarantee and the Parent Guarantee is secured by a
first priority security interest in the Parent Guarantor Collateral.
SECTION 11.02. Guarantee Unconditional, etc.
Upon failure of payment when due of any Guaranteed Obligation
for whatever reason, each Guarantor will be obligated to pay the same
immediately. Each Guarantor hereby agrees that its obligations hereunder shall
be continuing, absolute and unconditional, irrespective of: the recovery of any
judgment against the Company or any Guarantor; any extension, renewal,
settlement, compromise, waiver or release in respect of any obligation of the
Company under this Indenture or any Note, by operation of law or otherwise; any
modification or amendment of or supplement to this Indenture or any Note; any
change in the corporate existence, structure or ownership of the Company, or any
insolvency, bankruptcy, reorganization or other similar
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proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Indenture or any
Note; the existence of any claim, set-off or other rights which any Guarantor
may have at any time against the Company, the Trustee, any Noteholder or any
other Person, whether in connection herewith or any unrelated transactions;
provided, that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim; any invalidity or unenforceability
relating to or against the Company for any reason of this Indenture or any Note,
or any provision of applicable law or regulation purporting to prohibit the
payment by the Company of the principal, premium, if any, or interest on any
Note or any other Guaranteed Obligation; or any other act or omission to act or
delay of any kind by the Company, the Trustee, any Noteholder or any other
Person or any other circumstance whatsoever which might, but for the provisions
of this paragraph, constitute a legal or equitable discharge of the Guarantors'
obligations hereunder. Subject to Section 11.05, each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the company, protest, notice and all demand whatsoever
and covenants that this Guarantee will not be discharged except by the complete
performance of the obligations contained in the Notes, this Indenture and in
this Article 11. Each Guarantor's obligations hereunder shall remain in full
force and effect until the Indenture shall have terminated and the principal of
and interest on the Notes and all other Guaranteed Obligations shall have been
paid in full. If at any time any payment of the principal of or interest on any
Note or any other payment in respect of any Guaranteed Obligation is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, each Guarantor's obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time, and this Article 11, to the
extent therefore discharged, shall be reinstated in full force and effect. Each
Guarantor irrevocably waives any and all rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Company with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the Company
in respect thereof.
SECTION 11.03. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance hereof each
Noteholder hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to its Guarantee not constitute
a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, federal
and state fraudulent conveyance laws or other legal principles. To effectuate
the foregoing intention, the Noteholders and each Guarantor hereby irrevocably
agree that the obligations of each Subsidiary Guarantor under its Guarantee
shall be limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee or pursuant to Section 11.05 hereof, will result in the
obligations of such Subsidiary Guarantor under its Guarantee not constituting
such fraudulent transfer or conveyance under applicable law.
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SECTION 11.04. Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Guarantee, such Funding Guarantor shall be
entitled to a contribution from all other Subsidiary Guarantors in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including
the Funding Guarantor), determined in accordance with GAAP, for all payments,
damages and expenses incurred by that Funding Guarantor in discharging the
Company's obligations with respect to the Notes or any other Guarantor's
obligations with respect to the Guarantee.
SECTION 11.05. Release.
Upon the sale or disposition of all of the Equity Interests of
a Subsidiary Guarantor to an entity which is not the Company, the Parent
Guarantor or a Restricted Subsidiary of the Company, which is otherwise in
compliance with this Indenture, such Subsidiary Guarantor shall be deemed
released from all its obligations under the Indenture without any further action
required on the part of the Trustee or any Noteholder; provided, however, that
any such termination shall occur if and only to the extent that all Obligations
of such Subsidiary Guarantor under all of its guarantees of, and under all of
its pledges of assets or other Note interests which secure, Indebtedness of the
Company and the other Guarantors shall also terminate upon such release, sale or
transfer; provided further, that without limiting the foregoing, any proceeds
received by the Company or any Restricted Subsidiary of the Company from such
transaction shall be applied as provided in Section 4.16. The Trustee shall
deliver an appropriate instrument evidencing such release upon receipt of a
request by the Company accompanied by an Officers' Certificate certifying as to
the compliance with this Section 11.05. Any Guarantor not released in accordance
with the first sentence of this Section 11.05 remains liable for the full amount
of principal, premium, if any, and interest on the Notes as provided in this
Article 11.
SECTION 11.06. Additional Guarantors.
Any Person that was not a Guarantor on the date of this
Indenture may become a Guarantor by executing and delivering to the Trustee (a)
a supplemental indenture in form and substance satisfactory to the Trustee,
which subjects such Person to the provisions (including, without limitation, the
representations and warranties in this Article 11 and Articles 8, 9, and 10) of
this Indenture as a Guarantor and (b) an Opinion of Counsel to the effect that
such supplemental indenture has been duly authorized and executed by such Person
and constitutes the legal, valid, binding and enforceable obligation of such
Person (subject to such customary exceptions concerning creditors' rights and
equitable principles as may be acceptable to the Trustee in its discretion). The
Guarantee of each Person described in this Section 11.06 shall apply to all
Notes whether executed, delivered and authenticated on, before or after the date
such Person became a Guarantor.
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SECTION 11.07. Guarantors May Consolidate, Etc., On Certain
Terms.
(a) Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
the Company or another Subsidiary Guarantor that is a Wholly Owned Subsidiary of
the Company or shall prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety, to the
Company or another Subsidiary Guarantor that is a Wholly Owned Subsidiary of the
Company. Upon any such consolidation, merger, sale or conveyance, the Guarantee
given by such Guarantor shall no longer have any force or effect.
(b) Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
a corporation or corporations other than the Company or another Subsidiary
Guarantor (whether or not affiliated with the Guarantor), or successive
consolidations or mergers in which a Subsidiary Guarantor or its successor or
successors shall be a party or parties, or shall prevent any sale or conveyance
of the property of a Subsidiary Guarantor as an entirety or substantially as an
entirety, to a corporation other than the Company or another Guarantor (whether
or not affiliated with the Guarantor); provided, however, that, subject to
Sections 11.06 and 11.07(a), (x) (i) immediately after such transaction, and
giving effect thereto, no Default or Event of Default shall have occurred as a
result of such transaction and be continuing, or (ii) such transaction does not
violate any covenants set forth in this Indenture, and (y) (i) the respective
transaction is treated as an Asset Sale for purposes of Section 4.16 hereof or
(ii) if the surviving corporation is not the Subsidiary Guarantor, each
Subsidiary Guarantor hereby covenants and agrees that, upon any such
consolidation, merger, sale or conveyance, the Guarantee set forth in this
Article 11, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by such Subsidiary
Guarantor, shall be expressly assumed (in the event that the Subsidiary
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor corporation shall succeed
to, and be substituted for, the Subsidiary Guarantor with the same effect as if
it had been named herein as a Subsidiary Guarantor.
SECTION 11.08. Successors and Assigns.
This Article 11 shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Noteholders and, in the event of any transfer or
assignment of rights by any Noteholder or the Trustee, the rights and privileges
conferred upon that party in this Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.
SECTION 11.09. Waiver of Stay, Extension or Usury Laws.
Each Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive each
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such Guarantor from performing its Guarantee as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each such Guarantor hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE TWELVE
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 12.01. Termination of the Company's Obligations.
The Indenture (and all Liens on Collateral or Parent Guarantor
Collateral granted in connection with the issuance of the Notes) will be
discharged and will cease to be of further effect (except as to surviving
rights, or registration of transfer or exchange of the Notes, as expressly
provided for below) as to all outstanding Notes when:
(a) either (i) all the Notes theretofore authenticated and
delivered (except lost, stolen or destroyed Notes which have been
replaced or paid and Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust) have
been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation have become due
and payable and the Company thereafter has irrevocably deposited or
caused to be deposited with the Trustee funds in an amount sufficient
to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal
of, premium, if any, and interest on the Notes to the date of deposit
together with irrevocable instructions from the Company directing the
Trustee to apply such funds to the payment thereof;
(b) no Default or Event of Default with respect to this
Indenture or the Notes shall have occurred and be continuing on the
date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute
a default under, any other instrument to which the Company is a party
or by which it is bound;
(c) the Company shall have paid all other sums payable by it
hereunder or under the Notes; and
(d) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for the termination of the Company's
obligations under the Notes and this Indenture have been complied with.
Such Opinion of Counsel shall also state that such satisfaction and
discharge does not result in a default under the Revolving Credit
Agreement (if then in effect) or any other agreement or instrument then
known to such counsel that binds or affects the Company.
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Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 12.05 and
12.06 shall survive until the Notes are no longer outstanding pursuant to the
last paragraph of Section 2.08. After the Notes are no longer outstanding, the
Company's obligations in Sections 7.07, 12.05 and 12.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under the Notes and this Indenture except for those surviving obligations
specified above.
SECTION 12.02. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution of the
Board of Directors of the Company, at any time, elect to have either paragraph
(b) or (c) below be applied to all outstanding Notes upon compliance with the
conditions set forth in Section 12.03.
(b) Upon the Company's exercise under paragraph (a) hereof of
the option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 12.03, be deemed to have
been discharged from its obligations with respect to all outstanding Notes on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 12.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions, which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 12.04 hereof, and as more fully set forth in such Section 12.04,
payments in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due, (ii) the Company's obligations with respect to
such Notes under Article 2 and Section 4.02 hereof, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (iv) this Article 12. Subject to
compliance with this Article 12, the Company may exercise its option under this
paragraph (b) notwithstanding the prior exercise of its option under paragraph
(c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of
the option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 12.03 hereof, be released
from its obligations under the covenants contained in Sections 4.04, 4.05, 4.06,
4.07, 4.08 and 4.10 through 4.21 and Articles 5, 8, 9 and 10 hereof with respect
to the outstanding Notes on and after the date the conditions set forth below
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, the Company may omit to comply
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with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event or Default
under Section 6.01(iii), 6.01(iv), 6.01(v) and 6.01(ix) hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.
SECTION 12.03. Conditions to Legal Defeasance or Covenant
Defeasance.
The following shall be the conditions to the application of
either Section 12.02(b) or 12.02(c) hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(i) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the holders of the Notes cash in U.S.
dollars, non-callable U.S. Government Obligations, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the Notes on the
stated date for payment thereof or on the applicable redemption date,
as the case may be;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee (a)(1) an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the holders
of the Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had
not occurred, or (2) a ruling to such effect from, or published by, the
Internal Revenue Service and (B) an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the
resulting trust will not be an "Investment Company" within the meaning
of the Investment Company Act of 1940 unless such trust is qualified
thereunder or exempt from regulation thereunder;
(iii) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the holders
of the Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant
Defeasance had not occurred, and that the resulting trust will not be
an "Investment Company" within the meaning of the Investment Company
Act of 1940 unless such trust is qualified thereunder or exempt from
regulation thereunder;
(iv) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or
Event of Default with respect to the Indenture resulting from the
Incurrence of Indebtedness, all or a portion of which will be
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used to defease the Notes concurrently with such Incurrence) or with
regard to any such events specified in Sections 6.01(vii) and
6.01(viii), at any time in the period ending on the 91st day after the
date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under the
Indenture or any other material agreement or instrument to which the
Company or any of its Restricted Subsidiaries is a party or by which
the Company or any of its Restricted Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of defeating, hindering, delaying or defrauding
any other creditors of the Company or others;
(vii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with;
(viii) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that (A) the trust funds will not be
subject to any rights of holders of Indebtedness of the Company other
than the Notes and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the
deposit and that no Holder of the Notes is an insider of the Company,
after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
and
(ix) the Trustee shall have, for the benefit of the Holders,
a perfected first priority security interest under applicable law in
the U.S. dollars or U.S. Government Obligations deposited pursuant to
Section 12.03(i) above.
SECTION 12.04. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal
Tender or U.S. Government Obligations deposited with it pursuant to Article 8,
and shall apply the deposited U.S. Legal Tender and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of
principal of and interest on the Notes. The Trustee shall be under no obligation
to invest said U.S. Legal Tender or U.S. Government Obligations except as it may
agree in writing with the Company.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Legal Tender or
U.S. Government Obligations deposited pursuant to Section 12.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 12 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any U.S. Legal
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Tender or U.S. Government Obligations held by it as provided in Section 12.03
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 12.05. Repayment to the Company.
Subject to this Article 12, the Trustee and the Paying Agent
shall promptly pay to the Company upon written request any excess U.S. Legal
Tender or U.S. Government Obligations held by them at any time and thereupon
shall be relieved from all liability with respect to such money. The Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years;
provided that the Trustee or such Paying Agent, before being required to make
any payment, may at the expense of the Company cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Noteholders entitled to
such money must look to the Company for payment as general creditors unless an
applicable law designates another Person.
SECTION 12.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with this Article 12
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Article 8 until such time as the Trustee or Paying Agent is permitted to apply
all such U.S. Legal Tender or U.S. Government Obligations in accordance with
Article 8; provided that if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE THIRTEEN
AMENDMENTS AND SUPPLEMENTS TO THE INDENTURE, NOTES
AND SECURITY DOCUMENTS
SECTION 13.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the
Trustee, together, may amend or supplement in form satisfactory to the Trustee
this Indenture, the Notes or any of the Security Documents without notice to or
consent of any Noteholder:
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(1) to cure any ambiguity, defect or inconsistency; provided
that such amendment or supplement does not, in the opinion of the
Trustee, adversely affect the rights of any Holder in any material
respect;
(2) to comply with Article 5;
(3) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;
(4) to make any change that would provide any additional
benefit or rights to the Noteholders or that does not adversely affect
the rights of any Noteholder; or
(5) to provide for issuance of the Exchange Notes, which
will have terms substantially identical in all material respects to the
Initial Notes (except that the transfer restrictions contained in the
Initial Notes will be modified or eliminated, as appropriate), and
which will be treated together with any outstanding Initial Notes, as a
single issue of securities;
provided that the Company has delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 13.01.
SECTION 13.02. With Consent of Holders.
(a) Subject to Section 6.07, the Company, when authorized by
a Board Resolution, and the Trustee, together, with the written consent of the
Holder or Holders of at least a majority in aggregate principal amount of the
outstanding Notes, may amend or supplement this Indenture, the Notes or any
Security Document without notice to any other Noteholders. Subject to Section
6.07, the Holder or Holders of a majority in aggregate principal amount of the
outstanding Notes may waive compliance by the Company with any provision of this
Indenture, the Notes or any Security Document without notice to any other
Noteholder. No amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, shall, without the consent of each Holder of each Note affected
thereby, directly or indirectly:
(i) reduce the amount of Notes whose Holders must consent to
an amendment;
(ii) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Notes;
(iii) reduce the principal of or change the fixed maturity of
any Notes, or change the date on which any Notes may be subject to
redemption or repurchase, or reduce the redemption or repurchase price
therefor;
(iv) make any Notes payable in money other than that stated
in the Notes;
(v) make any change in provisions of the Indenture
protecting the right of each Holder to receive payment of principal of
and interest on such Note on or after the due
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date thereof or to bring suit to enforce such payment, or permitting
Holders of a majority in principal amount of the Notes to waive
Defaults or Events of Default;
(vi) amend, modify or change the obligation of the Company
to make or consummate a Change of Control Offer (including amending,
modifying or changing the definition of Change of Control), or, after
the Company's obligation to purchase the Notes arises thereunder, an
Asset Sale Offer or waive any default in the provisions thereof or
modify any of the provisions or definitions with respect to any Asset
Sale Offer;
(vii) adversely affect the ranking of Notes or any Guarantee;
or
(viii) permit the creation of any Lien on the Collateral or
any part thereof (other than the Lien of the Indenture and the Security
Documents and any other Liens expressly permitted by the Security
Documents), or terminate the Lien of this Indenture and the Security
Documents as to the Collateral or any part thereof or deprive the
Holders of the Notes of the security afforded by the Lien of this
Indenture and the Security Documents or any part thereof, except as set
forth under Section 4.18 and Section 8.05.
(b) After an amendment, supplement or waiver under this
Section 13.02 becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 13.03. Execution of Supplemental Indentures and
Amendments to Security Documents.
The Trustee shall sign any supplemental indenture or any
amendment to any Security Document authorized pursuant to this Article 13,
subject to the last sentence of this Section 13.03. In executing, or accepting
the additional trusts created by, any supplemental indenture or any amendment to
any Security Document permitted by this Article 13 or the modifications thereby
of the trusts created by this Indenture and the Security Documents, the Trustee
shall be entitled to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such supplemental indenture or amendment is
authorized or permitted by this Indenture or the Security Documents,
respectively. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture or amendment which affects the Trustee's own rights,
duties or immunities under this Indenture and the Security Documents or
otherwise.
SECTION 13.04. Effect of Supplemental Indentures and
Amendments to Security Documents.
Upon the execution of any supplemental indenture or any
amendment to any Security Document under this Article, this Indenture or such
Security Document, as the case may be, shall be modified in accordance
therewith, and such supplemental indenture or amendment
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shall form a part of this Indenture for all purposes; and every Holder of Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 13.05. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 13 may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and made available for delivery by the Trustee in
exchange for Outstanding Notes.
SECTION 13.06. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
SECTION 13.07. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be at least 30 days
prior to the first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Noteholder, unless it makes a change described in any of
clauses (i) through (viii) of Section 13.02(a) or 13.02(b), in which case, the
amendment, supplement or waiver shall bind only each Holder of a Note who has
consented to it and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note; provided that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Note, on or after the respective due dates
expressed in such Note, or to bring suit for
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the enforcement of any such payment on or after such respective dates without
the consent of such Holder.
SECTION 13.08. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a
Note, the Trustee may require the Holder of the Note to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue and the
Trustee shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
ARTICLE FOURTEEN
MISCELLANEOUS
SECTION 14.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
SECTION 14.02. Notices.
(a) Any notice or communication by the Company, any Guarantor
or the Trustee to the other is duly given if in writing and delivered in person
or mailed by first class mail (registered or certified, return receipt
requested), confirmed facsimile transmission or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Company or any of the Guarantors:
Anchor Glass Container Corporation
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634
Facsimile No.: (813) 882-7859
Attention: Chief Financial Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No. (212) 815-5915
Attention: Corporate Trust Trustee Administration
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(b) The Company, any Guarantor or the Trustee, by notice to
the other, may designate additional or different addresses for subsequent
notices or communications.
(c) All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if by facsimile
transmission; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
(d) Any notice or communication mailed to a Holder shall be
mailed by first class mail, postage prepaid, to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.
(e) If a notice or communication is mailed to any Person in
the manner provided above within the time prescribed, it is duly given, whether
or not the addressee receives it.
(f) If the Company mails a notice or communication to Holders,
it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 14.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, the Registrar and any other Person shall have
the protection of TIA Section 312(c).
SECTION 14.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company,
if any, provided for in this Indenture relating to the proposed action
have been complied with.
SECTION 14.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
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(1) a statement that the Person making such certificate or
opinion has read such covenant or condition and the definitions
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it has
made such examination or investigation as is reasonably necessary to
enable it to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
SECTION 14.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Noteholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 14.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York or at such place of payment are not required to be open. If a
payment date is a Legal Holiday at such place, payment may be made at such place
on the next succeeding day that is a Business Day, and no interest shall accrue
for the intervening period.
SECTION 14.08. GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE
OF PROCESS.
(a) THIS INDENTURE, THE NOTES, EACH GUARANTEE, AND THE
SECURITY DOCUMENTS SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS. THE PARTIES HERETO EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS INDENTURE, THE NOTES (INCLUDING ANY GUARANTEE) OR ANY SECURITY DOCUMENT OR
TRANSACTION RELATED HERETO OR THERETO.
(b) Any legal action or proceeding with respect to this
Indenture, any Note, any Guarantee or any Security Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Indenture, each of
the parties to this Indenture hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this Indenture
hereby further irrevocably waives any claim that any such
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courts lack jurisdiction over such party, and agrees not to plead or claim, in
any legal action or proceeding with respect to this Indenture, the Notes, the
Guarantees, the security Documents or the transactions contemplated thereby
brought in any of the aforesaid courts, that any such court lacks jurisdiction
over such party. The Company and each Guarantor hereto irrevocably (a) appoints
itself as its lawful agent and attorney to accept and acknowledge service of
process against such party, and upon whom process may be served in any action,
suit or proceeding arising out of, or in connection with, this Indenture, the
Notes, the Guarantees, the Security Documents or the transactions contemplated
thereby with the same effect as if such party was a resident of the State of New
York and had been lawfully served with such process in such jurisdiction, and
(b) consents to the service of any process, pleading, notices or other papers by
the mailing of copies thereof by registered, certified or first class mail
(postage prepaid, return receipt requested) or by reputable courier service, to
such party at such party's address set forth herein, or by any other method
provided or permitted under New York law, with the same effect as if such party
was a resident of the State of New York and had been lawfully served with such
process in such jurisdiction. Each of the parties to this Indenture irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party, at its respective address for notices pursuant to Section 14.02,
such service to become effective 30 days after such mailing. To the extent
permitted by law, each of the parties to this Indenture hereby irrevocably
waives any objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any action or proceeding commenced hereunder
or under any Note or any Guarantee that service of process was in any way
invalid or ineffective. Nothing herein shall affect the right of any party to
this Indenture to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any party in any other
jurisdiction.
(c) Each of the parties to this Indenture hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Indenture, the Notes, the Guarantees or the Security Documents brought
in the courts referred to in clause (b) of this Section 14.08 and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 14.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 14.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as
such, of the Company or of the Trustee shall not have any liability for any
obligations of the Company or any Guarantor under the Notes or this Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creations. Each Noteholder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
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SECTION 14.11. Successors.
All agreements of the Company and the Guarantor in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.
SECTION 14.12. Duplicate and Counterpart Originals.
All parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture. This Indenture may be
executed in any number of counterparts, each of which so executed shall be an
original, but all of them together shall represent the same agreement.
SECTION 14.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 14.14. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
Issuer:
ANCHOR GLASS CONTAINER
CORPORATION
By: /s/ M. William Lightner, Jr.
____________________________
Name: M. William Lightner, Jr.
Title: Chief Financial Officer
Guarantor:
CONSUMERS U.S., INC.,
as Guarantor
By: /s/ M. William Lightner, Jr.
____________________________
Name: M. William Lightner, Jr.
Title: Chief Financial Officer
Trustee:
THE BANK OF NEW YORK,
as Trustee
By: /s/ Paul J. Schmalzel
____________________________
Name: Paul J. Schmalzel
Title: Assistant Treasurer
<PAGE> 121
EXHIBIT A
CUSIP No.:
ANCHOR GLASS CONTAINER CORPORATION
11 1/4% FIRST MORTGAGE NOTE DUE 2005
No. $
[IF GLOBAL NOTE:
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.]
THIS SECURITY (AND ANY GUARANTEES THEREOF) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, RESOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY REOFFER, RESELL,
ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF THIS SECURITY EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER
OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT
THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER IS ATTACHED AS AN EXHIBIT HERETO), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
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SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
[IF GLOBAL NOTE:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE.
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE INDENTURE.
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<PAGE> 123
GLOBAL NOTE
REPRESENTING 11-1/4% FIRST MORTGAGE
NOTES DUE 2005]
ANCHOR GLASS CONTAINER CORPORATION , a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of Dollars,
on April 1, 2005.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ANCHOR GLASS CONTAINER CORPORATION
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Certificate of Authentication
This is one of the 11 1/4% First Mortgage Notes due 2005
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: _________________________
Authorized Signatory
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<PAGE> 124
(REVERSE OF NOTE)
11 1/4% FIRST MORTGAGE NOTE DUE 2005
1. Interest. ANCHOR GLASS CONTAINER CORPORATION, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. The Company will pay interest
semiannually in arrears on each Interest Payment Date, commencing October 1,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest shall accrue from the most recent Interest Payment Date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes plus 2% per annum and on overdue installments of interest (without
regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New
York, a New York banking corporation (the "Trustee"), will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders.
4. Indenture. The Company first issued the Notes under a Loan
Agreement, dated as of February 5, 1997, among the Company, Bankers Trust
Company and certain other parties named therein, which Loan Agreement was
amended and restated in the form of an Indenture, dated as of April 17, 1997
(the "Indenture"), among the Company, the Parent Guarantor and the Trustee
pursuant to which the Notes were amended and restated in the form of the Notes
dated the date hereof. This Note is one of a duly authorized issue of Initial
Notes of the Company designated as its 11 1/4% First Mortgage Notes due 2005
(the "Initial Notes"). The Notes are limited in aggregate principal amount to
$150,000,000. The Notes include the Initial Notes and the Exchange Notes, as
defined below, issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"). Notwithstanding anything to the contrary herein, the
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and said Act for a
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statement of them. As provided in the Indenture, the Securities are secured by
the Lien of the Indenture and the other Security Documents.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to Incur
additional Indebtedness, create Liens, make certain dividend payments,
distributions, Investments and other Restricted Payments, pay dividends and
other distributions, enter into or permit certain transactions with Affiliates
and make Asset Sales. The Indenture also imposes limitations on the ability of
the Company and its Restricted Subsidiaries to consolidate or merge with or into
any other Person or permit any other Person to merge with or into the Company or
a Restricted Subsidiary, or sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of the Property of the Company or any
Restricted Subsidiary to any other Person and on the ability of the Company's
Restricted Subsidiaries to issue Capital Stock. Such limitations are subject to
a number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
5. Guarantees. This Note guaranteed by Consumers U.S., Inc.
and each Restricted Subsidiary of the Company is entitled to the benefits of the
Guarantees and may be entitled to additional Guarantees made for the benefit of
the Noteholders. Each Guarantor has, and each future Guarantor will, irrevocably
and unconditionally guarantee on a senior basis the performance and punctual
payment when due, whether at Stated Maturity, by acceleration, in connection
with a Change of Control Offer or Asset Sale Offer or redemption, or otherwise,
of all obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, or interest on the Notes, expenses,
indemnification or otherwise. A Guarantor shall be released from the relevant
Guarantee upon the terms and subject to the conditions set forth in the
Indenture.
6. Redemption.
(a) Optional Redemption. Except as specified in the next three
succeeding paragraphs, the Notes are not redeemable at the Company's option
prior to April 1, 2001. The Notes will be redeemable, at the Company's option,
in whole at any time or in part from time to time, on and after April 1, 2001,
upon not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on April 1 of the years set forth
below, plus, in each case, accrued and unpaid interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2001............................................................ 105.625%
2002............................................................ 103.750%
2003............................................................ 101.875%
2004 and thereafter............................................. 100.000%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. At any time, or
from time to time, on or prior to April 1, 2000, the Company may, at its option,
use the net cash proceeds of
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one or more Equity Offerings (as defined in the Indenture) to redeem up to an
aggregate of 35% of the principal amount of the Notes originally issued at a
redemption price equal to 111.25 % of the principal amount thereof plus accrued
and unpaid interest thereon, if any, to the date of redemption; provided,
however, that after giving effect to any such redemption, at least 65% of the
aggregate principal amount of Notes originally issued remain outstanding.
In order to effect the foregoing redemption with the proceeds
of any Equity Offering, the Company shall make such redemption not more than 60
days after the consummation of any such Equity Offering.
(c) Optional Redemption Upon a Change of Control. Within 90
days of the consummation of any Change of Control Offer pursuant to which the
Company has repurchased at least 90% of the Notes outstanding immediately prior
to such Change of Control Offer, the Company may, at its option, redeem all of
the remaining Notes at a redemption price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
redemption.
7. Notice of Redemption. Notice of redemption under
paragraphs 6(a), 6(b) and 6(c) of this Note will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder's registered address. Notes in denominations larger than
$1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such Redemption Date, then, unless the Company
defaults in the payment of such Redemption Price plus accrued interest, if any,
the Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued interest, if any.
In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part.
Notice of redemption shall be mailed by first-class mail at least 30 but not
more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. If any Note is to be redeemed in part only,
the notice of redemption that relates to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the redemption
date, interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the paying agent for the
Notes funds in satisfaction of the applicable redemption price pursuant to the
Indenture.
8. Offers to Purchase. Sections 4.15 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in the Indenture)
and upon the occurrence of a Change of Control (as defined in the Indenture),
and subject to further limitations contained therein, the
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Company will make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
9. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company and the Holders of the Initial Notes, the Company
will be obligated to consummate an exchange offer pursuant to which the Holder
of this Note shall have the right to exchange this Note for the Company's 11
1/4% First Mortgage Notes due 2005 of the Company, which have been registered
under the Securities Act, in like principal amount and having terms identical in
all material respects to the Initial Notes, including the guarantee thereof by
the Guarantors. The Holders of the Initial Notes shall be entitled to receive
certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement.
10. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article 3 of the Indenture, except
the unredeemed portion of any Note being redeemed in part..
11. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes, or
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comply with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
15. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture or
for any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
20. Governing Law. The laws of the State of New York shall
govern this Note and the Indenture without regard to principles of conflicts of
laws.
21. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
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<PAGE> 129
23. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Anchor Glass Container
Corporation, One Anchor Plaza, 4343 Anchor Parkway, Tampa, Florida 33634, Attn:
Chief Financial Officer.
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<PAGE> 130
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
Dated: ______________________ Signed: ___________________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ____________________________
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the SEC
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) April 17, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
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<PAGE> 131
[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities
Act; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) __ outside the United states to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) __ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) __ pursuant to an effective registration statement under the
Securities Act; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
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<PAGE> 132
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Date: _______________________ Signed: ___________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ____________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date: ______________________________ ________________________________
NOTICE: To be executed by an
executive officer
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<PAGE> 133
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$_________________________
Dated: _______________________ ______________________________________
NOTICE: The signature on this assignment
must correspond with the name as it appears
upon the face of the within Note in every
particular without alteration or enlargement or
any change whatsoever.
Signature Guarantee: ____________________________________
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<PAGE> 134
EXHIBIT B
CUSIP No.:
ANCHOR GLASS CONTAINER CORPORATION
11 1/4% FIRST MORTGAGE NOTE DUE 2005
No. $
[IF GLOBAL NOTE:
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE.
GLOBAL NOTE
REPRESENTING 11-1/4% FIRST MORTGAGE
NOTES DUE 2005]
ANCHOR GLASS CONTAINER CORPORATION , a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of Dollars,
on ________ 1, 2005.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
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<PAGE> 135
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ANCHOR GLASS CONTAINER CORPORATION
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Certificate of Authentication
This is one of the 11 1/4% First Mortgage Notes due 2005
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: _________________________
Authorized Signatory
Dated:
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<PAGE> 136
(REVERSE OF NOTE)
11 1/4% FIRST MORTGAGE NOTE DUE 2005
1. Interest. ANCHOR GLASS CONTAINER CORPORATION, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at the rate per annum shown above. The Company will pay interest
semiannually in arrears on each Interest Payment Date, commencing October 1,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest shall accrue from the most recent Interest Payment Date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes plus 2% per annum and on overdue installments of interest (without
regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New
York, a New York banking corporation (the "Trustee"), will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders.
4. Indenture. The Company first issued the Notes under a Loan
Agreement, dated as of February 5, 1997, among the Company, Bankers Trust
Company and certain other parties named therein, which Loan Agreement was
amended and restated in the form of an Indenture, dated as of April 17, 1997
(the "Indenture"), among the Company, the Parent Guarantor and the Trustee
pursuant to which the Notes were amended and restated in the form of the Notes
dated the date hereof. This Note is one of a duly authorized issue of Exchange
Notes of the Company designated as its 11 1/4% First Mortgage Notes due 2005
(the "Exchange Notes"). The Notes are limited in aggregate principal amount to
$150,000,000. The Notes include the Initial Notes and the Exchange Notes, as
defined below, issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"). Notwithstanding anything to the contrary herein, the
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and
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<PAGE> 137
said Act for a statement of them. As provided in the Indenture, the Securities
are secured by the Lien of the Indenture and the other Security Documents.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to Incur
additional Indebtedness, create Liens, make certain dividend payments,
distributions, Investments and other Restricted Payments, enter into or permit
certain transactions with Affiliates and make Asset Sales. The Indenture also
imposes limitations on the ability of the Company and its Restricted
Subsidiaries to consolidate or merge with or into any other Person or permit any
other Person to merge with or into the Company or a Restricted Subsidiary, or
sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Property of the Company or any Restricted Subsidiary to
any other Person and on the ability of the Company's Restricted Subsidiaries to
issue Capital Stock. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
5. Guarantees. This Note is entitled to the benefits of the
Guarantees and may be entitled to additional Guarantees made for the benefit of
the Noteholders. Each Guarantor has, and each future Guarantor will, irrevocably
and unconditionally guarantee on a senior basis the performance and punctual
payment when due, whether at Stated Maturity, by acceleration, in connection
with a Change of Control Offer or Asset Sale Offer or redemption, or otherwise,
of all obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, or interest on the Notes, expenses,
indemnification or otherwise. A Guarantor shall be released from the relevant
Guarantee upon the terms and subject to the conditions set forth in the
Indenture.
6. Redemption.
(a) Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after April 1, 2001, upon not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of the principal amount
thereof) if redeemed during the twelve-month period commencing on April 1 of the
years set forth below, plus, in each case, accrued and unpaid interest thereon
to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2001............................................................. 105.625%
2002............................................................. 103.750%
2003............................................................. 101.875%
2004 and thereafter.............................................. 100.000%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. At any time, or
from time to time, on or prior to April 1, 2000, the Company may, at its option,
use the net cash proceeds of one or more Equity Offerings (as defined in the
Indenture) to redeem up to an aggregate of 35% of the principal amount of the
Notes originally issued at a redemption price equal to 111.25 % of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
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redemption; provided, however, that after giving effect to any such redemption,
at least 65% of the aggregate principal amount of Notes originally issued remain
outstanding.
In order to effect the foregoing redemption with the proceeds
of any Equity Offering, the Company shall make such redemption not more than 60
days after the consummation of any such Equity Offering.
(c) Optional Redemption Upon a Change of Control. Within 90
days of the consummation of any Change of Control Offer pursuant to which the
Company has repurchased at least 90% of the Notes outstanding immediately prior
to such Change of Control Offer, the Company may, at its option, redeem all of
the remaining Notes at a redemption price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
redemption.
7. Notice of Redemption. Notice of redemption under
paragraphs 6(a), 6(b) and 6(c) of this Note will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder's registered address. Notes in denominations larger than
$1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such Redemption Date, then, unless the Company
defaults in the payment of such Redemption Price plus accrued interest, if any,
the Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued interest, if any.
In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part.
Notice of redemption shall be mailed by first-class mail at least 30 but not
more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. If any Note is to be redeemed in part only,
the notice of redemption that relates to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the redemption
date, interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the paying agent for the
Notes funds in satisfaction of the applicable redemption price pursuant to the
Indenture.
8. Offers to Purchase. Sections 4.15 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in the Indenture)
and upon the occurrence of a Change of Control (as defined in the Indenture),
and subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.
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9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Notes and ending at the close of business on the day of such mailing and (ii)
selected for redemption in whole or in part pursuant to Article 3 of the
Indenture, except the unredeemed portion of any Note being redeemed in part..
10. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes, or comply with Article
Five of the Indenture or make any other change that does not adversely affect in
any material respect the rights of any Holder of a Note.
14. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
15. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits,
B-6
<PAGE> 140
subject to certain limitations therein provided, Holders of a majority in
aggregate principal amount of the Notes then outstanding to direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines that withholding notice is in
their interest.
16. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
17. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture or
for any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
18. Authentication. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
19. Governing Law. The laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflicts of
laws.
20. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
22. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Anchor Glass Container
Corporation, One Anchor Plaza, 4343 Anchor Parkway, Tampa, Florida 33634, Attn:
Chief Financial Officer.
B-7
<PAGE> 141
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
Dated: _______________________ Signed: _____________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ____________________________
B-8
<PAGE> 142
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$______________________
Dated: _______________________ ______________________________________
NOTICE: The signature on this assignment
must correspond with the name as it appears
upon the face of the within Note in every
particular without alteration or enlargement or
any change whatsoever.
Signature Guarantee: ____________________________________
B-9
<PAGE> 143
Exhibit C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
__________, ____
Anchor Glass Container Corporation
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Re: Anchor Glass Container Corporation 11 1/4% First Mortgage
Notes due 2005
Ladies and Gentlemen:
In connection with our proposed purchase of $__________
aggregate principal amount of 11 1/4% First Mortgage Notes due 2005 (the
"Notes") of Anchor Glass Container Corporation (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated April 17, 1997 relating to the Notes and such
other information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters stated on pages
(i)-(iii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" of the Offering Memorandum, including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes prior to the date
which is three years after the original issuance of the Notes, we will do so
only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), (iii)
inside the United States to an institutional if accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to the
C-1
<PAGE> 144
Trustee (as defined in the Indenture relating to the Notes), a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, (iv) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (v) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Notes from
us a notice advising such purchaser that resales of the Notes are restricted as
stated herein.
4. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.
6. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:________________________________
Name:
Title:
C-2
<PAGE> 145
Exhibit D
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S
____________,_____
Anchor Glass Container Corporation
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Re: Anchor Glass Container Corporation (the "Company") 11 1/4%
First Mortgage Notes due 2005 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_______________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or
D-1
<PAGE> 146
legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in Regulation
S.
Very truly yours,
[Name of Transferor]
By:____________________________
Authorized Signature
D-2
<PAGE> 1
Exhibit 4.4
SECURITY AGREEMENT
between
ANCHOR GLASS ACQUISITION CORPORATION
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of February 5, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I SECURITY INTEREST...................................................................................... 2
1.1 Grant of Security Interest......................................................................... 2
1.2 Power of Attorney.................................................................................. 2
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS..................................................... 2
2.1 Necessary Filings.................................................................................. 2
2.2 No Liens........................................................................................... 3
2.3 Other Financing Statements......................................................................... 3
2.4 Chief Executive Office; Records.................................................................... 3
2.5 Location of Equipment.............................................................................. 4
2.6 Trade Names; Change of Name........................................................................ 4
2.7 Recourse........................................................................................... 4
ARTICLE III SPECIAL PROVISIONS CONCERNING CONTRACTS, CONTRACT RIGHTS; INSTRUMENTS; ETC........................... 5
3.1 Additional Representations and Warranties.......................................................... 5
3.2 Maintenance of Records............................................................................. 5
3.3 Inspection......................................................................................... 5
3.4 Modification of Terms; etc......................................................................... 5
3.5 Collection......................................................................................... 6
3.6 Direction to Account Debtors; etc.................................................................. 6
3.7 Instruments........................................................................................ 7
3.8 Collateral Accounts................................................................................ 7
3.9 Receipt of Payments................................................................................ 7
3.10 Account Inspection................................................................................ 7
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS.............................................................. 7
4.1 Additional Representations and Warranties.......................................................... 7
4.2 Licenses and Assignments........................................................................... 8
4.3 Infringements...................................................................................... 8
4.4 Preservation of Trademarks......................................................................... 8
4.5 Maintenance of Registration........................................................................ 8
4.6 Remedies........................................................................................... 9
ARTICLE V SPECIAL PROVISIONS CONCERNING TRADE SECRETS, PATENTS AND COPYRIGHTS.................................... 9
5.1 Additional Representations and Warranties.......................................................... 9
5.2 Licenses and Assignments........................................................................... 10
5.3 Infringements...................................................................................... 10
5.4 Maintenance of Patents............................................................................. 10
5.5 Prosecution of Patent Application.................................................................. 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
5.6 Remedies........................................................................................... 11
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL.................................................................. 11
6.1 General Representations and Warranties............................................................. 11
6.2 Protection of Collateral Agent's Security.......................................................... 11
6.3 Further Actions.................................................................................... 12
6.4 Financing and Continuation Statements.............................................................. 12
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT AND CERTAIN DEFAULTS.................................... 12
7.1 Remedies; Obtaining Collateral Upon Default........................................................ 12
7.2 Remedies; Disposition of Collateral................................................................ 14
7.3 Waiver of Claims................................................................................... 15
7.4 Application of Proceeds............................................................................ 16
7.5 Remedies Cumulative................................................................................ 17
7.6 Discontinuance of Proceedings...................................................................... 17
ARTICLE VIII INDEMNITY........................................................................................... 17
8.1 Indemnity.......................................................................................... 17
8.2 Indemnity Obligations Secured by Collateral; Survival.............................................. 18
ARTICLE IX DEFINITIONS........................................................................................... 19
ARTICLE X MISCELLANEOUS.......................................................................................... 24
10.1 Notices........................................................................................... 24
10.2 Waiver; Amendment................................................................................. 24
10.3 Obligations Absolute.............................................................................. 25
10.4 Successors and Assigns............................................................................ 25
10.5 Headings Descriptive.............................................................................. 25
10.6 Severability...................................................................................... 25
10.7 Waiver of Jury Trial; Consent to Jurisdiction..................................................... 26
10.8 Governing Law..................................................................................... 27
10.9 Assignor's Duties................................................................................. 27
10.10 Termination; Release............................................................................. 27
10.11 Collateral Agent................................................................................. 28
</TABLE>
ii
<PAGE> 4
ANNEX A Location of Chief Executive Office; Record Locations
ANNEX B Schedule of Equipment Locations
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Trademarks
ANNEX E Schedule of Patents and Applications
ANNEX F Schedule of Copyrights and Applications
ANNEX G Assignment of Security Interest in United States Trademarks and Patents
ANNEX H Assignment of Security Interest in United States Copyrights
iii
<PAGE> 5
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of February 5,
1997 between ANCHOR GLASS ACQUISITION CORPORATION, a Delaware corporation (the
"Assignor"), and Bankers Trust Company, as Collateral Agent (the "Collateral
Agent") for the Secured Creditors (as defined below). Capitalized terms used
herein shall have the meaning specified in Article IX herein or, if not defined
therein, as specified in the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Assignor, the financial institutions from time to
time party thereto (the "Lenders"), and Bankers Trust Company, as Agent (the
"Agent"), have entered into a Credit Agreement, dated as of February 5, 1997 (as
amended, modified or supplemented from time to time, the "Credit Agreement"),
providing for the making of Loans (the Lenders from time to time party to the
Credit Agreement, the Collateral Agent and the Agent herein called the "Bank
Creditors");
WHEREAS, the Assignor may from time to time be party to one or
more interest rate agreements (including, without limitation, interest rate
swaps, caps, floors, collars, and similar agreements permitted by the Credit
Agreement) (collectively, the "Interest Rate Agreements," and each such Interest
Rate Agreement with an Interest Rate Creditor (as defined below), a "Secured
Interest Rate Agreement") with Bankers Trust Company, in its individual capacity
("BTCo"), any Lender or a syndicate of financial institutions organized by BTCo
or an affiliate of BTCo (even if BTCo or any such Lender ceases to be a Lender
under the Credit Agreement for any reason), and any institution that
participates, and in each case their subsequent assigns, in such Secured
Interest Rate Agreement (collectively, the "Interest Rate Creditors," and the
Interest Rate Creditors together with the Bank Creditors, collectively, the
"Secured Creditors");
WHEREAS, it is a condition to the making of Loans under the
Credit Agreement that the Assignor shall have executed and delivered to the
Collateral Agent this Agreement; and
WHEREAS, the Assignor desires to execute this Agreement to
satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Assignor, the receipt and sufficiency of which are
hereby acknowledged, the Assignor hereby makes the following representations and
warranties to the Collateral Agent and hereby covenants and agrees with the
Collateral Agent as follows:
<PAGE> 6
2
ARTICLE I
SECURITY INTEREST
1.1 Grant of Security Interest. (a) The Assignor, as security
for the prompt and complete payment and performance when due of all of the
Obligations of the Assignor, does hereby sell, assign and transfer unto the
Collateral Agent, and does hereby grant to the Collateral Agent for the benefit
of the Secured Creditors a continuing security interest in, all of the right,
title and interest of the Assignor in, to and under all of the Collateral.
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which the Assignor may acquire at any time during the continuation of
this Agreement.
(c) This Agreement constitutes a security agreement with
respect to personal property (including, without limitation, the Intellectual
Property Collateral) under Article 9 of the UCC.
1.2 Power of Attorney. The Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of the Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to the Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable in the
premises, which appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1 Necessary Filings. Except as set forth in Section 4.27 of
the Credit Agreement (and on Schedule D to the Credit Agreement), all things,
registrations and recordings necessary or appropriate to create, preserve,
protect, and perfect the security interest granted by the Assignor to the
Collateral Agent hereby in respect of the Collateral will have been accomplished
no later than five days following the Closing Date and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral constitutes a perfected security interest therein prior to the rights
of all other Persons therein, other than the holders of Liens set forth on
Exhibit D to the Credit Agreement, and subject to no other Liens (except Liens
set forth on Exhibit D to the Credit Agreement, Liens which may arise with
respect to the Shared Collateral and Liens which may arise after the date hereof
which pursuant to the operation of law are prior to the perfected security
interests created hereunder ("Future Liens")) and is entitled to
<PAGE> 7
3
all the rights, priorities and benefits afforded by the Uniform Commercial Code
or other relevant law as enacted in any relevant jurisdiction to perfected
security interests.
2.2 No Liens. The Assignor is, and as to Collateral acquired
by it from time to time after the date hereof the Assignor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens, Liens
created under this Agreement, Liens with respect to the Shared Collateral, and
Future Liens), and the Assignor shall defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent.
2.3 Other Financing Statements. On or prior to the 45th day
following the Closing Date, the Assignor shall have caused the termination and
release of any and all financing statements (or similar statement or instrument
of registration under the law of any jurisdiction) on file or of record in any
relevant jurisdiction covering or purporting to cover any interest of any kind
in the Collateral of the Assignor (other than Permitted Liens, Liens created
under this Agreement, Liens with respect to the Shared Collateral, and Future
Liens), and so long as the Total Commitments have not been terminated or any
Note remains outstanding or any of the Obligations remain unpaid or any Interest
Rate Agreement remains in effect or any Obligations are owed with respect
thereto, the Assignor will not execute, authorize or permit to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by the Assignor or as permitted
by the Credit Agreement.
2.4 Chief Executive Office; Records. The chief executive
office of the Assignor is located at the address indicated under the name of the
Assignor on Annex A hereto. The Assignor will not move its chief executive
office except to such new location as the Assignor may establish in accordance
with the last sentence of this Section 2.4. The originals of all documents
evidencing Contract Rights and Trade Secrets of the Assignor and the original
books of account and records of the Assignor relating thereto are, and will
continue to be, kept at such chief executive office and/or one or more of the
locations shown on Annex A, or at such new locations as the Assignor may
establish in accordance with the last sentence of this Section 2.4. All Contract
Rights and Trade Secrets are, and will continue to be, maintained at, and
controlled and directed (including, without limitation, for general accounting
purposes) from, the office locations described above, or such new locations as
the Assignor may establish in accordance with the last sentence of this Section
2.4. The Assignor shall not establish new locations for such offices until (i)
it shall have given to the Collateral Agent not less than 45 days' prior written
notice (or such lesser notice as shall be acceptable to the Collateral Agent in
the case of a new record location to be established in connection with newly
acquired Contracts) of its intention to do so, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action, reasonably satisfactory to the
Collateral Agent, to maintain the perfection and priority of the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times in full force and effect.
<PAGE> 8
4
2.5 Location of Equipment. All Equipment held on the date
hereof by the Assignor is located at one of the locations shown on Annex B
attached hereto. The Assignor agrees that all Equipment now held or subsequently
acquired by it shall be kept at (or shall be in transport to or from) any one of
the locations shown on Annex B hereto, or such new location as the Assignor may
establish in accordance with the last sentence of this Section 2.5. The Assignor
may establish a new location for Equipment only if (i) it shall have given to
the Collateral Agent not less than 30 days prior written notice of its intention
so to do, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location, it shall have taken all
action reasonably satisfactory to the Collateral Agent to maintain the
perfection and priority of the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times in full force and effect.
2.6 Trade Names; Change of Name. The Assignor does not have or
operate in any jurisdiction under, or in the preceding 12 months has not had and
has not operated in any jurisdiction under, any trade names, fictitious names or
other names (including, without limitation, any names of divisions or
operations) except its legal name and such other trade, fictitious or other
names as are listed under the name of the Assignor on Annex C hereto. The
Assignor has only operated under each name set forth in Annex C in the
jurisdiction or jurisdictions set forth opposite each such name on Annex C. The
Assignor shall not change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex C hereto in the jurisdictions listed with respect to such names and new
names (including, without limitation, any names of divisions or operations)
and/or jurisdictions established in accordance with the last sentence of this
Section 2.5. The Assignor shall not assume or operate in any jurisdiction under
any new trade, fictitious or other name or operate under any existing name in
any additional jurisdiction until (i) it shall have given to the Collateral
Agent not less than 45 days' prior written notice of its intention so to do,
clearly describing such new name and/or jurisdiction and, in the case of a new
name, the jurisdictions in which such new name shall be used and providing such
other information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new name and/or new jurisdiction, it
shall have taken all action reasonably required to maintain the perfection and
priority of the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.7 Recourse. This Agreement is made with full recourse to the
Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of the Assignor contained herein, in the
other Loan Documents, in the Interest Rate Agreements and otherwise in writing
in connection herewith or therewith.
<PAGE> 9
5
ARTICLE III
SPECIAL PROVISIONS CONCERNING CONTRACTS,
CONTRACT RIGHTS; INSTRUMENTS; ETC.
3.1 Additional Representations and Warranties. The Assignor
shall be deemed to have represented and warranted that any Contracts to which
the Assignor is a party, and all records, papers and documents relating thereto
(if any), are genuine and in all respects what they purport to be, and that all
papers and documents (if any) relating thereto (i) will represent the genuine,
legal, valid and binding obligation of the parties thereto, enforceable in
accordance with their respective terms, subject to adjustments customary in the
business of the Assignor, and evidencing indebtedness unpaid and owed, if any,
to the Assignor arising out of the performance of such Contract, or both, (ii)
will be the only original writings evidencing and embodying such obligation of
the parties named therein (other than copies created for general accounting
purposes), and (iii) will be in compliance and will conform with all applicable
federal, state and local laws and applicable laws of any relevant foreign
jurisdiction.
3.2 Maintenance of Records. The Assignor will keep and
maintain at its own cost and expense satisfactory and complete records of its
Contracts, including, but not limited to, the originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith. Upon the occurrence and during the continuance of an Event
of Default, the Assignor shall, upon request of the Collateral Agent and at the
Assignor's own cost and expense, deliver all tangible evidence of its Contract
Rights (including, without limitation, copies of all documents evidencing all
Contracts, such copies to be certified as true and complete by an appropriate
officer of the Assignor) and such books and records to the Collateral Agent or
to its representatives (copies of which evidence and books and records may be
retained by the Assignor) at any time upon its demand. If, upon the occurrence
and during the continuance of an Event of Default, the Collateral Agent so
directs, the Assignor shall legend, in form and manner reasonably satisfactory
to the Collateral Agent, the Contracts, as well as books, records and documents
of the Assignor evidencing or pertaining to the Contracts, with an appropriate
reference to the fact that the Contracts have been assigned to the Collateral
Agent and that the Collateral Agent has a security interest therein.
3.3 Inspection. The Assignor shall permit the Collateral
Agent, and the Collateral Agent's agents, representatives and employees, during
normal business hours and upon reasonable prior notice to Assignor, to inspect
the Collateral and the books and records maintained by the Assignor, or any of
its agents, representatives, and employees in respect of the Collateral and to
make copies of and to take extracts from such records as are reasonably
necessary for Collateral Agent's evaluation of the Collateral, provided that
such inspections shall not materially interfere with the use and operation of
the Collateral.
3.4 Modification of Terms; etc. The Assignor shall not rescind
or cancel any indebtedness evidenced under any Contract of the Assignor, or
modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle any
<PAGE> 10
6
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Contract of the Assignor, or interest therein, without the prior written consent
of the Collateral Agent (which consent shall not be unreasonably withheld),
except (i) as permitted by Section 3.5 hereof and (ii) so long as no Event of
Default is then in existence in respect of which the Collateral Agent has given
notice that this exception is no longer applicable, the Assignor may modify,
make adjustments with respect to, extend, renew, rescind or cancel any Contracts
or any indebtedness thereunder or compromise or settle any dispute, claim, suit
or legal proceeding relating to any Contract or sell any Contract or interest
therein in the ordinary course of business. Except as set forth in the preceding
sentence, the Assignor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Contracts of the Assignor and will do
nothing to impair the rights of the Collateral Agent in such Contracts.
3.5 Collection. The Assignor shall, in accordance with its
ordinary business practices, endeavor to cause to be collected from the obligor
under any Contract of the Assignor, as and when due (including, without
limitation, amounts which are delinquent, such amounts to be collected in
accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Contract, and apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
under such Contract, except that, so long as no Event of Default is then in
existence in respect of which the Collateral Agent has given notice that this
exception is no longer applicable, the Assignor may allow in the ordinary course
of business as adjustments to amounts owing under its Contracts (i) an extension
or renewal of the time or times of payment, or settlement for less than the
total unpaid balance, which the Assignor finds appropriate in accordance with
reasonable business judgment and (ii) a refund or credit due as a result of
returned or damaged merchandise or improperly performed services or such other
adjustments which the Assignor deems appropriate in the exercise of its
commercially reasonable business judgment. The reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) of collection,
whether incurred by the Assignor or the Collateral Agent, shall be borne by the
Assignor.
3.6 Direction to Account Debtors; etc. Upon the occurrence and
during the continuance of an Event of Default, and if the Collateral Agent so
directs the Assignor, to the extent permitted by applicable law, the Assignor
agrees (x) to cause all payments otherwise payable to an Indemnity Account or
Loss Proceeds Account to be made directly to the Cash Collateral Account, (y)
that the Collateral Agent may, at its option, directly notify the obligors with
respect to any payments otherwise payable to an Indemnity Account or Loss
Proceeds Account to make payments with respect thereto as provided in preceding
clause (x), and (z) that the Collateral Agent may enforce collection of any such
payments and may adjust, settle or compromise the amount of payment thereof as
though the Collateral Agent were the outright owner thereof. The Collateral
Agent may apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account in the manner provided in Section 7.4 of this Agreement. The
reasonable costs and expenses (including reasonable attorneys' fees) of
collection, whether incurred by the Assignor or the Collateral Agent, shall be
borne by the Assignor.
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3.7 Instruments. If the Assignor owns or acquires any
Instrument, the Assignor will within ten Business Days notify the Collateral
Agent thereof, and upon request by the Collateral Agent promptly deliver such
Instrument to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
3.8 Collateral Accounts. (a) The Assignor, pursuant to
Section 5.4(ix) of the Credit Agreement, has established with the Collateral
Agent an Indemnity Account in the sole dominion and control of the Collateral
Agent, which shall be subject to a perfected first priority security interest in
favor of the Collateral Agent.
(b) Loss Proceeds Account. The Assignor, pursuant to Section
5.4(vi) of the Credit Agreement, has established with the Collateral Agent a
Loss Proceeds Account in the sole dominion and control of the Collateral Agent,
which shall be subject to a perfected first priority security interest in favor
of the Collateral Agent.
3.9 Receipt of Payments. In the event the Assignor shall
receive Insurance Proceeds or Condemnation Proceeds from any Casualty or
Condemnation in excess of $500,000, or Indemnity Payments relating to any
circumstance or series of related circumstances in excess of $500,000, then such
Insurance Proceeds or Condemnation Proceeds or Indemnity Payments, as the case
may be, shall be deposited upon receipt thereof, to the Indemnity Account or
Loss Proceeds Account as provided for in the Credit Agreement. Any other
Proceeds received by the Assignor shall be held in trust by the Assignor for the
benefit of the Collateral Agent, and the Assignor shall turn over such Proceeds
to the Collateral Agent within one Business Day of receipt thereof.
3.10 Account Inspection. The Assignor will permit the
Collateral Agent or its agents to verify from time to time the balances of any
and all of the accounts of the Assignor (including, without limitation, the
Collateral Accounts).
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1 Additional Representations and Warranties. Annex D hereto
lists all Trademarks owned by the Assignor and all Trademark Licenses as of the
date hereof. No modifications are required to be made to render Annex D accurate
as of the date hereof other than modifications that do not constitute a Material
Adverse Effect. To the best of Assignor's knowledge, except as set forth in
Annex D, (i) each Trademark is valid, subsisting, unexpired, enforceable and has
not been abandoned; (ii) each application for the federal registration of a
Trademark (including, without limitation, any renewals thereof) has been duly
and properly filed; (iii) no holding, decision or judgment has been rendered by
any court agency, board or other governmental authority which would limit,
cancel or question the validity of any Trademark; (iv) no action or proceeding
is pending seeking to limit, cancel or question the validity of any Trademark;
and (v) no written claim has been made that the use of any Trademark does or may
violate the rights of any third person. The Assignor further represents and
warrants that upon the recordation in the United States Patent and Trademark
Office of an Assignment of Security
<PAGE> 12
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Interest in United States Trademarks and Patents substantially in the form of
Annex G hereto, together with filings on Form UCC-1 pursuant to this Agreement,
all filings, registrations and recordings necessary or appropriate, to the
extent permitted by applicable law, to cause the security interest granted to
the Collateral Agent in the United States Trademarks covered by this Agreement
to be a perfected first-priority security interest under applicable law will
have been accomplished. The Assignor agrees to execute such Assignment of
Security Interest in United States Trademarks and Patents covering all right,
title and interest in each United States Trademark, and the associated goodwill,
of the Assignor, and to record the same. Without limitation on Section 1.2, the
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of an Event of Default, any
document which may be required by the U.S. Patent and Trademark Office or
secretary of state or equivalent governmental agency of any state of the United
States in order to effect an absolute assignment of all right, title and
interest in each Trademark, and record the same. Such power of attorney, coupled
with an interest shall be irrevocable.
4.2 Licenses and Assignments. The Assignor hereby agrees not
to divest itself of any right under a Trademark of the Assignor other than in
the ordinary course of business or to the extent permitted under Section 6.1 of
the Credit Agreement absent prior written approval of the Collateral Agent.
4.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating in any respect any of the
Assignor's rights in and to any Trademark of the Assignor, or with respect to
any party claiming that the Assignor's use of any Trademark of the Assignor
violates any right of that party, to the extent that such infringement or
violation is reasonably likely to have a Material Adverse Effect. The Assignor
further agrees, unless otherwise directed by the Collateral Agent, diligently to
prosecute any person infringing any Trademark of the Assignor at the expense of
the Assignor in accordance with reasonable business practices.
4.4 Preservation of Trademarks. The Assignor agrees to use its
Trademarks in interstate commerce during the time in which this Agreement is in
effect, sufficiently to preserve such Trademarks registered under the laws of
the United States; provided that, the Assignor shall not be obligated to
preserve any Trademark (a) to the extent the Assignor determines, in its
reasonable business judgment, that the preservation of such Trademark is no
longer desirable in the conduct of its business or (b) if any injunction,
restraining order or similar order is in effect which prevents the Assignor from
using any such Trademarks.
4.5 Maintenance of Registration. The Assignor shall, at its
own expense, diligently process all documents required by the Trademark Act of
1946, 15 U.S.C. Sections 1051 et seq., to maintain trademark registration to the
extent that the Assignor's failure to do so would be reasonably likely to have a
Material Adverse Effect, including but not limited to affidavits or declarations
of use and applications for renewals of registration in the United States Patent
and Trademark Office for all of its Trademarks pursuant to 15 U.S.C. Sections
1058(a), 1059 and 1065, and shall pay all fees and disbursements in connection
therewith, and shall not abandon any such
<PAGE> 13
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filing of affidavit or declaration of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent, and, upon the written request of
the Collateral Agent, shall provide the Collateral Agent with written
verification that such actions have been taken; provided that, the Assignor
shall not be obligated to preserve any Trademark to the extent the Assignor
determines, in its reasonable business judgment, that the preservation of such
Trademark is no longer desirable in the conduct of its business.
4.6 Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the Assignor, take
any or all of the following actions: (i) declare the entire right, title and
interest of the Assignor in and to each of the Trademarks, together with all
trademark rights and rights of protection to the same, vested, in which event
such rights, title and interest shall immediately vest in the Collateral Agent
for the benefit of the Secured Creditors and the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 4.1 to
execute, cause to be acknowledged and notarized, and record said absolute
assignment with the applicable agency; (ii) take and use or sell the Trademarks
of the Assignor and the goodwill of the Assignor's business symbolized by the
Trademarks of the Assignor and the right to carry on the business and use the
assets of the Assignor in connection with which the Trademarks of the Assignor
have been used; and (iii) direct the Assignor to refrain, in which event the
Assignor shall refrain, from using the Trademarks of the Assignor in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change the Assignor's corporate name to eliminate therefrom any use of any
Trademark of the Assignor and execute such other and further documents that the
Collateral Agent may request to further confirm this and to transfer ownership
of the Trademarks and registrations and any pending trademark application in the
United States Patent and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING TRADE SECRETS,
PATENTS AND COPYRIGHTS
5.1 Additional Representations and Warranties. Annex E hereto
lists all Patents owned by the Assignor as of the date hereof and any known
defects in title to such Patents. Annex F hereto lists all Copyrights owned by
the Assignor in its own name as of the date hereof. No modifications are
required to be made to render Annex E or Annex F accurate as of the date hereof
other than modifications that do not constitute a Material Adverse Effect. To
the best of the Assignor's knowledge, except as set forth in Annex E, (i) each
Patent and Copyright is valid, subsisting, unexpired, enforceable and has not
been abandoned; (ii) each application for a Patent or Copyright (including,
without limitation, any reissues, divisions, continuations, renewals, extensions
and continuations-in-part thereof) has been duly and properly filed; (iii)
except as set forth in Annex E or Annex F, no holding, decision or judgment has
been rendered by any court agency, board or other governmental authority which
would limit, cancel or question the validity of any Patent or Copyright; (iv) no
action or proceeding is pending seeking to limit, cancel or question the
validity of any Patent or Copyright; and (v) no written claim has been made that
the
<PAGE> 14
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use of any Patent or Copyright does or may violate the rights of any third
person. The Assignor further represents and warrants that it is the true and
lawful owner of all rights in (i) all trade secrets and proprietary information
necessary to operate the business of the Assignor (the "Trade Secret Rights").
The Assignor further represents and warrants that, except as set forth in Annex
E, it has the exclusive right to use all Patents and Copyrights that it owns and
to the best knowledge of the Assignor has the exclusive right to exclude others
from using any Patents and Copyrights it owns. The Assignor agrees to execute an
Assignment of Security Interest in United States Trademarks and Patents
substantially in the form of Annex G hereto covering all right, title and
interest in each United States Patent of the Assignor and to record the same,
and to execute an Assignment of Security Interest in United States Copyrights
substantially in the form of Annex H hereto covering all right, title and
interest in each United States Copyright of the Assignor and to record the same.
The Assignor further represents and warrants that upon the recordation of each
of the Assignment of Security Interest in United States Trademarks and Patents
and the Assignment of Security Interest in United States Copyrights, together
with filings on Form UCC-1 pursuant to this Agreement, all filings,
registrations and recordings necessary or appropriate, to the extent permitted
by applicable law, to cause the security interest granted to the Collateral
Agent in the United States Patents and Copyrights covered by this Agreement to
be a perfected first priority security interest under applicable law will have
been accomplished. The Assignor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
U.S. Patent and Trademark Office, the U.S. Copyright Office or secretary of
state or equivalent governmental agency of any state of the United States in
order to effect an absolute assignment of all right, title and interest in each
Patent and Copyright, and to record the same. Such power of attorney, coupled
with an interest, shall be irrevocable.
5.2 Licenses and Assignments. The Assignor hereby agrees not
to divest itself of any right under a Patent or Copyright other than in the
ordinary course of business or to the extent permitted under Section 6.1 of the
Credit Agreement absent prior written approval of the Collateral Agent.
5.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to the Assignor with respect to any infringement or other
violation in any respect of the Assignor's rights in any significant Patent or
Copyright, or with respect to any claim that practice of any significant Patent
or Copyright of the Assignor violates any property right of a third party, to
the extent that such infringement or violation is reasonably likely to have a
Material Adverse Effect. The Assignor further agrees, absent direction of the
Collateral Agent to the contrary, diligently to prosecute any person infringing
any significant Patent or Copyright at the expense of the Assignor in accordance
with ordinary business practices to the extent that such infringement or
violation is reasonably likely to have a Material Adverse Effect.
5.4 Maintenance of Patents. At its own expense, the Assignor
shall make timely payment of all post-issuance fees required pursuant to 35
U.S.C. Section 41 to maintain in force rights under each of its Patents.
<PAGE> 15
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5.5 Prosecution of Patent Application. At its own expense, the
Assignor shall diligently prosecute all applications for United States patents
listed under the Assignor's name on Annex E hereto, and shall not abandon any
such application prior to exhaustion of all commercially reasonable
administrative and judicial remedies, absent written consent of the Collateral
Agent; provided that, the Assignor shall not be obligated to preserve any
application to the extent the Assignor determines, in its reasonable business
judgment, that (a) the preservation of such application is no longer desirable
in the conduct of its business or (b) having regard to applicable legal and
ethical principles, that the prosecution or maintenance of an application should
not be pursued or continued.
5.6 Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may by written notice to the Assignor take any
or all of the following actions: (i) declare the entire right, title and
interest of the Assignor in each of the Patents and Copyrights vested, in which
event such right, title and interest shall immediately vest in the Collateral
Agent for the benefit of the Secured Creditors, in which case the Collateral
Agent shall be entitled to exercise the power of attorney referred to in Section
5.1 to execute, cause to be acknowledged and notarized, and record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights of the Assignor; (iii) direct the Assignor to refrain, in
which event the Assignor shall refrain, from practicing the Patents and
Copyrights of the Assignor directly or indirectly, and the Assignor shall
execute such other and further documents as the Collateral Agent may request
further to confirm this and to transfer ownership of the Patents and Copyrights
of the Assignor to the Collateral Agent for the benefit of the Secured
Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 General Representations and Warranties. (i) The Assignor
has the full right, power and authority to enter into this Agreement and to
grant all of the right, title and interest herein granted by it; (ii) the
execution, delivery and performance by the Assignor of this Agreement do not and
will not contravene the Assignor's charter or by-laws or any contractual
restriction binding on or affecting the Assignor or any of its properties; (iii)
no consent of any third party is required in connection with the Assignor's
execution and delivery of this Agreement; (iv) this Agreement has been duly
executed and delivered by the Assignor and is a legal, valid and binding
obligation of the Assignor, enforceable against the Assignor in accordance with
its terms; and (v) all of the Assignor's representations and warranties in
Sections 4.1 and 5.1 are true and correct.
6.2 Protection of Collateral Agent's Security. The Assignor
will do nothing to impair the rights of the Collateral Agent in the Collateral.
The Assignor will at all times keep the insurable Collateral insured in favor of
the Collateral Agent, at its own expense, to the extent required by the Credit
Agreement against fire, theft and all other risks to which such Collateral may
be subject; all policies or certificates with respect to such insurance shall be
endorsed to the
<PAGE> 16
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Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee)
and deposited with the Collateral Agent. If the Assignor shall fail to insure
the Collateral to the extent required by the Credit Agreement, or if the
Assignor shall fail to so endorse and deposit all policies or certificates with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation) to procure such insurance and the Assignor agrees to reimburse
the Collateral Agent for all reasonable costs and expenses of procuring such
insurance. Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may apply any proceeds of such insurance required
to be maintained pursuant to this Section 6.1 in accordance with Section 7.4.
The Assignor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of the Assignor to pay its
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to the Assignor.
6.3 Further Actions. The Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
including, without any limitation on the foregoing, any and all warehouse
receipts, receipts in the nature of warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney, certificates, reports
and other assurances or instruments, and take such further steps relating to the
Collateral including, without limitation, all Acquired Collateral, and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to protect, perfect,
and preserve the priority of, its security interest in the Collateral.
6.4 Financing and Continuation Statements. Without limitation
on the foregoing, the Assignor agrees to sign and deliver to the Collateral
Agent such financing and continuation statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, perfected
security interest in the Collateral as provided herein and the other rights and
security contemplated hereby all in accordance with the Uniform Commercial Code
as enacted in any and all relevant jurisdictions or any other relevant law. The
Assignor will pay any applicable filing fees and related expenses. The Assignor
authorizes the Collateral Agent to file any such financing statements without
the signature of the Assignor.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
AND CERTAIN DEFAULTS
7.1 Remedies; Obtaining Collateral Upon Default. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement, the Assignor agrees that if any Event of Default shall have
occurred and be continuing:
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(a) then and in every such case, subject to any mandatory
requirements of applicable law then in effect, the Collateral Agent, in addition
to any rights now or hereafter existing under applicable law, shall have all
rights as a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately retake
possession of the Collateral of the Assignor or any part thereof from
the Assignor or any other Person who then has possession of any part
thereof with or without notice or process of law:
(1) by directing the Assignor in writing to deliver the
same to the Collateral Agent at any place or places designated by
the Collateral Agent, in which event the Assignor shall at its own
expense:
(A) forthwith cause the same to be moved to the place
or places so designated by the Collateral Agent and there
delivered to the Collateral Agent,
(B) store and keep any Collateral of the Assignor so
delivered to the Collateral Agent at such place or places
pending further action by the Collateral Agent as provided in
Section 7.2, and
(C) while the Collateral of the Assignor shall be so
stored and kept, provide such guards and maintenance services
as shall be necessary to protect the same and to preserve and
maintain them in good condition; or
(2) by entering upon the Assignor's premises where any
of the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids
and other facilities of the Assignor;
(ii) withdraw all moneys, securities and other instruments in
the Cash Collateral Account for application to the Obligations in
accordance with Section 7.4 hereof;
(iii) sell, assign or otherwise liquidate, or direct the
Assignor to sell, assign or otherwise liquidate, any or all of the
Collateral of the Assignor or any part thereof in accordance with
Section 7.2 hereof, and take possession of the proceeds of any such
sale or liquidation;
(b) the Assignor hereby grants to the Collateral Agent an
irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Assignor and subject only to the
rights of the third party licensors from whom the Assignor has licensed
copyrights, trademarks and patents that are incorporated in certain of
the Assignor's works) (i), to license or sublicense any part of the
Intellectual Property Collateral to any third party, or to grant to any
such third party any corresponding right of use, (ii) to use, disclose,
reproduce, prepare derivative works based upon, distribute, display
publicly or perform publicly, the Intellectual Property Collateral or
any part thereof, or (iii) to make, use or sell any inventions
contained, disclosed or described in the Intellectual Property
Collateral; in each case, without the prior written consent of the
<PAGE> 18
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Assignor. The license granted herein includes the right of the
Collateral Agent, consistent with the Assignor's confidentiality
obligations to third parties, to have reasonable access to all media in
which, without limitation, any copyrightable work, software, mask work,
invention, process, art, method or trade secret underlying the
Intellectual Property Collateral may be recorded or stored and to all
equipment, computer software and documentation that is used for the
compilation or printout thereof or that is otherwise necessary in the
Collateral Agent's reasonable judgment for the Collateral Agent to
exercise its licensed rights hereunder;
(c) upon the request of the Collateral Agent, the Assignor
shall use its best efforts to obtain all requisite consents or
approvals by the licenser of each license or sublicense pursuant to
which Assignor receives rights with respect to any copyright, trademark
or patent owned by any third party that is used in connection with the
Intellectual Property Collateral to effect the assignment of all of the
Assignor's rights, title and interest thereunder to the Collateral
Agent or its designee;
it being understood that the Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by the Assignor of said obligation.
7.2 Remedies; Disposition of Collateral. Upon the occurrence
and during the continuance of an Event of Default, any Collateral repossessed by
the Collateral Agent under or pursuant to Section 7.1 and any other Collateral
whether or not so repossessed by the Collateral Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Collateral Agent may, in compliance with any
mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of
in the condition in which the same existed when taken by the Collateral Agent or
after any overhaul or repair which the Collateral Agent shall determine to be
commercially reasonable. Any such disposition which shall be a private sale or
other private proceedings permitted by such requirements shall be made upon not
less than ten (10) days' written notice to the Assignor specifying the time at
which such disposition is to be made and the intended sale price or other
consideration therefor, and shall be subject, for the ten (10) days after
receipt of such notice, to the right of the Assignor or any nominee of the
Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than ten (10) days' written notice
to the Assignor specifying the time and place of such sale and, in the absence
of applicable requirements of law, shall be by public auction (which may, at the
Collateral Agent's option, be subject to reserve), after publication of notice
of such auction not less than ten (10) days prior thereto in two newspapers in
general circulation in the City of New York. The Assignor agrees that the
notices provided for herein are commercially reasonable within the meaning of
the Uniform Commercial Code as in effect in any relevant jurisdiction. To the
extent permitted by any requirement of law,
<PAGE> 19
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the Collateral Agent on behalf of the Secured Creditors (or certain of them) may
bid for and become the purchaser of the Collateral or any item thereof, offered
for sale in accordance with this Section 7.2 without accountability to the
Assignor (except to the extent of surplus money received as provided in Section
7.4). If, under mandatory requirements of applicable law, the Collateral Agent
shall be required to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the Assignor as hereinabove
specified, the Collateral Agent need give the Assignor only such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law. The Assignor agrees to do or cause to be done
all such other acts and things as may be reasonably necessary to make such sale
or sales of all or any portion of the Collateral of the Assignor valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts, arbitrations or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Assignor's expense.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, THE ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL
OF SUCH ASSIGNOR, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH
ASSIGNOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE
UNITED STATES OR OF ANY STATE, and the Assignor hereby further waives, to the
extent permitted by law:
(i) all damages occasioned by such taking of possession,
except any damages which are the direct result of the Collateral
Agent's gross negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and the
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Assignor.
<PAGE> 20
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7.4 Application of Proceeds. (a) Except as otherwise set
forth in the Intercreditor Agreement with respect to Shared Collateral, the
proceeds of any Collateral obtained pursuant to Section 7.1 or disposed of
pursuant to Section 7.2 shall be applied as follows:
(i) first, to the payment of all Obligations to the
Collateral Agent of the type described in clauses (iii) and (iv) of the
definition of "Obligation" contained in Article IX hereof;
(ii) second, to the extent proceeds remain after the
application pursuant to preceding clause (i), an amount equal to the
outstanding Obligations to the Secured Creditors shall be paid to the
Secured Creditors as provided in Section 7.4(c) with each Secured
Creditor receiving an amount equal to its outstanding Obligations or,
if the proceeds are insufficient to pay in full all such Obligations,
its Pro Rata Share of the amount remaining to be distributed to be
applied, with respect to the Credit Agreement Obligations, firstly to
the payment of interest in respect of the unpaid principal amount of
Loans outstanding, secondly to the payment of principal of Loans
outstanding, then to the other Credit Agreement Obligations; and
(iii) third, to the extent remaining after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 10.9 hereof, to the
Assignor or to whomever may be lawfully entitled to receive such
payment.
(b) For purposes of this Agreement, "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, the amount (expressed as a percentage) equal to a fraction the numerator
of which is the then outstanding amount of the relevant Obligations owed such
Secured Creditor and the denominator of which is the then outstanding amount of
all Obligations.
(c) All payments required to be made to (i) the Bank
Creditors hereunder shall be made to the Agent for the account of the respective
Bank Creditors and (ii) the Interest Rate Creditors hereunder shall be made to
the paying agent under the applicable Secured Interest Rate Agreement or, in the
case of Secured Interest Rate Agreements without a paying agent, directly to the
applicable Interest Rate Creditor.
(d) For purposes of applying payments received in accordance
with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i)
the Agent for a determination (which the Agent agrees to provide upon request to
the Collateral Agent) of the outstanding Credit Agreement Obligations and (ii)
upon any Interest Rate Creditor for a determination (which each Interest Rate
Creditor agrees to provide upon request to the Collateral Agent) of the
outstanding Interest Rate Obligations owed to such Interest Rate Creditor.
Unless it has actual knowledge (including by way of written notice from a
Secured Creditor) to the contrary, the Agent under the Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Credit
Agreement Obligations other than principal, interest and regularly accruing fees
are owing to any Bank
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Creditor and (y) no Secured Interest Rate Agreements or Interest Rate
Obligations with respect thereto are in existence.
(e) It is understood that the Assignor shall remain liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the sums referred to in clauses (i) and
(ii) of Section 7.4(a) with respect to the Assignor.
7.5 Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under any Secured
Interest Rate Agreement or the other Loan Documents or otherwise now or
hereafter existing at law or in equity, or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time or simultaneously and as often and in such order as
may be deemed expedient by the Collateral Agent. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of exercise of
one shall not be deemed a waiver of the right to exercise of any other or
others. No delay or omission of the Collateral Agent in the exercise of any such
right, power or remedy and no renewal or extension of any of the Obligations
shall impair any such right, power or remedy or shall be construed to be a
waiver of any Default or Event of Default or an acquiescence therein. In the
event that the Collateral Agent shall bring any suit to enforce any of its
rights hereunder and shall be entitled to judgment, then in such suit the
Collateral Agent may recover reasonable expenses, including, without limitation,
reasonable attorneys' fees, and the amounts thereof shall be included in such
judgment.
7.6 Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) The Assignor agrees to indemnify, reimburse
and hold the Collateral Agent, each Secured Creditor and its respective
successors, assigns, employees, agents and servants (hereinafter in this Section
8.1 referred to individually as "Indemnitee," and collectively as "Indemnitees")
harmless from any and all liabilities, obligations, losses, damages, penalties,
claims, demands, actions, suits, judgments and any and all costs and expenses
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called "Expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement, or in any other way
connected with the enforcement of any of the terms of, or the
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preservation of any rights hereunder, or in any way relating to or arising out
of the manufacture, ownership, ordering, purchase, delivery, control,
acceptance, lease, financing, possession, operation, condition, sale, return or
other disposition, or use of the Collateral (including, without limitation,
latent or other defects, whether or not discoverable), the violation of the laws
of any country, state or other governmental body or unit, any tort (including,
without limitation, claims arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. The Assignor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation, loss,
damage, penalty, claim, demand, action, judgment or suit, the Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify the Assignor of any such assertion of
which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), the
Assignor agrees to pay, or reimburse the Collateral Agent for (if the Collateral
Agent shall have incurred fees, costs or expenses because the Assignor shall
have failed to comply with its obligations under this Agreement or any Credit
Document), any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation, protection and
enforcement of the Collateral Agent's security interest in the Collateral,
including, without limitation, all reasonable fees and taxes in connection with
the recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other reasonable
fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of the Assignor
under this Section 8.1 are unenforceable for any reason, the Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement and all of the other Obligations and
notwithstanding the discharge thereof.
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ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified
unless the context otherwise requires. Such definitions shall be equally
applicable to the singular and plural forms of the terms defined.
"Accounts" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by the Assignor or in
which the Assignor now has or hereafter acquires any rights, and, in any event,
shall include, without limitation, all book debts and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper, Documents or
Instruments) now owned or hereafter received or acquired by or belonging or
owing to the Assignor arising out of services rendered by the Assignor, whether
or not the same have been earned, and all of the Assignor's rights in, to and
under all purchase orders or receipts now owned or hereafter acquired by it in
connection with any performance or anticipated performance of services, and all
moneys due or to become due to the Assignor under all contracts for the
performance of services by the Assignor (whether or not yet earned by
performance on the part of the Assignor or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the Proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Acquire" means, with respect to the Assignor, to become the
owner of any Collateral not owned by Assignor as of the date hereof, whether
such ownership comes by means of: (i) the purchase, assignment or other transfer
of ownership right, title and interest from a third party or (ii) Assignor's
creation, use, invention, discovery or other development of proprietary rights
included in the Intellectual Property Collateral. "Acquisition" and "Acquired"
have corollary meanings.
"Assignor" shall have the meaning specified in the first
paragraph of this Agreement.
"Bank Creditor" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Bank Collateral" means the BTCC Credit Agreement Collateral,
as such term is defined in the Intercreditor Agreement.
"Cash Collateral Account" shall mean a non-interest bearing
cash collateral account maintained with, and in the sole dominion and control
of, the Collateral Agent for the benefit of the Secured Creditors.
"Casualty" shall have the meaning provided for such term in
the Credit Agreement.
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20
"Chattel Paper" means any "chattel paper," as such term is
defined in Section 9-105 (1) (b) of the UCC, now owned or hereafter acquired by
the Assignor or in which the Assignor now has or hereafter acquires any rights
and wherever located.
"Class" shall have the meaning provided in Section 10.2(a).
"Closing Date" shall have the meaning provided to such term in
the Credit Agreement.
"Collateral" means all of the assets, whether now existing or
hereafter from time to time acquired, by the Assignor or any of its present or
future Subsidiaries, including, without limitation, any and all real property
and leasehold interest in real property now or hereafter owned by the Assignor
or its Subsidiaries, all Equipment, Shared Collateral, Collateral Accounts and
all monies, securities and instruments deposited or required to be deposited in
such Collateral Accounts, Cash Collateral Account and all monies, securities and
instruments deposited or required to be deposited in such Cash Collateral
Account, Copyrights (including all reissues and renewals thereof), Patents
(including all reissues and renewals thereof), Trademarks, Trade Secrets, Trade
Secret Rights, Contracts, Contract Rights, General Intangibles, Goods, Chattel
Paper, Instruments, Documents, and all Proceeds and products of any and all of
the foregoing; provided, that, without limitation on any of the foregoing, the
term Collateral shall not include the Bank Collateral.
"Collateral Accounts" means the Indemnity Account and the Loss
Proceeds Account now existing or hereafter established pursuant to the Credit
Agreement.
"Collateral Agent" shall have the meaning specified in the
first paragraph of this Agreement.
"Condemnation" shall have the meaning provided to such term in
the Credit Agreement.
"Contract Rights" shall mean all rights of an Assignor
(including, without limitation, all rights to payment) under each Contract.
"Contracts" means all contracts, undertakings, or other
agreements (but only to the extent that any or all of the foregoing constitute
all or a part of the Collateral, and other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which the Assignor may now or
hereafter have any right, title or interest and wherever located, including,
without limitation, (a) with respect to an Account, any agreement relating to
the terms of payment or the terms of performance thereof and (b) all interest
rate or currency exchange agreements, including, without limitation, cap,
collar, floor, forward or similar agreements, other rate or currency protection
arrangements or other rate or currency management arrangements.
"Copyrights" means copyrights and copyrightable works
(including, without limitation, rights to computer software) of the Assignor in
any jurisdiction along with any and all (i) registrations and applications for
registration of copyrights, (ii) income, royalties, damages
<PAGE> 25
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and payments now or hereafter due and/or payable to Assignor with respect
thereto, including, without limitation, damages and payments for past or future
infringements or misappropriation thereof, and (iii) rights to sue for past,
present and future infringements or misappropriation thereof.
"Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Credit Agreement Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Documents" means any "documents," as such term is defined in
Section 9-105 (1) (f) of the UCC, now owned or hereafter acquired by the
Assignor or in which the Assignor now has or hereafter acquires any rights and
wherever located.
"Equipment" means any "equipment," as such term is defined in
Section 9-109 (2) of the UCC, now owned or hereafter acquired by the Assignor or
in which the Assignor now has or hereafter acquires any rights and wherever
located, and, in any event, shall include, without limitation, all machinery,
equipment, furnishings, fixtures, vehicles and computers and other electronic
data-processing and other office equipment now owned or hereafter acquired by
the Assignor or in which the Assignor now has or hereafter acquires any rights
and wherever located, and any and all additions, substitutions and replacements
of any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
"Event of Default" shall have the meaning provided for such
term in the Credit Agreement.
"Existing Credit Agreement" means the Credit Agreement, dated
as of January 12, 1996 among Anchor Glass, Foothill Capital Corporation and
Congress Financial Corporation, as amended, modified or supplemented to and
including the Closing Date.
"General Intangibles" means any "general intangibles" as such
term is defined in Section 9-106 of the UCC, now owned or hereafter acquired by
the Assignor or in which the Assignor now has or hereafter acquires any rights
and wherever located.
"Goods" means any "goods" as such term is defined in Section
9-105 (1) (h) of the UCC now owned or hereafter acquired by the Assignor or in
which the Assignor now has or hereafter acquires any rights and wherever
located.
"Indemnitee" shall have the meaning provided in Section 8.1.
"Indemnity Payments" shall have the meaning provided to such
term in the Credit Agreement.
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"Instrument" means any "instrument," as such term is defined
in Section 9-105 (1) (i) of the UCC, now owned or hereafter acquired by the
Assignor or in which the Assignor now has or hereafter acquires any rights and
wherever located, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property Collateral" means the Copyrights,
Patents, Trademarks, Trade Secrets, Trade Secret Rights and Trademark Licenses.
"Interest Rate Agreements" shall have the meaning provided in
the second WHEREAS clause of this Agreement.
"Interest Rate Creditors" shall have the meaning provided in
the second WHEREAS clause of this Agreement.
"Interest Rate Obligations" shall have the meaning provided in
the definition of "Obligations" in this Article IX.
"Liens" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement, lessor's interest
in a financing lease or analogous instrument, in, of, or on the Assignor's
property.
"Loan Documents" means this Agreement, all other Security
Documents, the Credit Agreement, the Bridge Notes, the Term Notes, the
Guarantees, the Intercreditor Agreement, the Term Exchange Notes, the
Registration Rights Agreement, the Warrant Agreement, the Warrants, the
Affiliate Transactions Agreement, the Holding Agreement and the OI Assurance
Agreement, all as the foregoing are defined in the Credit Agreement.
"Loans" shall mean the Bridge Loan and Term Loan as those
terms are described in the Credit Agreement.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, operations, properties, assets, financial condition or
prospects of the Assignor and its Subsidiaries taken as a whole, (ii) the value
of the Collateral or the amount which the Collateral Agent and the Secured
Parties would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in liquidation of the Collateral, or (iii) the
ability of the Assignor to execute, deliver or perform its obligations under any
Transaction Document or (iv) the material rights and remedies of the Collateral
Agent and the Secured Parties under any Loan Document.
"Obligations" shall mean (i) the full and prompt payment when
due (whether at stated maturity, by acceleration or otherwise) of all
obligations and liabilities of the Assignor, now existing or hereafter incurred
under, arising out of or in connection with any Loan Document to which it is a
party and the due performance and compliance by the Assignor with the terms of
each of the Loan Documents (all such obligations and liabilities under this
clause (i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Agreements, being herein collectively called the
"Credit Agreement Obligations"); (ii) the full
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and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and liabilities of the Assignor, now existing or
hereafter incurred under, arising out of or in connection with any Interest Rate
Agreement (all such obligations and indebtedness under this clause (ii) being
herein collectively called the "Interest Rate Obligations"); (iii) any and all
sums advanced by the Collateral Agent in order to preserve the Collateral or
preserve its security interest in the Collateral; (iv) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations,
or liabilities of the Assignor referred to in clauses (i) and (ii), after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable attorneys'
fees and court costs; and (v) all amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement under Section 8.1 of this
Agreement.
"Patents" means patents and patent applications of the
Assignor in any jurisdiction along with any and all (i) inventions and
improvements described and claimed therein, (ii) reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (iii)
income, royalties, damages and payments now or hereafter due and/or payable to
Assignor with respect thereto, including, without limitation, damages and
payments for past or future infringements or misappropriation thereof, and (iv)
rights to sue for past, present and future infringements or misappropriation
thereof.
"Proceeds" shall have the meaning assigned that term under the
UCC or under other relevant law and, in any event, shall include, but not be
limited to, (i) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to the Collateral Agent or the Assignor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Assignor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Requisite Creditors" shall have the meaning provided in
Section 10.2(a).
"Secured Creditors" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
"Secured Interest Rate Agreement" shall have the meaning
provided in the second WHEREAS clause of this Agreement.
"Total Commitments" means the aggregate of the Bridge Loan
Commitment and Term Loan Commitment.
"Trademark Licenses" means any agreement, written or oral,
providing for the grant by Assignor of any right to use any Trademark, including
without limitation, any Trademark referred to in Annex D hereto but excluding
those agreements that are granted by the
<PAGE> 28
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Assignor in the ordinary course of its business, the terms of which were not the
subject of extensive negotiation.
"Trademarks" means trademarks (including service marks, brand
names, certification marks, collective marks, trade dress and trade names,
whether registered or at common law) of the Assignor in any jurisdiction,
registrations and applications in any jurisdiction therefor, the goodwill of
Assignor's business connected therewith and symbolized thereby, along with any
and all, (i) renewals thereof, (ii) income, royalties, damages and payments now
or hereafter due or payable or both with respect thereto, including, without
limitation, damages and payments for past or future infringements or
misappropriations thereof, and (iii) rights to sue for past, present and future
infringements or misappropriations thereof.
"Trade Secrets" means all of Assignor's right, title and
interest, in any jurisdiction, in and to all proprietary information of
Assignor, whether now owned or hereafter possessed, that Assignor protects as a
trade secret.
"Trade Secret Rights" shall have the meaning provided in
Section 5.1.
"Transaction Documents" means the Loan Documents, the
Acquisition Documents, the Senior Bank Revolving Credit Facility, the Affiliate
Transactions Agreement and any other documents or instruments delivered by the
Assignor or any of its Subsidiaries in connection with any of the foregoing or
the Transactions, all as the foregoing are defined in the Credit Agreement.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York or, if another jurisdiction is specified
herein, the Uniform Commercial Code as in effect from time to time in such
jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement, addressed to
such party at its address set forth opposite its signature below, or at such
other address as any of the parties hereto may hereafter notify the others in
writing.
10.2 Waiver; Amendment. (a) None of the terms and conditions
of this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Assignor and the Collateral
Agent (with the consent of the Required Lenders or, to the extent required by
Section 10.6 of the Credit Agreement, all of the Lenders); provided, however,
that no such change, waiver, modification or variance shall be made to Section
7.4 hereof or this Section 10.2(a) without the consent of each Secured Creditor
adversely
<PAGE> 29
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affected thereby; provided further that any change, waiver, modification or
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement, the term "Class" shall mean each
class of Secured Creditors, i.e., whether (x) the Bank Creditors as holders of
the Credit Agreement Obligations or (y) the Interest Rate Creditors as holders
of the Interest Rate Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Agreement Obligations, the Required Lenders and (y) with respect to the
Interest Rate Obligations, the holders of 51% of all obligations outstanding
from time to time under the Secured Interest Rate Agreements.
(b) No notice to or demand on the Assignor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Collateral
Agent to any other or further action in any circumstances without notice or
demand.
10.3 Obligations Absolute. The obligations of the Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Loan Document or
any Secured Interest Rate Agreement except as specifically set forth in a waiver
granted pursuant to the restrictions of Section 10.2 hereof; or (c) any
amendment to or modification of any Loan Document or any Secured Interest Rate
Agreement or any security for any of the Obligations; whether or not the
Assignor shall have notice or knowledge of any of the foregoing. The rights and
remedies of the Collateral Agent herein provided are cumulative and not
exclusive of any rights or remedies which the Collateral Agent would otherwise
have.
10.4 Successors and Assigns. This Agreement shall be binding
upon the Assignor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and its successors and assigns, provided that the
Assignor may not transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Collateral Agent. All agreements,
statements, representations and warranties made by the Assignor herein or in any
certificate or other instrument delivered by the Assignor or on its behalf under
this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement and the
other Loan Documents regardless of any investigation made by the Collateral
Agent.
10.5 Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10.7 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. (a) TO THE
MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, THE ASSIGNOR AND THE COLLATERAL
AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY DEALINGS,
CONDUCT, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS BY EITHER OF THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP BETWEEN
THEM. THE SCOPE OF THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE ASSIGNOR AND
THE COLLATERAL AGENT EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THE ASSIGNOR AND THE COLLATERAL AGENT FURTHER
WARRANT AND REPRESENT THAT EACH OF THEM HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH OF THEM KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENTS OR AGREEMENTS RELATING TO THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
(b) THE ASSIGNOR AND THE COLLATERAL AGENT HERETO CONSENT FOR
THEMSELVES AND IN RESPECT OF THEIR PROPERTIES, GENERALLY, UNCONDITIONALLY AND
IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS IN
THE STATE OF NEW YORK WITH RESPECT TO ANY PROCEEDING RELATING TO ANY MATTER,
CLAIM OR DISPUTE ARISING UNDER THIS AGREEMENT, THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BORROWER FURTHER CONSENTS,
GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF
THE STATE AND FEDERAL COURTS OF THE STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED IN RESPECT OF ANY PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE
ARISING WITH RESPECT TO SUCH COLLATERAL. ASSIGNOR FURTHER IRREVOCABLY
<PAGE> 31
27
CONSENTS TO THE SERVICE OF PROCESS, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY,
AT THE ADDRESSES SET FORTH HEREIN IN CONNECTION WITH ANY OF THE AFORESAID
PROCEEDINGS IN ACCORDANCE WITH THE RULES APPLICABLE TO SUCH PROCEEDINGS. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW HAVE OR HAVE IN THE FUTURE TO THE LAYING OF VENUE IN
RESPECT OF ANY OF THE AFORESAID PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO
ABOVE AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED
AGAINST BORROWER IN ANY JURISDICTION.
10.8 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.9 Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that the Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Assignor under or with
respect to any Collateral.
10.10 Termination; Release. (a) After the termination of the
Total Commitments, or at such time as no Note is outstanding and all Loans and
other Obligations have been paid in full, this Agreement shall terminate, and
the Collateral Agent, at the request and expense of the Assignor, will execute
and deliver to the Assignor a proper instrument or instruments (including
Uniform Commercial Code termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the Assignor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Collateral
Agent and as has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
(b) So long as no payment default on any of the Obligations is
in existence or would exist after the application of proceeds as provided below,
the Collateral Agent shall, at the request of the Assignor, release any or all
of the Collateral, provided that (x) such release is permitted by the terms of
the Credit Agreement or otherwise has been approved in writing by the Required
Lenders and (y) the proceeds of such Collateral are applied as required pursuant
to the Credit Agreement or any consent or waiver with respect thereto.
<PAGE> 32
28
(c) At any time that the Assignor desires that the Collateral
Agent take any action to give effect to any release of Collateral pursuant to
the foregoing Section 10.10(a) or (b), it shall deliver to the Collateral Agent
a certificate signed by an authorized officer stating that the release of the
respective Collateral is permitted pursuant to Section 10.10(a) or (b). In the
event that any part of the Collateral is released as provided in the preceding
paragraph (b), the Collateral Agent, at the request and expense of the Assignor,
will duly assign, transfer and deliver to the Assignor or its designee (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold and as may be in the possession of the
Collateral Agent and has not theretofore been released pursuant to this
Agreement. The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it as permitted
by this Section 10.10. Upon any release of Collateral pursuant to Section
10.10(a) or (b), none of the Secured Creditors shall have any continuing right
or interest in such Collateral, or the proceeds thereof.
10.11 Collateral Agent. By accepting the benefits of this
Agreement, each Secured Creditor acknowledges and agrees that the rights and
obligations of the Collateral Agent shall be as set forth in Section 8 of the
Credit Agreement. Notwithstanding anything to the contrary contained in Section
10.2 of this Agreement or Section 10.6 of the Credit Agreement, Section 10.10,
and the duties and obligations of the Collateral Agent set forth in Section
10.10, may not be amended or modified without the consent of the Agent.
* * *
<PAGE> 33
29
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
One Anchor Plaza ANCHOR GLASS ACQUISITION
4343 Anchor Plaza Parkway CORPORATION, as Assignor
Tampa, Florida 33635-7513
Attention: John J. Ghaznaui
Tel: (813) 884-0000
Fax: (813) 882-7859 By /s/ John J. Ghaznavi
------------------------------
with a copy to: C. Kent May Name: John J. Ghaznavi
Eckert Seamans Title: Chief Executive Officer
Cherin & Mellott
Fax: 600 Grant Street
42nd Floor
Pittsburgh,PA 15219
Tel: (412) 566-6119
Fax: (412) 566-6099
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 as Collateral Agent
Attention: Larry Benison
Tel: (212) 259-7561
Fax: (212) 250-7351 By /s/ Timothy J. Morris
------------------------------
Name: Timothy J. Morris
Title: Vice President
<PAGE> 34
ANNEX A
To
Security Agreement
------------------
LOCATION OF CHIEF EXECUTIVE OFFICE; RECORD LOCATIONS
----------------------------------------------------
<PAGE> 35
ANNEX B
To
Security Agreement
------------------
SCHEDULE OF EQUIPMENT LOCATIONS
-------------------------------
Location Equipment
- -------- ---------
<PAGE> 36
ANNEX C
To
Security Agreement
------------------
SCHEDULE OF TRADE AND FICTITIOUS NAMES
--------------------------------------
Name Jurisdiction Where Used
---- -----------------------
<PAGE> 37
ANNEX D
To
Security Agreement
------------------
SCHEDULE OF TRADEMARKS
----------------------
Expiration
Trademark Name Number Type Date
- -------------- ------ ---- ----------
<PAGE> 38
ANNEX E
To
Security Agreement
------------------
SCHEDULE OF PATENTS AND APPLICATIONS
------------------------------------
U.S.
Patent No. Description Expiration
- ---------- ----------- ----------
<PAGE> 39
ANNEX F
To
Security Agreement
------------------
SCHEDULE OF COPYRIGHTS AND APPLICATIONS
---------------------------------------
U.S. Copyright
Number Description Expiration
-------------- ----------- ----------
<PAGE> 40
ANNEX G
to
SECURITY AGREEMENT
------------------
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
---------------------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, ANCHOR GLASS ACQUISITION CORPORATION, a Delaware
corporation (the "Assignor") with principal offices at One Anchor Plaza, 4343
Anchor Plaza Parkway, Tampa, Florida 33634-7513 hereby assigns and grants to
BANKERS TRUST COMPANY, as Collateral Agent, with principal offices at 130
Liberty Street, New York, New York 10006 (the "Assignee"), a security interest
in (i) all of the Assignor's right, title and interest in and to the United
States trademarks, trademark registrations and trademark applications (the
"Trademarks") set forth on Schedule A attached hereto, (ii) all of the
Assignor's rights, title and interest in and to the United States patents and
pending patent applications (the "Patents") set forth on Schedule B attached
hereto, in each case together with (iii) all Proceeds (as such term is defined
in the Security Agreement referred to below) and products of the Trademarks and
Patents, (iv) the goodwill of the businesses with which the Trademarks are
associated and (v) all causes of action arising prior to or after the date
hereof for infringement of any of the Trademarks and Patents or unfair
competition regarding the same.
THIS ASSIGNMENT OF SECURITY INTEREST is made to secure the satisfactory
performance and payment of all the Obligations of the Assignor, as such term is
defined in the Security Agreement between the Assignor and the Assignee, dated
as of February 5, 1997 (as amended from time to time, the "Security Agreement").
After the termination of the
<PAGE> 41
ANNEX G
Page 2
Total Commitments, no Note is outstanding and all Loans and other Obligations
have been paid in full, the Assignee shall, upon such satisfaction, execute,
acknowledge, and deliver to the Assignor an instrument in writing releasing the
security interest in the Trademarks and Patents acquired under this Assignment
of Security Interest.
This Assignment of Security Interest has been granted in conjunction
with the security interest granted to the Assignee under the Security Agreement.
The rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment of
Security Interest are deemed to conflict with the Security Agreement, the
provisions of the Security Agreement shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Assignment of
Security Interest as of the ____ day of ________, _____.
ANCHOR GLASS ACQUISITION
CORPORATION, Assignor
By________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Collateral Agent, Assignee
By_______________________
Name:
Title:
<PAGE> 42
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
_________________________ who, being by me duly sworn, did state as follows:
that [s]he is ________________ of ANCHOR GLASS ACQUISITION CORPORATION, that
[s]he is authorized to execute the foregoing Assignment of Security Interest on
behalf of said corporation and that [s]he did so by authority of the Board of
Directors of said corporation.
____________________
Notary Public
<PAGE> 43
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
_________________________ who, being by me duly sworn, did state as follows:
that [s]he is ________________ of BANKERS TRUST COMPANY, that [s]he is
authorized to execute the foregoing Assignment of Security Interest on behalf of
said company and that [s]he did so by authority of the Board of Directors of
said corporation.
______________________
Notary Public
<PAGE> 44
SCHEDULE A
<TABLE>
<CAPTION>
TRADEMARK REG. NO. REG. DATE
- --------- -------- ---------
<S> <C> <C>
STELLAR 1,953,772 January 30, 1996
Cornucopia Design 1,265,032 January 24,1984
GOLDEN HARVEST 1,300,589 October 16, 1984
and Cornucopia Design
Anchor Design 1,320,769 February 19, 1985
LINELIGHTS 1,929,484 October 24, 1995
</TABLE>
<TABLE>
<CAPTION>
TRADEMARK SERIAL NO. REG. DATE
- --------- ---------- ---------
<S> <C> <C>
LASTING IMPRESSIONS 75/037,768 December 27, 1995
SPLASH 75/088,093 April 15, 1996
COUNTRY WICKS (not available) December 31, 1996
</TABLE>
<PAGE> 45
SCHEDULE B
<TABLE>
<CAPTION>
PATENT PATENT NO. ISSUE DATE
------ ---------- ----------
<S> <C> <C>
Box Separator 4,144,995 March 20, 1979
Electronic Apparatus and Method for Control of Container 4,149,621 April 17, 1979
Orienting Machinery
Thermoplastic Ink Decorated Polymer Coated Glass Articles 4,265,947 May 5, 1981
Liquid Flask Orienter 4,308,943 January 5, 1982
Container Masking and Coating Apparatus 4,319,543 March 16, 1982
Fuse Assembly 4,467,308 August 21, 1984
Corrosion/Wear-Resistant Metal Alloy Coating Composition 4,833,041 May 23, 1989
Ornamental Design of a Bottle (1) Des. 366,209 January 16, 1996
</TABLE>
<TABLE>
<CAPTION>
PATENT SERIAL NO. FILING DATE
------ ---------- -----------
<S> <C> <C>
Ornamental Design of a Bottle Des. 29/040,135 June 9, 1995
Ornamental Design of a Bottle Des. 29/051,870 March 8, 1996
Ornamental Design of a Bottle Des. 29/051,289 March 8, 1996
Ornamental Design of a Bottle Des. 29/051,869 March 8, 1996
Beverage Bottle Des. 29/056,085 June 21, 1996
</TABLE>
- -----------------------------
(1) The Company has an undivided 50% interest in this patent.
<PAGE> 46
ANNEX H
to
SECURITY AGREEMENT
------------------
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
---------------------------
WHEREAS, ANCHOR GLASS ACQUISITION CORPORATION, a Delaware corporation
(the "Assignor"), having its chief executive office at One Anchor Plaza, 4343
Anchor Plaza Parkway, Tampa, Florida 33634-7513 is the owner of all right, title
and interest in and to the United States copyrights and associated United States
copyright registrations and applications for registration set forth in Schedule
A attached hereto;
WHEREAS, BANKERS TRUST COMPANY, as Collateral Agent, having its
principal offices at 130 Liberty Street, New York, New York 10006 (the
"Assignee"), desires to acquire a security interest in, and lien upon, all of
Assignor's right, title and interest in and to Assignor's copyrights and
copyright registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign and grant to the Assignee a
security interest in, and lien upon, the copyrights and copyright registrations
and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, and subject to the terms and
conditions of the Security Agreement, dated as of February 5, 1997, between the
Assignor and the Assignee (as amended from time to time, the "Security
Agreement"), the Assignor hereby assigns and grants to the Assignee a security
interest in, and lien upon, all of Assignor's right, title and interest in and
to Assignor's copyrights and copyright registrations and applications therefor
set forth in Schedule
<PAGE> 47
ANNEX H
Page 2
A attached hereto (the "Copyrights"), together with (i) all Proceeds (as such
term is defined in the Security Agreement referred to below) of the Copyrights,
and (ii) all causes of action arising prior to or after the date hereof for
infringement of any Copyright.
This Assignment of Security Interest is made to secure the satisfactory
performance and payment of all Obligations (as such term is defined in the
Security Agreement) of the Assignor and shall be effective as of the date of the
Security Agreement. After the termination of the Total Commitments, or at such
time as no Note is outstanding and all Loans and other Obligations have been
paid in full, the Assignee shall, upon such satisfaction, execute, acknowledge,
and deliver to Assignor an instrument in writing releasing the security interest
in the Copyrights acquired under this Assignment of Security Interest.
This Assignment of Security Interest has been granted in conjunction
with the security interest granted to the Assignee under the Security Agreement.
The rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment are
deemed to conflict with the Security Agreement, the provisions of the Security
Agreement shall govern.
<PAGE> 48
ANNEX H
Page 3
IN WITNESS WHEREOF, the undersigned have executed this
Assignment of Security Interest at New York, New York as of the ___day of
__________, 1997.
ANCHOR GLASS ACQUISITION
CORPORATION, Assignor
By______________________
Name:
Title:
BANKERS TRUST COMPANY, as
Collateral Agent, Assignee
By______________________
Name:
Title:
<PAGE> 49
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ________, _____ before me personally came
______________, who being duly sworn, did depose and say that [s]he is
___________________ of ANCHOR GLASS ACQUISITION CORPORATION, that [s]he is
authorized to execute the foregoing Assignment of Security Interest on behalf of
said corporation and that [s]he did so by authority of the Board of Directors of
said corporation.
________________________
Notary Public
<PAGE> 50
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ________, 199 before me personally came
_______________, who being duly sworn, did depose and say that [s]he is
___________________ of BANKERS TRUST COMPANY, that [s]he is authorized to
execute the foregoing Assignment of Security Interest on behalf of said company
and that [s]he did so by authority of the Board of Directors of said company.
__________________________
Notary Public
<PAGE> 51
SCHEDULE A
----------
COPYRIGHTS
----------
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION COPYRIGHT
NUMBERS DATE NAME
------------ ------------- ---------
<S> <C> <C> <C>
VA733-169 June 26, 1995 Party Jar
VA733-170 June 26, 1995 Oriental Floral Jar
VA733-171 June 26, 1995 Floral Grid Jar
VA733-172 June 26, 1995 Flower Garden Jar
VA733-173 June 26, 1995 Heart Sampler Jar
VA733-174 June 26, 1995 Hearts Galore Jar
VA733-175 June 26, 1995 Modern Floral Jar
VA733-176 June 26, 1995 Ivy Jar
VA733-177 June 26, 1995 Rose Buds Jar
VA733-178 June 26, 1995 Roosters Jar
VA733-179 June 26, 1995 Plaid Jar
VA733-180 June 26, 1995 Peach Blossom Jar
VA733-181 June 26, 1995 Crocus Jar
VA733-182 June 26, 1995 Cows Jar
VA733-183 June 26, 1995 Contemporary Grid Jar
VA733-184 June 26, 1995 Cherries Jar
VA733-185 June 26, 1995 Checkerboard Scribble Jar
VA733-186 June 26, 1995 Celestial Jar
VA733-187 June 26, 1995 Victorian Rose Jar
VA733-188 June 26, 1995 Wild Iris Jar
VA733-189 June 26, 1995 Assorted Fruit Jar
VA733-190 June 26, 1995 Splatters 1 Jar
VA733-191 June 26, 1995 Splatters 2 Jar
VA733-192 June 26, 1995 Surfing Suntea Jar
VA733-193 June 26, 1995 Sunrise Suntea Jar
VA733-194 June 26, 1995 Scribble Stripes Jar
VA733-195 June 26, 1995 Scribble Fish Jar
VA733-196 June 26, 1995 Tropical Birds Jar
VA733-197 June 26, 1995 Tropical Fish Jar
VA733-198 June 26, 1995 Tulips Jar
VA733-199 June 26, 1995 Sailboats Jar
</TABLE>
<PAGE> 1
Exhibit 4.5
ASSIGNMENT OF SECURITY AGREEMENT
ASSIGNMENT OF SECURITY AGREEMENT dated as of April 17, 1997 among
BANKERS TRUST COMPANY, as agent for the lenders (the "Lenders") under the
Credit Agreement referred to below (the "Assignor"), and THE BANK OF NEW YORK,
as Trustee for the noteholders under the Indenture referred to below.
Reference is hereby made to (i) the Senior Credit Agreement (the
"Credit Agreement") dated as of February 5, 1997, between ANCHOR GLASS
CONTAINER CORPORATION (formerly known as Anchor Glass Acquisition Corporation)
(the "Company"), CONSUMERS U.S., INC. (the "Guarantor") and the Assignor, (ii)
the Security Agreement (the "Security Agreement") dated as of February 5, 1997
between the Company and Assignor, (iii) the offering (the "Offering") by the
Company of its 11 1/4% First Mortgage Notes due 2005 (the "Notes") to be
consummated on the date hereof and (iv) the Indenture to be entered into on the
date hereof by the Company, Consumers U.S., Inc. and the Assignee relating to
the Offering.
In consideration of the sum of ten dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor does hereby assign unto Assignee, prior to the Offering,
without representation, warranty or recourse, all of Assignor's right, title and
interest in, to and under the Security Agreement together with all of Assignor's
right, title, and interest in, to and under Company's obligations under the
Security Agreement and all other documents and instruments securing or
evidencing such obligations, including, without limitation, all liens, security
interests and guarantees and all notes secured thereby and all references in the
Security Agreement to the Lenders shall be deemed to be references to the
holders of the Notes, all references in the Security Agreement to the Assignor,
in its individual capacity and as agent for the Lenders, shall be deemed to be
references to the Trustee, in its individual capacity and as Trustee for the
holders of the Notes, respectively, and all references in the Security Agreement
to the Credit Agreement shall be deemed to be references to the Indenture.
<PAGE> 2
IN WITNESS WHEREOF, this Assignment of Security Agreement has been
executed by the parties as of the date first above written.
ASSIGNOR:
BANKERS TRUST COMPANY, as agent for the
Lenders under the Credit Agreement
By: /s/ T.J. Morris
--------------------------------
Name: T.J. Morris
Title: Vice President
ASSIGNEE:
THE BANK OF NEW YORK, as Trustee under
the Indenture
By: /s/ Paul J. Schmalzel
--------------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
The undersigned (i) acknowledges the foregoing assignment and (ii) acknowledges
that the Assignor, Assignee and the undersigned intend that the Security
Agreement shall secure the obligations described in the Indenture.
ANCHOR GLASS CONTAINER CORPORATION
(formerly known as Anchor Glass
Acquisition Corporation)
By: /s/ M. William Lightner, Jr.
-------------------------------------------------
Name: M. William Lightner, Jr.
Title: Vice President and Chief Financial Officer
2
<PAGE> 1
EXHIBIT 4.6
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of April 17, 1997 (as amended, modified or
supplemented from time to time, this "Agreement"), made by Consumers U.S., Inc.
(the "Pledgor"), in favor of THE BANK OF NEW YORK, as Trustee for the benefit of
the Noteholders referred to below (in such capacity, the "Pledgee").
W I T N E S S E T H :
WHEREAS, Anchor Glass Container Corporation (the "Company") has duly
authorized the issuance of its 11-1/4% First Mortgage Notes due 2005 (the
"Initial Notes") and of its 11-1/4% First Mortgage Notes due 2005 to be issued
in exchange for Initial Notes pursuant to the Indenture and the Registration
Rights Agreement (the "Exchange Notes," and together with the Initial Notes, the
"Notes"), in each case, in an aggregate principal amount of $150,000,000; and
WHEREAS, the Company, the Pledgor (as a guarantor) and the Pledgee have
entered into an Indenture, dated as of April 17, 1997 (as amended, modified or
supplemented from time to time, the "Indenture"), providing for, inter alia, the
authentication and delivery of the Notes to the Pledgee (in its capacity as
Trustee under the Indenture); and
WHEREAS, the Company, the Pledgor and the Initial Purchasers (as
defined) have entered into a Purchase Agreement, dated as of April 10, 1997 (as
amended, modified or supplemented from time to time, the "Purchase Agreement"),
providing for the sale by the Company to the Initial Purchasers of the Notes;
and
WHEREAS, pursuant to the Indenture, the Pledgor has agreed to provide
the Guarantee (as defined); and
WHEREAS, it is a condition precedent to the Initial Purchaser's
obligations under the Purchase Agreement that the Pledgor shall have executed
and delivered to the Pledgee this Agreement; and
WHEREAS, the Pledgor desires to execute this Agreement to satisfy the
condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee, in each case for the benefit
of the Noteholders, as follows:
<PAGE> 2
1. DEFINITIONS.
1.1 Certain Definitions. Capitalized terms used but not defined herein
shall have the meanings assigned in the Indenture. In addition to other terms
defined elsewhere in this Pledge Agreement, the following words and terms shall
have the following meanings, respectively, unless the context hereof clearly
requires otherwise:
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including,
without limitation, each class of Common Stock and Preferred Stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Distributions" shall mean all stock dividends, liquidating dividends,
shares of stock resulting from stock splits, reclassifications, warrants,
options, non-cash dividends and other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any Pledged Securities, but
shall not mean Dividends.
"Dividends" shall mean cash dividends and cash distributions with
respect to any Pledged Securities.
"DTC" means The Depository Trust Company, a registered clearing agency.
"DTC Shares" means those Pledged Securities, if any, consisting of
securities held at DTC and maintained on the books and records of the Pledgor in
the name of DTC or its nominee.
"Guarantee" means the Pledgor's guarantee of the Notes provided
pursuant to Article 11 of the Indenture.
"Guaranteed Obligations" means (i) the due and punctual payment of the
principal, premium, if any, interest (including post-petition interest in any
proceeding under any Bankruptcy Law whether or not an allowed claim in such
proceeding) on overdue principal, premium, if any, and interest, if lawful on
any and all Notes, and (ii) all other monetary obligations payable by the
Company under the Indenture and the Notes, when and as the same shall become due
and payable, whether by acceleration thereof, call for redemption or otherwise
(including amounts that would become due and payable but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code), in accordance
with the terms of any such Note or the Indenture.
"Initial Purchasers" means BT Securities Corporation and TD Securities.
"Noteholder" means the Person in whose name a Note is registered on the
books of the Registrar.
"Pledged Collateral" is defined in Section 2.1 hereof.
2
<PAGE> 3
"Pledged Notes" shall mean all promissory notes issued from time to
time to the Pledgor by the Company or any of the Company's Subsidiaries.
"Pledged Securities" shall mean all Pledged Stock and Pledged Notes.
"Pledged Stock" shall mean all shares of Capital Stock at any time
owned by the Pledgor, in the Company or any Subsidiary of the Company, whether
outstanding on the date hereof or issued thereafter.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of April 17, 1997 between the Company, the Pledgor and the Initial
Purchasers.
"Required Noteholders" means on any date, Noteholders holding at least
50% of the aggregate principal amount of Notes then outstanding.
"Secured Obligations" is defined in Section 3.1 hereof.
"Transaction Documents" means this Agreement, the Indenture, the Notes,
the Purchase Agreement, the Registration Rights Agreement and the other Security
Documents.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York.
1.2 U.C.C. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the U.C.C. are used
in this Agreement with such meanings.
2. PLEDGE.
2.1 Grant of Security Interest. To secure the prompt and complete
payment and performance of the Guarantee and for the purposes set forth in
Section 3, the Pledgor hereby pledges, hypothecates, assigns, charges,
mortgages, delivers and transfers to the Agent, and hereby grants to the Agent,
a continuing lien on and security interest in, all of the following property
(collectively, the "Pledged Collateral");
(a) all Pledged Securities issued from time to time and the
certificates, in the case of certificated Pledged Securities,
representing the Pledged Securities;
(b) all Dividends, Distributions, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Securities; and
(c) all other rights and privileges appurtenant to the
property described in clauses (a) and (b) above (including, without
limitation, voting rights); and
(d) all cash and noncash proceeds of any of the foregoing.
3
<PAGE> 4
2.2 Delivery of Certificated Pledged Securities. Concurrently with the
execution and delivery of this Pledge Agreement, the Pledgor has delivered to
and deposited with the Pledgee in pledge the certificates representing the
Pledged Securities set forth on Annex A and B hereto registered in the name of
the Pledgor, duly endorsed in blank in the case of Pledged Notes, and
accompanied by undated stock powers duly executed in blank by the Pledgor in the
case of Pledged Stock. If the Pledgor shall hereafter acquire any other shares
of Pledged Stock or any Pledged Notes hereafter outstanding, or any
Distributions, whether by purchase or otherwise, the Pledgor agrees to accept
the same as the Pledgee's agent and to hold the same in trust on behalf and for
the benefit of the Pledgee and to deliver the same forthwith to the Pledgee in
the exact form received, duly endorsed in blank in the case of Pledged Notes and
accompanied by undated, stock powers duly executed in blank in the case of
Pledged Stock, to be held by the Pledgee, subject to the terms hereof, as
additional Pledged Collateral for the Secured Obligations.
2.3 Delivery of Subsequently Acquired Pledged Securities. If the
Pledgor shall acquire (by purchase, stock dividend, exercise of any Warrant or
otherwise) any additional Pledged Securities at any time or from time to time
after the date hereof, the Pledgor will (a) if such subsequently acquired
Pledged Securities are certificated securities, deliver to and deposit with the
Pledgee in pledge the certificates or instruments representing the Pledged
Securities registered in the name of the Pledgor, duly endorsed in blank in the
case of Pledged Notes and accompanied by undated stock powers duly executed in
blank in the case of Pledged Stock, or such other instruments of transfer as are
acceptable to the Pledgee, or (b) if such subsequently acquired Pledged
Securities are uncertificated Pledged Securities, the Pledgor shall promptly
notify the Pledgee thereof and comply with clauses (a) and (b) of Section 2.4
hereof, or (c) if such subsequently acquired Pledged Securities are DTC Shares,
the Pledgor shall promptly comply with Section 2.5 hereof, and will promptly
thereafter deliver to the Pledgee a certificate executed by a principal
executive officer of the Pledgor describing such Pledged Securities and
certifying that the same have been duly pledged with the Pledgee hereunder.
2.4 Perfection of Uncertificated Securities. Notwithstanding anything
to the contrary contained in Sections 3.1 and 3.2 hereof, if any Pledged
Securities (whether now owned or hereafter acquired) are uncertificated
securities (as defined in Section 8-102 of the UCC), the Pledgor shall promptly
notify the Pledgee thereof, and shall promptly (a) supply the Pledgee with
evidence satisfactory to the Pledgee that its security interest in such
uncertificated securities has been perfected in accordance with Sections
8-313(1) and 8-321 of the UCC, and (b) if requested by the Pledgee, cause to be
made appropriate entries on books maintained by or on behalf of the issuer for
purposes of registering the pledge of such uncertificated securities to the
Pledgee and restricting the transfer of such uncertificated securities without
the Pledgee's consent.
2.5 Perfection of DTC Shares. If any Pledged Securities are DTC Shares
(whether certificated or uncertificated), the Pledgor shall promptly make an
appropriate debit to an account maintained by or on behalf of the Pledgor with
DTC and an appropriate credit to an account maintained by the Pledgee with the
DTC.
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3. SECURITY.
3.1 Security. This Agreement is made by the Pledgor for the benefit of
the Noteholders to secure:
(i) the Guaranteed Obligations and compliance by the Pledgor
with the terms of each of the Transaction Documents to which it is a
party;
(ii) any and all sums advanced by the Pledgee in order to
preserve the Pledged Collateral or preserve its security interest in
the Pledged Collateral;
(iii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred
to in clause (i) above, after an Event of Default shall have occurred
and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing or
realizing on the Pledged Collateral, or of any exercise by the Pledgee
of its rights hereunder, together with reasonable attorneys' fees and
court costs;
(iv) all amounts paid by any Indemnitee (as defined in Section
11 hereof) as to which such Indemnitee has the right to reimbursement
under Section 11 of this Agreement; and
(v) all other obligations of the Pledgor hereunder;
the Guaranteed Obligations and all such liabilities, sums and expenses set forth
in clauses (i) through (v) of this Section 3.1 being herein collectively called
the "Secured Obligations".
3.2 Continuing Security Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall:
(a) remain in full force and effect until this Agreement and
the Liens created hereunder are terminated or released pursuant to
Section 17 hereof;
(b) be binding upon each of the Pledgor, its successors and
assigns; and
(c) inure, together with the rights and remedies of the
Pledgee hereunder, to the benefit of the Pledgee and each of its
successors, transferees, and assigns.
3.3 Security Interest Absolute. All rights of the Pledgee and the
security interests granted to the Pledgee hereunder, and all obligations of the
Pledgor hereunder, shall be absolute and unconditional, and shall not be
impaired or affected by any of the following, whether or not the Pledgor shall
have any notice or knowledge thereof (and the Pledgor hereby waives any notice
of any of the following):
(a) any lack of validity or enforceability of the Indenture or
any other Transaction Documents, or any other agreement or instrument
relating thereto;
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<PAGE> 6
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment to, waiver of, consent to any departure from, or other
action, inaction or indulgence in respect of the Indenture or any other
Transaction Documents or any other agreement or instrument relating
thereto, or any assignment or transfer thereof;
(c) any exchange, release or non-perfection or any collateral
(including the Pledged Collateral), or any release of or amendment to
or waiver of or consent to depart from any guaranty for all or any of
the Secured Obligations;
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Company; or
(e) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, a guarantor or a third party
grantor of a lien or security interest.
4. APPOINTMENT OF SUBAGENTS; ENDORSEMENTS, ETC. The Pledgee shall have
the right to appoint one or more subagents for the purpose of retaining physical
possession of the Pledged Securities, endorsed or assigned in blank or in favor
of the Pledgee or any nominee or nominees of the Pledgee or a subagent appointed
by the Pledgee. The Pledgee agrees to promptly notify the Pledgor after the
appointment of any subagent; provided, however, that the failure to give such
notice shall not affect the validity of such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until (i) an
Event of Default shall have occurred and be continuing and (ii) written notice
thereof shall have been given by the Pledgee to the Pledgor (provided, that if
an Event of Default specified in Section 6.01(vii) or 6.01(viii) of the
Indenture shall occur, no such notice shall be required), the Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Securities and to give all consents, waivers or ratifications in
respect thereof; provided, that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate any of the terms of
this Agreement or any other Transaction Document, or which would have the effect
of impairing the position or interests of the Pledgee in the Pledged Collateral.
All such rights of the Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default shall occur and be
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default shall
have occurred and be continuing, all Dividends payable in respect of the Pledged
Stock shall be paid to the Pledgor to the extent that the payment thereof is
permitted by the Indenture; provided, that all Dividends payable in respect of
the Pledged Stock which are (i) not permitted to be paid pursuant to the
Indenture or (ii) determined by the Pledgee to represent in whole or in part an
extraordinary, liquidating or other distribution in return of capital shall be
paid, to the extent so determined to represent an extraordinary, liquidating or
other distribution in return of capital, to the Pledgee and retained by it as
part of the Pledged Collateral. The Pledgee shall also be entitled to receive
directly, and to retain as part of the Pledged Collateral:
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(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged
Securities by way of stocksplit, spinoff, splitup, reclassification,
combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the Pledged
Collateral by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation or similar corporate reorganization;
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of Default
shall have occurred and be continuing, the Pledgee shall be entitled to exercise
all of the rights, powers and remedies (whether vested in it by this Agreement
or by any other Transaction Document or by law) for the protection and
enforcement of its rights in respect of the Pledged Collateral, and the Pledgee
shall be entitled, without limitation, to exercise the following rights, which
the Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Pledged
Collateral payable to the Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities
into the Pledgee's name or the name of its nominee or nominees (the
Pledgee agrees to promptly notify the Pledgor after such transfer;
provided, however, that the failure to give such notice shall not
affect the validity of such transfer);
(iii) to accelerate any Pledged Note which may be accelerated
in accordance with its terms, and take any other action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(iv) subject to the giving of written notice to the Pledgor in
accordance with (and to the extent required by) clause (ii) of Section
5 hereof, to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Pledged Collateral and
otherwise act with respect thereto as though it were the outright owner
thereof (the Pledgor hereby irrevocably constituting and appointing the
Pledgee the proxy and attorney-in-fact of the Pledgor, with full power
of substitution to do so, such appointment being coupled with an
interest); and
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Pledged
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or
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<PAGE> 8
otherwise (all of which are hereby waived by the Pledgor), for cash, on
credit or for other property, for immediate or future delivery without
any assumption of credit risk, and for such price or prices and on such
terms as the Pledgee in its absolute discretion may determine;
provided, that at least 10 days' notice of the time and place of any
such sale shall be given to the Pledgor. The Pledgor acknowledges that
such notice constitutes reasonable notification under the UCC. The
Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Pledged
Collateral, whether before or after sale hereunder, and all rights, if
any, of marshaling the Pledged Collateral and any other security for
the Secured Obligations or otherwise. At any such sale, unless
prohibited by applicable law, the Pledgee or any other Noteholder may
bid for and purchase all or any part of the Pledged Collateral so sold
free from any such right or equity of redemption. The Pledgee shall not
be liable for failure to collect or realize upon any or all of the
Pledged Collateral or for any delay in so doing nor shall any of them
be under any obligation to take any action whatsoever with regard
thereto.
Without limitation on the foregoing, upon the occurrence of an Event of
Default, the Pledgee shall have all the rights and remedies of a secured party
under the UCC.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Transaction Document or now
or hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any Noteholder of
any one or more of the rights, powers or remedies provided for in this Agreement
or any other Transaction Document or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the simultaneous or later
exercise by the Pledgee or any Noteholder of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any Noteholder
to exercise any such right, power or remedy shall operate as a waiver thereof.
No notice to or demand on the Pledgor in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Pledgee or any Noteholder to any other or
further action in any circumstances without notice or demand. This Agreement may
be enforced only by the action of the Pledgee, in each case acting in accordance
with the terms of the Indenture, and no Noteholder shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Pledgee, as the case may be, for the
benefit of the Noteholders upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. All moneys collected by the Pledgee upon
any sale or other disposition of the Pledged Collateral, together with all other
moneys received by the Pledgee hereunder, shall be applied in accordance with
the terms of the Indenture.
10. PURCHASERS OF PLEDGED COLLATERAL. Upon any sale of the Pledged
Collateral by the Pledgee hereunder (whether by virtue of the power of sale
herein
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<PAGE> 9
granted, pursuant to judicial process or otherwise), the receipt of the
Pledgee or the officer making the sale shall be a sufficient discharge to the
purchaser or purchasers of the Pledged Collateral so sold, and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Pledgee or such officer or be answerable in any
way for the misapplication or nonapplication thereof.
11. INDEMNITY. The Pledgor agrees (i) to indemnify, pay and hold
harmless the Pledgee, each Initial Purchaser and their respective officers,
directors, employees, agents, representatives and affiliates (each an
"Indemnitee") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated as a
party thereto) which may be suffered by, imposed on, incurred by or asserted
against that Indemnitee, in any manner resulting from, connected to, in respect
of, relating to or arising out of this Agreement (the "Indemnified
Liabilities"), provided that the Pledgor shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities to the extent (1)
such liabilities are finally judicially determined to have resulted from (x) the
gross negligence or willful misconduct of that Indemnitee or (y) the failure of
such Indemnitee to perform material obligations under this Agreement or (z) such
Indemnitee's violation of law, or (2) arising from (x) legal proceedings
commenced against the Pledgee or any Initial Purchaser by any security holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor in its capacity as such or (y) legal proceedings commenced
against the Pledgee or any Initial Purchaser by any other Initial Purchaser or
commenced by the Pledgee against any Initial Purchaser, in the case of each of
(x) and (y), to the extent that such liabilities would not be Indemnified
Liabilities in respect of such Indemnitee. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Pledgor
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) The Pledgor agrees that
it will join with the Pledgee in executing and, at the Pledgor's own expense,
file and refile under the applicable UCC (including, without limitation, Revised
Article 8 of the UCC) in any jurisdiction such financing statements,
continuation statements and other documents in such offices as the Pledgee may
deem necessary or appropriate and wherever required or permitted by law in order
to perfect, preserve or otherwise protect the Pledgee's security interest in the
Pledged Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Pledged
Collateral without the signature of the Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder.
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(b) The Pledgor hereby appoints the Pledgee the Pledgor's
attorney-in-fact (which appointment is irrevocable and coupled with an
interest), with full authority in the place and stead of the Pledgor and in the
name of the Pledgor or otherwise, from time to time after the occurrence and
during the continuance of an Event of Default, in the Pledgee's discretion to
take any action and to execute any instrument which the Pledgee may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement.
13. THE PLEDGEE. The Pledgee will hold in accordance with this
Agreement all items of the Pledged Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Pledged Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement and in the Indenture. The Pledgee
shall act hereunder on the terms and conditions set forth herein and in the
Indenture.
14. TRANSFER BY PLEDGOR. The Pledgor will not sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge, grant a Lien on or
security interest in or otherwise encumber any of the Pledged Collateral owned
by it or any interest therein except as otherwise permitted by the Indenture.
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. The Pledgor
represents, warrants and covenants as to itself that (i) on the date hereof (A)
the Pledged Stock held by the Pledgor consists of the number and type of shares
of (or Warrants to purchase shares of) the stock of the corporations as
described in Annex A hereto; (B) such Pledged Stock constitutes that percentage
of the issued and outstanding Capital Stock of (or, in the case of Warrants, the
right to purchase that percentage of the issued and outstanding capital stock
of) the issuing corporation as is set forth in Annex A hereto; (C) the Pledged
Notes held by the Pledgor consist of the promissory notes described in Annex B
hereto; and (D) on the date hereof, the Pledgor owns no other Pledged
Securities; (ii) it is the legal, record and beneficial owner of, and has good
and marketable title to, all Pledged Securities pledged by it hereunder, subject
to no pledge, lien, mortgage, hypothecation, security interest, charge, option
or other encumbrance whatsoever, except the liens and security interests created
by this Agreement; (iii) it has full power, authority and legal right to pledge
all the Pledged Securities pledged by it pursuant to this Agreement; (iv) this
Agreement has been duly authorized, executed and delivered by the Pledgor and
constitutes a legal, valid and binding obligation of the Pledgor enforceable in
accordance with its terms, except to the extent that the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
(v) except to the extent already obtained or made no consent of any other party
(including, without limitation, any stockholder or creditor of the Pledgor or
any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by the
Pledgor in connection with the execution, delivery or performance of this
Agreement, or in connection with the exercise by the Pledgee of its rights and
remedies pursuant to this Agreement, except as may be required in connection
with the disposition of the Pledged Securities by laws affecting the offering
and sale of securities
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generally; (vi) the execution, delivery and performance of this Agreement by the
Pledgor does not violate any provision of any applicable law or regulation or of
any order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, or of the certificate or articles
of incorporation or bylaws of the Pledgor or any of its Subsidiaries or of any
securities issued by the Pledgor or any of its Subsidiaries, or of any mortgage,
indenture, lease, deed of trust, agreement, instrument or undertaking to which
the Pledgor or any of its Subsidiaries is a party or which purports to be
binding upon the Pledgor or any of its Subsidiaries or upon any of their
respective assets and will not result in the creation or imposition (or the
obligation to create or impose) of any lien or encumbrance on any of the assets
of the Pledgor or any of its Subsidiaries except as contemplated by this
Agreement; (vii) all the shares of the Pledged Stock have been duly and validly
issued, are fully paid and nonassessable and are subject to no options to
purchase or similar rights; (viii) each of the Pledged Notes constitutes, or
when executed by the obligor thereof will constitute, the legal, valid and
binding obligation of such obligor, enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (ix) the
pledge and assignment of the Pledged Securities pursuant to this Agreement,
together with (A) with respect to certificated Pledged Securities, the delivery
of the Pledged Securities pursuant to this Agreement (which delivery has been
made), (B) with respect to DTC Shares, the making of an appropriate debit to an
account maintained by or on behalf of the Pledgor with DTC and the making of an
appropriate credit to an account maintained by the Pledgee with DTC, and (C)
with respect to uncertificated Pledged Securities, the Pledgor's compliance with
Section 2.4 hereof, creates a valid and perfected first security interest in
such Pledged Securities and the proceeds thereof subject to no prior lien or
encumbrance or to any agreement purporting to grant to any third party a lien or
encumbrance on the property or assets of the Pledgor which would include the
Pledged Securities (other than as set forth above). The Pledgor covenants and
agrees that it will defend the Pledgee's right, title and security interest in
and to the Pledged Securities and the proceeds thereof against the claims and
demands of all persons whomsoever; and the Pledgor covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Pledged Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee.
16. REGISTRATION, ETC. (a) If an Event of Default shall have occurred
and be continuing and the Pledgor shall have received from the Pledgee a written
request or requests that the Pledgor cause any registration, qualification or
compliance under any Federal or state securities law or laws to be effected with
respect to all or any part of the Pledged Stock, the Pledgor as soon as
practicable and at its expense will use its best efforts to cause such
registration to be effected (and be kept effective) and will use its best
efforts to cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Stock, including, without limitation, registration
under the Securities Act of 1933 as then in effect (or any similar statute then
in effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other government
requirements; provided, that the Pledgee and each Noteholder shall furnish to
the Pledgor such information regarding the Pledgee or such
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other Noteholder as the Pledgor may request in writing and as shall be required
in connection with any such registration, qualification or compliance. The
Pledgor will cause the Pledgee to be kept advised in writing as to the progress
of each such registration, qualification or compliance and as to the completion
thereof, will furnish to the Pledgee such number of prospectuses, offering
circulars or other documents incident thereto as the Pledgee from time to time
may reasonably request, and will indemnify the Pledgee and each Noteholder and
all others participating in the distribution of the Pledged Stock against all
claims, losses, damages and liabilities caused by any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to the Pledgor by the Pledgee or such other
Noteholder expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, such Pledged Securities or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion: (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Securities or part thereof shall have been filed under such
Securities Act; (ii) may approach and negotiate with a single possible purchaser
to effect such sale; and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Securities or any part thereof. In the event of any such sale, the Pledgee shall
incur no responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute discretion,
may in good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
deferred until after registration as aforesaid.
17. TERMINATION, RELEASE. This Agreement and the Liens created
hereunder shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 11 hereof, shall survive any such
termination) in accordance with the terms of the Indenture. In the event that
any part of the Pledged Collateral is sold in connection with a sale permitted
by the Indenture or is otherwise released in accordance with the terms of the
Indenture, the Pledgee, at the request and expense of the Pledgor, will duly
assign, transfer and deliver to the Pledgor (without recourse and without any
representation or warranty) such of the Pledged Collateral as is then being (or
has been) so sold or released and as may be in possession of the Pledgee and has
not heretofore been released pursuant to this Agreement.
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18. NOTICES, ETC. All notices and other communications hereunder shall
be in writing and shall be delivered or mailed by first class mail, postage
prepaid, addressed:
(a) if to the Pledgor, at:
Consumers U.S. Inc.
[ADDRESS]
[ATTENTION]
Telecopier No.:
(b) if to the Pledgee, at:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopier No.: (212) 815-5915
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
19. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Pledgor directly affected thereby and the
Pledgee (with the written consent of the Required Noteholders or all of the
Noteholders to the extent required by the Indenture).
20. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of the Pledgor and shall inure to the benefit of the Pledgee and the
Noteholders and their respective successors and assigns. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES. The headings in this Agreement are
for purposes of reference only and shall not limit or define the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one instrument.
21. RECOURSE. This Agreement is made with full recourse to the Pledgor
and pursuant to and upon all the representations, warranties, covenants and
agreements on the part of the Pledgor contained herein, in the other Transaction
Documents and otherwise in writing in connection herewith or therewith.
13
<PAGE> 14
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
CONSUMERS U.S., INC., as Pledgor
By /s/ M. William Lightner, Jr.
-------------------------------
Title: Vice President and
Chief Financial Officer
THE BANK OF NEW YORK,
as Pledgee
By /s/ Paul J. Schmalzel
-------------------------------
Title: Assistant Treasurer
14
<PAGE> 15
ANNEX A
Page 1
ANNEX A
to
PLEDGE AGREEMENT
----------------
PLEDGED STOCKS
--------------
(A) 200,000 shares of Class B Common Stock, par value $0.10 per
share;
(B) 2,960,000 shares of Series B 8% Cumulative Convertible
Preferred Stock, par value $0.01 per share.
<PAGE> 16
ANNEX C
Page 1
ANNEX B
to
PLEDGE AGREEMENT
----------------
PLEDGED NOTES
-------------
(A) None
<PAGE> 1
EXHIBIT 4.7
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT, dated as of the 5th day of February,
1997, by and among Bankers Trust Company (together with any trustee acting in
such capacity for the holders of Permanent Senior Notes issued pursuant to the
Permanent Senior Note Documents in exchange for theretofore outstanding Bridge
Senior Notes so long as such trustee executes a counterpart of this Agreement,
hereinafter referred to as the "Note Agent"), in its capacity as agent for
itself and any other holders of "Senior Notes" (hereinafter referred to as the
"Senior Noteholders") issued from time to time pursuant to the "Senior Note
Documents" (and any indenture created pursuant thereto), as those terms are
defined below; BT Commercial Corporation (hereinafter referred to as "BTCC"), in
its capacity as agent for itself and any other "Lender" from time to time party
to the "BTCC Credit Agreement" as those terms are defined below; and BTCC, in
its capacity as "Shared Collateral Agent," as defined below.
R E C I T A L S
A. Anchor Glass Acquisition Corporation (the "Borrower") has entered
into a Credit Agreement dated as of February 5, 1997 (hereinafter referred to as
the "Senior Credit Agreement") with the Note Agent, pursuant to which the
Borrower will issue its Bridge Senior Notes due February 5, 2003 in the maximum
aggregate principal amount equal to $130,000,000;
B. The Borrower has entered into a Credit Agreement dated as of
February 5, 1997 (the "BTCC Credit Agreement") with the Lenders parties thereto,
Bankers Trust Company, as Issuing Bank, BTCC, as Co-Syndication Agent and Agent,
and PNC Bank, National Association, as Co-Syndication Agent and Issuing Bank
pursuant to which the Lenders have made available to Borrower a revolving credit
facility in the initial aggregate amount of $110,000,000;
C. The obligations of the Borrower under the Senior Credit Agreement
and the Senior Notes issued thereunder are secured by mortgages, liens and
security interests in substantially all of Borrower's property, plant and
equipment, and all capital
<PAGE> 2
stock of the Borrower's subsidiaries, joint ventures (other than inventory,
receivables and all assets relating thereto) all as more specifically set forth
in the Senior Credit Agreement and the other documents delivered in connection
therewith;
D. The obligations of the Borrower under the BTCC Credit Agreement are
secured by inventory, receivables and all assets relating thereto, as more
specifically set forth in the BTCC Credit Agreement and the other documents
delivered in connection therewith; and
E. The Credit Agent and the Note Agent wish to enter into this
Agreement setting forth their agreement (i) as to the relative priorities of the
respective mortgages, liens and security interests in the assets of the Borrower
securing the respective obligations of the Borrower under the Senior Note
Documents and the BTCC Credit Agreement and (ii) as to certain related matters.
A G R E E M E N T
In consideration of the premises and the mutual covenants and
conditions herein contained, the Credit Agent, for itself and on behalf of the
Lenders, and the Note Agent, for itself and on behalf of the holders of the
Senior Notes, intending to be legally bound, agree as follows:
1. Definitions. In addition to those terms elsewhere expressly defined
in this Agreement, as used herein, the following terms shall be defined as set
forth below:
"Accounts" means any "account," as such term is defined in Section 9-
106 of the UCC, now owned or hereafter acquired by the Borrower or in which the
Borrower now has or hereafter acquires any rights, and, in any event, shall
include, without limitation, all accounts receivable, book debts and other forms
of obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to the Borrower arising out of inventory sold or leased or
services rendered by the Borrower, whether or not the same have been earned, and
all of the Borrower's rights in, to and under all purchase orders or receipts
now owned or hereafter acquired by it in connection with any Disposition or
anticipated Disposition of Inventory or services, and all of the Borrower's
rights to any Inventory represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed Inventory),
and all moneys due or to become due to the Borrower under all contracts for the
sale of Inventory or the performance of services or both by the Borrower
(whether or not yet
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<PAGE> 3
earned by performance on the part of the Borrower or in connection with any
other transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the Proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Anchor Property" means any and all Property of the Borrower, or
rights, title or interests of the Borrower in Property, howsoever arising,
acquired or obtained, whether now or hereafter existing, whether tangible or
intangible, whether real or personal, and wherever located.
"Anchor Real Property" means (i) all freehold real and immoveable
property now owned or hereafter acquired by the Borrower, together with all
buildings, erections, improvements and fixtures now or hereafter constructed or
placed thereon or used in connection therewith, and (ii) all leasehold property
now or hereafter leased by the Borrower, together with all buildings, erections,
improvements and fixtures now or hereafter constructed or placed thereon or used
in connection therewith.
"Article 8 Securities" means all "securities" as defined in Article 8
of the UCC, whether now owned or hereafter acquired by the Borrower or in which
the Borrower now has or hereafter acquires any rights.
"Bank Collateral" has the meaning set forth in Section 3.1(a).
"Bank Creditors" means BTCC, Bankers Trust Company and the Lenders as
parties to the BTCC Credit Agreement.
"Borrower" has the meaning set forth in the Recitals.
"Borrower Common Stock Purchase Warrants" means each of the Common
Stock Purchase Warrants issued pursuant to (i) the Warrant Agreement dated
hereof between the Company and Bankers Trust Company, as Agent, or (ii) Section
5.10 of the Senior Credit Agreement.
"Bridge Senior Note Documents" means all documents and other agreements
entered into and relating to the issuance by the Borrower of the Bridge Senior
Notes, as in effect on the date of the making of an initial revolving loan or
the issuance of the initial letter of credit under the BTCC Credit Agreement.
"Bridge Senior Notes" means the Borrowers Senior Notes issued pursuant
to the Senior Credit Agreement. As used herein, the term "Bridge Senior Notes"
shall
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<PAGE> 4
include "Term Notes" issued pursuant to the Senior Credit Agreement in exchange
for theretofore outstanding Bridge Senior Notes, as contemplated by the Senior
Credit Agreement.
"BT Account" means an account, maintained by the Collateral Agent at
Bankers Trust Company, into which all available funds in the Concentration
Account are transferred on every Business Day to be applied to payments of the
BTCC Credit Agreement Obligations.
"BTCC" has the meaning set forth in the introductory paragraph.
"BTCC Credit Agreement" means (a) the BTCC Credit Agreement, as the
BTCC Credit Agreement may be amended, amended and restated, renewed, extended,
restructured, supplemented, or otherwise modified from time to time; and (b) any
credit agreement, loan agreement, note purchase agreement, indenture or other
agreement, document or instrument refinancing, refunding or otherwise replacing
the BTCC Credit Agreement, or any other agreement deemed a BTCC Credit Agreement
under clause (a) or (b) hereof, whether or not with the same agent, trustee,
representative lenders or holders and, subject to the provisions of the next
succeeding sentence, irrespective of any change in the terms and conditions
thereof; provided, that, any such agreement, document or instrument effecting
any such refunding, refinancing or replacement expressly provides that it is
deemed to be a "BTCC Credit Agreement" hereunder. Without limiting the
generality of the foregoing, the term "BTCC Credit Agreement" shall include any
amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to any BTCC Credit Agreement and all refundings,
refinancings and replacements of any BTCC Credit Agreement including any
agreement (i) extending the maturity of any BTCC Credit Agreement Obligations;
(ii) adding or deleting issuers, borrowers or guarantors thereunder; (iii)
increasing the amount of BTCC Credit Agreement Obligations incurred thereunder
or available to be borrowed thereunder, to the extent permitted by Section
4.2(a) hereof; or (iv) otherwise altering the terms and conditions thereof;
provided, that any such agreement, document or instrument effecting any such
refunding, refinancing or replacement expressly provides that it is deemed to be
a "BTCC Credit Agreement" hereunder.
"BTCC Credit Agreement Accounts" means, with respect to any Person, all
present and future accounts, contract rights and other rights to payment for
goods sold or leased (whether or not delivered) or for services rendered which
are not evidenced by an instrument or chattel paper, whether or not they have
been earned by performance, and any letter of credit, guarantee, security
interest or other security issued or granted to secure payment by an account
debtor.
-4-
<PAGE> 5
"BTCC Credit Agreement Obligations" means, collectively, at any time,
(a) all debts, liabilities and obligations of the Borrower, whether now or
hereafter existing, incurred in connection with the BTCC Credit Agreement, the
BTCC Credit Agreement Security Documents, or any other document, agreement or
instrument executed or delivered in connection therewith to further evidence the
debts, liabilities and obligations of the Borrower to the Credit Agent and the
Lenders and (b) all Hedging Obligations, in each case, at such time.
"BTCC Credit Agreement Security Documents" means, collectively, any and
all documents executed in connection with the BTCC Credit Agreement or in
furtherance thereof, pursuant to which the Borrower grants to the Lenders
(whether through the Credit Agent or otherwise) a Lien on the Lenders'
Collateral, as the same may be amended, modified or supplemented from time to
time.
"Business Day" means any day that is not a Saturday, a Sunday, a day on
which banks are required or authorized to be closed in the State of New York or
a day on which the Credit Agent or the Note Agent is closed for business.
"Cash Collateral Account of the BTCC Credit Agreement" means a
non-interest bearing cash collateral account maintained with, and in the sole
dominion and control of, the Collateral Agent for the benefit of the Secured
Creditors, established pursuant to the BTCC Credit Agreement.
"Cash Collateral Account of the Senior Credit Agreement" means a
non-interest bearing cash collateral account maintained with, and in the sole
dominion and control of, the Collateral Agent for the benefit of the Secured
Creditors (as such term is defined in the Senior Note Security Agreement),
established pursuant to the Senior Credit Agreement.
"Cash Equivalent Investments" means (i) United States Government
Securities, (ii) time deposits and certificates of deposit of any commercial
bank organized in the United States having capital and surplus in excess of
$100,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $100,000,000, in
either case, with a maturity date not more than one year from the date of
acquisition, (iii) repurchase obligations with a term of not more than seven (7)
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (ii)
above, (iv) direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable
-5-
<PAGE> 6
from either Standard & Poor's Corporation or Moody's Investors Service, Inc.
(or, if at any time neither Standard & Poor's Corporation nor Moody's Investors
Service, Inc. shall be rating such obligations, then from such other nationally
recognized rating services acceptable to the Shared Collateral Agent), (v)
commercial paper issued by the parent corporation of any commercial bank
organized in the United States having capital and surplus in excess of
$100,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $100,000,000, and
commercial paper issued by others having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc. (or, if at any time neither Standard & Poor's Corporation nor
Moody's Investors Service, Inc. shall be rating such obligations, then from such
other nationally recognized rating services acceptable to the Shared Collateral
Agent) and in each case maturing within one year after the date of acquisition,
(vi) overnight bank deposits and bankers' acceptances at any commercial bank
organized in the United States having capital and surplus in excess of
$100,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $100,000,000,
(vii) deposits available for withdrawal on demand with a commercial bank
organized in the United States having capital and surplus in excess of
$50,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $50,000,000 and
(viii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) through (vii).
"Chattel Paper" means any "chattel paper," as such term is defined in
Section 9-105(i)(b) of the UCC, now owned or hereafter acquired by the Borrower
or in which the Borrower now has or hereafter acquires any rights and wherever
located.
"Claims" has the meaning set forth in Section 5.4(a).
"Collateral" means, collectively, the Lenders' Collateral and the
Senior Noteholders' Collateral.
"Collateral Account" means any account established by the Borrower for
the benefit of the Note Agent pursuant to the terms of the Senior Note Documents
and this Agreement and designated as the "Anchor Glass Collateral Account."
"Collateral Agent" means BTCC as Collateral Agent under the BTCC Credit
Agreement Security Documents.
"Collateral Agent's Lien" means the Liens of the Collateral Agent in
the Shared Collateral granted pursuant to the Shared Collateral Security
Documents.
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<PAGE> 7
"Collection Account" means the account, established at an institution
selected by the Borrower and acceptable to BTCC pursuant to the Collection Bank
Agreement, into which funds on deposit in the relevant Sub-Collection Account
shall be transferred pursuant to the BTCC Credit Agreement.
"Collection Bank Agreements" means agreements between the Borrower, the
Collateral Agent and financial institutions selected by the Borrower and
acceptable to BTCC which provide, among other things, for all receipts received
in respect of BTCC Credit Agreement Accounts to be transferred at the end of
each day from each Sub-Collection Account to the appropriate Collection Account.
"Concentration Account" means an account established pursuant to a
Concentration Account Agreement entered into among the Borrower, the Collateral
Agent and Bankers Trust Company, and into which all available amounts held in
the Collection Accounts shall be wired each Business Day.
"Concentration Account Agreement" means a concentration account
agreement entered into among the Borrower, the Collateral Agent and Bankers
Trust Company establishing the Concentration Account.
"Contract Rights" means all rights of the Borrower (including, without
limitation, all rights to payment) under each Contract.
"Contracts" means all contracts, undertakings, or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which the Borrower may now or hereafter have any right, title or interest
and wherever located, including, without limitation, (a) with respect to an
Account, any agreement relating to the terms of payment or the terms of
performance thereof and (b) all interest rate or currency exchange agreements,
including, without limitation, cap, collar, floor, forward or similar
agreements, other rate or currency protection arrangements or other rate or
currency management arrangements.
"Copyrights" means any U.S. copyright to which the Borrower now or
hereafter has title, as well as any application for a U.S. copyright hereafter
made by the Borrower.
"Credit Agent" means BTCC in its capacity as agent for the Lenders
under the BTCC Credit Agreement and not in its individual capacity, any
successor agent to BTCC under the BTCC Credit Agreement and any other agent,
trustee or representative of the Lenders serving in such capacity from time to
time and, if there
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<PAGE> 8
is no such agent, trustee or representative, "Credit Agent" means, collectively,
the Lenders.
"Disbursement Account" means a checking account opened by the Borrower
with Bankers Trust (Delaware) for general corporate purposes, including the
purpose of paying trade payables and other operating expenses.
"Disposition" means the sale, assignment, transfer, lease, conveyance
or other disposition by the Borrower of any Anchor Property, including, without
limitation an involuntary disposition as a result of a casualty or condemnation.
"Documents" means any "documents," as such term is defined in Section
9-105(1)(f) of the UCC, now owned or hereafter acquired by the Borrower or in
which the Borrower now has or hereafter acquires any rights and wherever
located.
"Equipment" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired by the Borrower or in which
the Borrower now has or hereafter acquires any rights and wherever located, and,
in any event, shall include, without limitation, all machinery, equipment,
furnishings, fixtures, vehicles and computers and other electronic
data-processing and other office equipment now owned or hereafter acquired by
the Borrower or in which the Borrower now has or hereafter acquires any rights
and wherever located, and any and all additions, substitutions and replacements
of any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto.
"Expiration Date" means February 5, 2002.
"Future Subsidiary Guarantor" means each of the Borrower's hereafter
created or acquired Subsidiaries which becomes a guarantor of the Senior Note
Obligations or the BTCC Credit Agreement Obligations, and their respective
successors.
"General Intangibles" means any "general intangibles," as such term is
defined in the UCC.
"Goods" has the meaning assigned that term under the UCC.
"Governmental Agency" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental agency, authority, board, bureau, commission, department or
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<PAGE> 9
instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"Hedging Obligations" means, collectively, at any time, all debts,
liabilities and obligations of the Borrower, whether now or hereafter existing,
incurred in connection with the Interest Rate Protection or Other Hedging
Agreements (as such term is defined in the BTCC Credit Agreement Security
Documents as in effect on the date hereof) entered into with the Other Creditors
(as such term is defined in the BTCC Credit Agreement Security Documents as in
effect on the date hereof).
"Indemnitee" has the meaning set forth in Section 5.4(a).
"Indemnity Account" means the Indemnity Account established pursuant to
Section 5.4(b)(ix) of the Senior Credit Agreement.
"Instruments" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by the Borrower
or in which the Borrower now has or hereafter acquires any rights and wherever
located, other than instruments that constitute, or are a part of a group of
writings that constitute, Chattel Paper.
"Intercompany Debt" means any indebtedness payable to the Borrower or
any Future Subsidiary Guarantor by the Borrower, any Future Subsidiary Guarantor
or any other Person which is a direct or indirect Subsidiary of any of the
foregoing, or any Person which is an officer, director or employee of the
Borrower or any Future Subsidiary.
"Interest Expense" means the aggregate consolidated interest expense of
the Borrower and its Subsidiaries in respect of Indebtedness determined on a
consolidated basis in accordance with GAAP, including, without limitation,
amortization of original issue discount on any Indebtedness and of all fees
payable in connection with the incurrence of such Indebtedness (to the extent
included in interest expense), the interest portion of any deferred payment
obligation and the interest component of any Capital Lease Obligations,
provided, that for the purpose of clause (y) of the definition "Fixed Charges",
amortization of original issue discount and debt issuance costs on any
Indebtedness and all fees payable in connection with the incurrence of such
Indebtedness (to the extent included in interest expense) shall be excluded in
calculating Interest Expense.
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<PAGE> 10
"Interest Rate Creditors" means BTCC in its individual capacity, any
Lender or a syndicate of financial institutions organized by BTCC or an
affiliate of BTCC (even if BTCC or any such Lender ceases to be a Lender under
the BTCC Credit Agreement for any reason), and any institution that
participates, and in each case their subsequent assigns, in one or more interest
rate agreements (including, without limitation, interest rate swaps, caps,
floors, collars, and similar agreements permitted by the BTCC Credit Agreement).
"Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing, packaging or shipping
same; in all stages of production -- from raw materials through work-in-process
to finished goods -- and all products and proceeds of whatever sort and wherever
located and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Collateral Agent from the Borrower's customers, and shall
specifically include all "inventory" as such term is defined in the UCC, now or
hereafter owned by the Borrower.
"Law" means, when used in connection with any Person, collectively, all
international, foreign, federal, state and local statutes, treaties, rules,
regulations, standards, guidelines, ordinances, codes, orders and judgments (or
any official interpretation of any of the foregoing) issued by any Governmental
Agency applicable to that Person.
"Lenders" means, collectively, the holders from time to time of the
BTCC Credit Agreement Obligations.
"Lenders' Collateral" means, collectively, any and all of the Anchor
Property now or hereafter subject to a Lender's Lien, together with any and all
Proceeds and products thereof, as more specifically set forth in the BTCC Credit
Agreement and the other documents delivered in connection therewith.
"Lenders' Lien" means a Lien now or hereafter granted to, or obtained
by, the Lenders or the Credit Agent for the benefit of the Lenders as security
for the payment and performance of any BTCC Credit Agreement Obligations.
"Lien" means any mortgage, deed of trust, deed to secure debt, pledge,
hypothecation, assignment for security, security interest, encumbrance, lien or
charge of any kind, whether voluntarily incurred or arising by operation of Law,
by statute, by contract, or otherwise, affecting any Property, including any
agreement to grant any of the foregoing, any conditional sale or other title
retention agreement, any lease in
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<PAGE> 11
the nature of a security interest, and/or the filing of or agreement to give any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable Law of any jurisdiction as in effect on the date hereof with respect
to any Property.
"Loss Proceeds Account" means the Loss Proceeds Account established
pursuant to Section 5.4(b)(vi) of the Senior Credit Agreement.
"Note Agent" has the meaning set forth in the introductory paragraph.
"OECD" means the Organization for Economic Cooperation and Development.
"Officers' Certificate" means a certificate signed by two officers, one
of whom must be the principal executive officer, principal financial officer or
principal accounting officer of the Borrower.
"Patent" or "Patents" means one or all of the following now owned or
hereafter acquired by the Borrower or in which the Borrower now has or hereafter
acquires any rights, including, without limitation, pursuant to any Patent
License, and wherever located: (a) all letters patent of the United States or
any other country and all applications for letters patent of the United States
or any other country, (b) all reissues, reexaminations, continuations,
continuations-in-part, divisions, and extensions of any of the foregoing, and
(c) all inventions claimed and disclosed in the Patents and any and all trade
secrets and know-how related thereto.
"Patent License" means any written agreement granting any right to
make, use, sell and/or practice any invention or discovery that is the subject
matter of a Patent now owned or hereafter acquired by the Borrower or in which
the Borrower now has or hereafter acquires any rights.
"Permanent Senior Note Documents" means all purchase agreements,
indentures and other instruments evidencing or entered into in connection with
the Permanent Senior Notes (including, but not limited to, the Borrower's Common
Stock Purchase Warrants).
"Permanent Senior Notes" means senior secured notes of the Borrower,
issued pursuant to a private placement, public offering or similar transaction,
with the terms and conditions (taken as a whole) substantially as favorable or
better than the Bridge Senior Notes; provided that in no event shall final
maturity thereof be earlier than the date which is one year after the Expiration
Date.
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<PAGE> 12
"Person" means any entity, whether an individual, trustee, corporation,
general partnership, limited partnership, joint stock company, trust, estate,
unincorporated organization, business association, tribe, firm, joint venture,
Governmental Agency, or otherwise.
"PNC" means PNC Bank National Association.
"Proceeds" means "Proceeds," as such term is defined in Section 9-
306(1) of the UCC and, in any event, shall include, without limitation, (a) any
and all Proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or the Borrower from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to the Borrower from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Agency (or any Person acting under
color of governmental authority) and (c) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Pro Rata Share" means, with respect to any Lender or Senior Noteholder
at any time, a fraction equal to the following amounts owing to such Person (or
in the case of unutilized commitments, the amount of such Person's unutilized
commitment) divided by the sum of the following amounts, in each case, at such
time: (i) the aggregate principal amount of the Senior Notes outstanding at such
time and (ii) the principal balance of all loans owing under the BTCC Credit
Agreement, the aggregate amount of unpaid reimbursement obligations owing with
respect to letters of credit issued pursuant to the BTCC Credit Agreement, the
aggregate undrawn amount of all outstanding letters of credit issued pursuant to
the BTCC Credit Agreement, the aggregate amount of all Hedging Obligations owing
to any Lender and, so long as the Lenders under the BTCC Credit Agreement,
whether immediately or after the giving of notice or passage of time, or both,
would not have the right to terminate their respective, commitments thereunder,
the unutilized amount of such commitments. For purposes of determining whether
at any such time the Lenders have the right (or would have the right after the
giving of notice or passage of time or both) to terminate their respective
commitments under the BTCC Credit Agreement, an Officers' Certificate delivered
by the Borrower to the Note Agent and the Shared Collateral Agent at such time
certifying that no such right exists (or would exist after the giving of notice
or passage of time or both) together with a borrowing under the BTCC Credit
Agreement within two (2) Business Days after the delivery of such certificate
shall constitute
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<PAGE> 13
conclusive evidence, for purposes of this Agreement only, that no such right
exists (or would exist after the giving of notice or passage of time or both) at
such time.
"Receivables" means any "account" as such term is defined in the UCC,
now or hereafter owned by the Borrower and, in any event, includes, but is not
limited to, all of the Borrower's rights to payment for goods sold or leased or
services performed by the Borrower, whether now in existence or arising from
time to time hereafter, including, without limitation, rights evidenced by an
account, note, contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by the Borrower to secure the foregoing, (b)
all of the Borrower's right, title and interest in and to any goods, the sale of
which gave rise thereto, (c) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing, (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith, (e) all books, records, ledger cards, and invoices relating thereto,
(f) all notices to other creditors or secured parties, and certificates from
filing or other registration officers, (g) all credit information, reports and
memoranda relating thereto, and (h) all other writings related in any way to the
foregoing.
"Remedial Action" means any claim, proceeding or action to foreclose
upon, take possession or control of, sell, lease or otherwise dispose of or in
any other manner realize, take steps to realize or seek to realize upon, the
whole or any part of any Anchor Property, whether pursuant to the UCC, by
foreclosure, by setoff, by self-help repossession, by notification to account
debtors, by deed in lieu of foreclosure, by exercise of power of sale, by
judicial action or otherwise, or the exercise of any other remedies with respect
to any Anchor Property available under any of the Security Documents, or under
applicable Law.
"Required Parties" means, at any time, Lenders and Senior Noteholders
holding greater than fifty percent (50%) of the sum of the following amounts at
such time: (i) the aggregate principal amount of the Senior Notes outstanding at
such time and (ii) the principal balance of all loans owing under the BTCC
Credit Agreement, the aggregate amount of unpaid reimbursement obligations owing
with respect to letters of credit issued pursuant to the BTCC Credit Agreement,
the aggregate undrawn amount of all outstanding letters of credit issued
pursuant to the BTCC Credit Agreement, the aggregate amount of all Hedging
Obligations owing to any Lender and, so long as the Lenders under the BTCC
Credit Agreement, whether immediately or after the giving of notice or passage
of time, or both, would not have the right to terminate their respective
commitments thereunder, the unutilized amount of such commitments. For purposes
of determining whether at any such time the Lenders have the right (or would
have the right after the giving of notice or passage of time or both) to
terminate their
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<PAGE> 14
respective commitments under the BTCC Credit Agreement, an Officers' Certificate
delivered by the Borrower to the Note Agent at such time certifying that no such
right exists (or would exist after the giving of notice or passage of time or
both) together with a borrowing under the BTCC Credit Agreement within two
Business Days after the delivery of such certificate shall constitute conclusive
evidence, for purposes of this Agreement only, that no such right exists (or
would exist after the giving of notice or passage of time or both) at such time.
"Secured Creditors" means the Bank Creditors and the Interest Rate
Creditors taken collectively.
"Security Documents" means, collectively, the BTCC Credit Agreement
Security Documents, the Senior Note Security Documents and the Shared Collateral
Security Documents.
"Senior Credit Agreement" has the meaning set forth in the Recitals.
"Senior Note Collateral" has the meaning set forth in Section 3.1(b).
"Senior Note Documents" means the Bridge Senior Note Documents and the
Permanent Senior Note Documents.
"Senior Note Obligations" means, collectively, all debts, liabilities
and obligations of the Borrower, whether now or hereafter existing, arising
pursuant to the terms of the Senior Note Documents (including, without
limitation, the Senior Credit Agreement, the Senior Notes, the Senior Note
Security Documents and any other document, agreement or instrument executed or
delivered in connection therewith to further evidence the debts, liabilities and
obligations of the Borrower to the Note Agent and the Senior Noteholders).
"Senior Noteholders" has the meaning set forth in the introductory
paragraph.
"Senior Noteholders' Collateral" means any and all Anchor Property now
or hereafter subject to a Senior Noteholders' Lien, together with any and all
Proceeds and products thereof.
"Senior Noteholders' Lien" means a Lien now or hereafter granted to, or
obtained by, the Senior Noteholders or the Note Agent for the benefit of the
Senior Noteholders, as security for the payment and performance of any Senior
Note Obligations.
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"Senior Notes" means the Bridge Senior Notes and the Permanent Senior
Notes.
"Senior Note Security Agreement" means the security agreement executed
pursuant to the Senior Credit Agreement.
"Senior Note Security Documents" means, collectively, any and all
documents executed in connection with the Senior Credit Agreement or in
furtherance thereof, pursuant to which the Borrower grants to the Senior
Noteholders (whether through the Note Agent or otherwise) a Lien on the Senior
Noteholders' Collateral, and, to the extent permitted pursuant to the terms of
this Agreement, as the same may be amended, modified or supplemented from time
to time to the extent, and only to the extent, that such amendment, modification
or supplement constitutes a Permitted Amendment and Consent.
"Shared Collateral" has the meaning set forth in Section 3.1(c).
"Shared Collateral Account" means the account established by the
Borrower for the benefit of the Shared Collateral Agent pursuant to the terms of
this Agreement and designated as the "Anchor Glass Shared Collateral Account."
"Shared Collateral Agent" has the meaning set forth in Section 5.1.
"Shared Collateral Agent's Lien" means the Liens of the Shared
Collateral Agent in the Shared Collateral granted pursuant to the Shared
Collateral Security Documents.
"Shared Collateral Security Documents" means the documents, instruments
and agreements granting the Liens in the Shared Collateral to the Shared
Collateral Agent and all other documents, instruments, certificates and
agreements executed in connection therewith and, to the extent permitted
pursuant to the terms of this Agreement, as the same may be amended, modified or
supplemented from time to time.
"Stock Collateral" means all of the capital stock of any Person owned
by the Borrower or any Future Subsidiary Guarantor.
"Stroh Payment" shall mean payments of up to $6.0 million in 1997 and
$7.0 million in 1998 to The Stroh Brewing Company pursuant to the Agreement
dated June 17, 1996 between The Stroh Brewing Company, an Arizona corporation,
and Old Anchor as in effect on the date hereof.
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<PAGE> 16
"Sub-Collection Account" means an account established by the Borrower
for the collection of amounts received by the Borrower from any account debtor,
in addition to cash received from any other source, made in respect of BTCC
Credit Agreement Accounts.
"Subsidiary" means any Person of which at least a majority of the
capital stock or other ownership interest having ordinary voting power for the
election of directors or other governing body of said Person is owned by the
Borrower, directly or through one or more Subsidiaries.
"TIA" means The Trust Indenture Act of 1939, as amended, and all rules
and regulations thereunder or issued pursuant thereto.
"Trade Secret Rights" means all trade secrets and proprietary
information necessary to operate the business of the Borrower.
"Trademark" or "Trademarks" means any trademarks and service marks now
held or hereafter acquired by the Borrower (including, without limitation,
pursuant to any Trademark License), which are registered in the United States
Patent and Trademark Office, as well as any unregistered marks used by the
Borrower in the United States and trade dress including logos and/or designs in
connection with which any of these registered or unregistered marks are used.
"Trademark License" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
the Borrower or in which the Borrower now has or hereafter acquires any rights.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York, or, if another jurisdiction is specified in this
Agreement, the Uniform Commercial Code as in effect from time to time in such
jurisdiction.
"United States Government Securities" means securities issued directly
and fully guaranteed or insured by the United States of America or any agent or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof).
2. Consents. Subject to the terms and conditions of this Agreement
(including, without limitation, Section 4.2 hereof):
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<PAGE> 17
(a) The Credit Agent, for itself and on behalf of the Lenders,
consents to (i) the execution and delivery of the Senior Credit
Agreement, any Bridge Senior Notes and each Senior Note Security
Documents; (ii) the incurrence of all Senior Note Obligations; and
(iii) the granting of all Senior Noteholders, Liens; and
(b) The Note Agent, for itself and on behalf of the Senior
Noteholders, consents to (i) the execution and delivery of the BTCC
Credit Agreement and each BTCC Credit Agreement Security Document; (ii)
the incurrence of all BTCC Credit Agreement obligations; and (iii) the
granting of all Lenders' Liens.
3. Priority of Liens; Remedial Actions; Other Agreements.
3.1 Priority of Liens. The Lenders' Liens and the Senior
Noteholders' Liens shall, as between the Lenders and the Senior Noteholders,
have the following priorities:
(a) The Lenders' Liens in all that Anchor Property set forth
and described on Exhibit A hereto (the "Bank Collateral") shall be
first priority Liens in such Property, superior to any Senior
Noteholders' Liens in such Property, if any, shall be subordinate to
the Lenders' Liens in such Property.
(b) The Senior Noteholders' Liens in all that Anchor Property
set forth and described on Exhibit B hereto (the "Senior Note
Collateral") shall be first priority Liens in such Property, superior
to any Lenders' Liens in such Property, and the Lenders' Liens in such
Property, if any, shall be subordinate to the Senior Noteholders' Liens
in such Property.
(c) The Lenders' Liens, the Senior Noteholders' Liens and the
Shared Collateral Agent's Liens in all that Anchor Property set forth
and described on Exhibit C hereto (the "Shared Collateral") shall be
pari passu in priority and subject to the sharing arrangements
contained herein.
The foregoing provisions shall be effective at all times during the term of this
Agreement, notwithstanding: (i) the initiation of any bankruptcy, moratorium,
reorganization or other solvency proceeding with respect to the Borrower; (ii)
the priorities which would otherwise result from the order of creation,
attachment or perfection of any such Lien; (iii) the taking of possession of any
of the Anchor Property by the Credit Agent, the Note Agent, any Lender or any
Senior Noteholder; (iv) the filing of any financing statement or the recording
of any mortgage or other instrument
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<PAGE> 18
in any recording office; (v) the order in which any of the BTCC Credit Agreement
Obligations or the Senior Note Obligations is created; (vi) whether any such
Lien is now perfected, hereafter ceases to be perfected, is avoidable by any
bankruptcy trustee or otherwise is set aside invalidated or lapses; or (vii) any
other matter whatsoever; and shall continue in full force and effect unless and
until this Agreement shall have terminated in accordance with Section 6 hereof.
3.2 Remedial Actions. Unless and until this Agreement shall
have been terminated in accordance with Section 6 hereof, the Credit Agent and
the Note Agent shall have the right, as between themselves, to take or fail to
take Remedial Actions with respect to any Collateral as follows:
(a) The Credit Agent shall have the sole and exclusive right
to take or fail to take any Remedial Action with respect to the Bank
Collateral as provided in the BTCC Credit Agreement Security Documents
or under applicable Law in any manner deemed appropriate by the Credit
Agent or the Lenders in its or their sole discretion (without regard to
any Senior Noteholders' Lien, if any, in such Property), and neither
the Note Agent nor any Senior Noteholder shall take any Remedial Action
with respect to the Bank Collateral without the prior written consent
of the Credit Agent;
(b) The Note Agent shall have the sole and exclusive right to
take or fail to take any Remedial Action with respect to the Senior
Note Collateral as provided in the Senior Note Security Documents or
under applicable Law in any manner deemed appropriate by the Note Agent
or the Senior Noteholders in its or their sole discretion (without
regard to any Lenders' Lien, if any, in such Property), and neither the
Credit Agent nor any Lender shall take any Remedial Action with respect
to the Senior Note Collateral without the prior written consent of the
Note Agent;
(c) The Required Parties shall have the sole and exclusive
right to take or fail to take any Remedial Action with respect to the
Shared Collateral as provided herein, in the Shared Collateral Security
Documents or under applicable Law in any manner deemed appropriate by
the Required Parties in their sole discretion, and neither the Credit
Agent, any Lender, the Note Agent nor any Senior Noteholder shall take
any Remedial Action with respect to the Shared Collateral without the
prior written consent of the Required Parties (or the Credit Agent and
Note Agent on behalf of the Required Parties); and
(d) The Credit Agent shall have the sole and exclusive right
to adjust settlement of, and collect the Proceeds of, any and all
insurance insuring the
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<PAGE> 19
Bank Collateral and the Note Agent shall have the sole and exclusive
right to adjust settlement of and collect the Proceeds of, any and all
insurance insuring the Senior Note Collateral. The Shared Collateral
Agent at the direction of the Required Parties shall have the sole and
exclusive right to adjust settlement of any and all insurance insuring
or otherwise constituting the Shared Collateral. Any such Proceeds
received shall be promptly distributed in accordance with Section 3.3
hereof.
Notwithstanding the foregoing, nothing contained in this Section 3.2 shall
prohibit the Credit Agent, the Lenders, the Note Agent, Senior Noteholders or
the Shared Collateral Agent from filing a proof of claim in any case involving
the Borrower, as debtor, under Title 11 of the United States Code, as amended,
nor from intervening or participating in any other judicial proceeding to the
extent necessary to establish or preserve its interests, subject in each case to
the provisions of this Agreement.
3.3 Priority on Distribution of Proceeds of Collateral. In the
event of:
(a) any distribution of any Anchor Property upon the
bankruptcy, arrangement, receivership, assignment for the benefit of
creditors or any other action or proceeding involving the readjustment
of the obligations and indebtedness of the Borrower, or the application
of any Anchor Property to the payment thereof;
(b) any distribution of the Anchor Property upon the
liquidation or dissolution of the Borrower, or the winding up of the
assets or business of the Borrower;
(c) any realization by any of the Credit Agent, the Note
Agent, the Lenders, the Senior Noteholders or the Shared Collateral
Agent with respect to the Lenders' Liens, the Senior Noteholders' Liens
or the Shared Collateral Agent's Lien, respectively, whether through a
Remedial Action or otherwise; or
(d) any Disposition of any Anchor Property, to the extent that
any part of the proceeds of such Disposition are required to be applied
to any of the BTCC Credit Agreement Obligations or the Senior Note
Obligations or held by the Credit Agent, the Note Agent or the Shared
Collateral Agent in accordance with the provisions of the Senior Note
Documents, the BTCC Credit Agreement or any of the Security Documents,
or the provisions of this Agreement;
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<PAGE> 20
then, in any such event, as between the Lenders and the Senior Noteholders (i)
all of the Bank Collateral and any Proceeds thereof so distributed, applied or
realized upon shall be distributed or paid to (or retained by) the Credit Agent
for application to the BTCC Credit Agreement Obligations to the extent of the
Lenders' Liens therein, and, after the payment in full of all BTCC Credit
Agreement Obligations then due and owing, the remaining amount of such Proceeds
shall be distributed or paid to (or retained by) the Note Agent or any Senior
Noteholders for application to the Senior Note Obligations, (ii) all of the
Senior Note Collateral and any Proceeds thereof distributed, applied or realized
upon shall be distributed or paid to (or retained by) the Note Agent for
application to the Senior Note Obligations to the extent of the Senior
Noteholders' Liens therein and, after the payment in full of all Senior Note
Obligations then due and owing, the remaining amount of such Proceeds shall be
distributed or paid to (or retained by) the Credit Agent or any Lender for
application to the BTCC Credit Agreement Obligations, and (iii) all of the
Shared Collateral and any Proceeds thereof so distributed, applied or realized
upon shall be distributed, first, to the Shared Collateral Agent to pay the
Shared Collateral Agent's fees, expenses and indemnities provided for in this
Agreement and in the Shared Collateral Security Documents, in each case, to the
extent related to its duties, obligations and liabilities as Shared Collateral
Agent or otherwise related to the Shared Collateral and, second, to the Credit
Agent and the Note Agent for application to the BTCC Credit Agreement
Obligations and the Senior Note Obligations, respectively. Any amounts described
in clause (iii) above available to be distributed to the Credit Agent and the
Note Agent shall be distributed to each based upon the Pro Rata Shares of the
Lenders and the Senior Noteholders at the time of the commencement of any
Remedial Action giving rise to such proceeds until the respective BTCC Credit
Agreement Obligations and the Senior Note Obligations are paid in full, or if
not arising from a Remedial Action the Pro Rata Shares of the Lenders and the
Senior Noteholders at the time of such distribution until the respective BTCC
Credit Agreement Obligations and the Senior Note Obligations are paid in full.
Any amounts paid to the Credit Agent and the Note Agent shall be allocated to
the Lenders and the Senior Noteholders, respectively, in accordance with the
terms of the BTCC Credit Agreement and the Senior Note Documents, respectively.
The Note Agent and the Credit Agent agree that in the case of any such
distribution, realization or application of any proceeds from the sale of other
Disposition of any Anchor Property which does not constitute Bank Collateral,
Senior Note Collateral or Shared Collateral, such proceeds shall be distributed
to the Credit Agent and the Note Agent for application to the BTCC Credit
Agreement Obligations and the Senior Note Obligations, respectively, as if such
proceeds were Shared Collateral and distributed pursuant to the provisions of
this Section 3.3.
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<PAGE> 21
3.4 Agency for Perfection; Parties to Hold Proceeds in Trust.
The Note Agent and the Credit Agent hereby appoint each other as agent for the
purposes of perfecting their respective Liens in the Collateral described
hereunder. In the event that:
(a) the Credit Agent, any Lender or the Shared Collateral
Agent obtains possession of any of the Senior Note Collateral or
receives any Proceeds from any Remedial Action with respect to Senior
Note Collateral or any Disposition of Senior Note Collateral described
in Section 3.3 hereof or as a result of its Lien on any Senior Note
Collateral at any time prior to payment in full of all Senior Note
Obligations;
(b) the Note Agent, any Senior Noteholder or the Shared
Collateral Agent obtains possession of any of the Credit Agreement
Collateral or receives any Proceeds from any Remedial Action with
respect to Credit Agreement Collateral or Disposition of Credit
Agreement Collateral described in Section 3.3 hereof or as a result of
its Lien on any Credit Agreement Collateral at any time prior to
payment in full of all Credit Agreement Obligations; or
(c) the Credit Agent, any Lender, the Note Agent or any Senior
Noteholder receives any Proceeds from any Remedial Action with respect
to the Shared Collateral, or any Disposition of the Shared Collateral
at any time;
then, in any such event, the party receiving such Proceeds shall (unless
otherwise provided by Law) hold the same in trust for the party entitled to
receive the same and promptly notify and pay over the same to such party for
application to the Credit Agreement Obligations (in the case of the Credit
Agent) and to the Senior Note Obligations (in the case of the Note Agent) or for
distribution to the Credit Agent and the Note Agent pursuant to Section 3.3 (in
the case of the Shared Collateral Agent).
3.5 Dispositions of Collateral; Consents. In the event of a
Disposition by the Borrower of all or any portion of the Anchor Property,
either:
(a) on a basis permitted by or consented to under the terms of
the Credit Agreement and the Senior Note Documents, or
(b) at the request of or pursuant to the action of the Credit
Agent, in the case of Bank Collateral, or of the Note Agent, in the
case of Senior Note Collateral, following the occurrence and during the
continuance of an event of default under the BTCC Credit Agreement or
the Senior Note Documents, as the case may be, whether as a result of
or in lieu of a Remedial Action;
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<PAGE> 22
then, in either such event, provided that the net Proceeds of such Disposition
are (i) in the case of Bank Collateral, applied in accordance with the
requirements, if any set forth in the BTCC Credit Agreement and the Senior Note
Documents and (ii) in the case of Senior Note Collateral, applied to reduce the
Senior Note Obligations, held by the Note Agent (in the Collateral Account or
otherwise) or otherwise applied in accordance with the requirements set forth in
the Senior Note Documents, each of the Credit Agent and the Lenders in the case
of Senior Note Collateral and each of the Note Agent and the Senior Noteholders
in the case of Bank Collateral shall be deemed to have consented to such
Disposition (notwithstanding any provision of the Security Documents, the BTCC
Credit Agreement or the Senior Note Documents to the contrary) and no further
consent thereto on the part of any thereof shall be required and the subordinate
Lenders' Lien, if any, in such Senior Note Collateral or the subordinate Senior
Noteholders' Lien, if any, in such Bank Collateral shall he automatically
released upon such Disposition.
3.6 Payment Invalidated. In the event that any of the BTCC
Credit Agreement Obligations or Senior Note Obligations shall be paid in full
and subsequently, for whatever reason (including but not limited to, an order or
judgment for disgorgement of a preference under Title 11 of the United States
Code, or any similar Law, or the settlement of any claim in respect thereof),
formerly paid or satisfied BTCC Credit Agreement Obligations or Senior Note
Obligations become unpaid or unsatisfied, the terms and conditions of this
Agreement shall be reinstated, notwithstanding any prior termination of this
Agreement pursuant to Section 6, and all provisions of this Agreement shall
again be operative until all such obligations are again paid in full.
3.7 Notice of Acceleration, Etc. Each of the Credit Agent and
the Note Agent agrees to deliver to the other:
(a) In the case of the Credit Agent, (i) prompt written notice
of the acceleration of the BTCC Credit Agreement Obligations pursuant
to the BTCC Credit Agreement (such notice to be provided in the same
manner and substantially contemporaneously with any notice provided to
the Borrower), and (ii) prompt written notice of any Remedial Action
with respect to Bank Collateral; and
(b) In the case of the Note Agent, (i) prompt written notice
of the acceleration of the Senior Note Obligations pursuant to the
Senior Note Documents (such notice to be provided in the same manner
and substantially contemporaneously with any notice provided to the
Borrower), and (ii) prompt written notice of any Remedial Action with
respect to Senior Note Collateral.
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3.8 Other Collateral. Each of the Credit Agent, for itself and
on behalf of the Lenders, and the Note Agent, for itself and on behalf of the
Senior Noteholders, agrees that:
(a) In the event any Lien on Anchor Property is granted to or
perfected by either party, the party to which such Lien is granted or
by which it is perfected shall cooperate in all reasonable respects
with the other to permit the other concurrently to be granted or to
perfect a Lien in such Anchor Property to the extent that the other is
then entitled to a Lien on such Anchor Property under the terms of the
Senior Note Documents (including without limitation, the Senior
Noteholders' Security Documents), in the case of the Note Agent, or
under the terms of the BTCC Credit Agreement and the BTCC Credit
Agreement Security Documents, in the case of the Credit Agent, in each
case as then in effect, and subject to the terms and conditions of this
Agreement (including, without limitation, that the respective Liens of
the Credit Agent and the Note Agent shall have the priorities set forth
in this Agreement); and
(b) In the event that either the Credit Agent or the Note
Agent takes possession of any Anchor Property subject to a Lenders'
Lien or a Senior Noteholders' Lien, the Credit Agent, if such Property
constitutes Senior Note Collateral and is in the possession of the Note
Agent, or the Note Agent, if such Property constitutes Bank Collateral
and is in the possession of the Credit Agent, may give to the other
party, as bailee of such Property, written notice of the notifying
party's Lien on such Property, in order to perfect its Lien on such
Property pursuant to Sections 9-304 and 9-305 of the UCC, as in effect
on the date hereof of the applicable jurisdiction, and the other party
agrees to acknowledge such notification in accordance with the terms
and conditions of a bailee letter substantially in the form of Exhibit
D-1 or D-2 hereto, as appropriate.
3.9 Contesting Liens. Each of the Credit Agent, for itself and
on behalf of the Lenders, and the Note Agent, for itself and on behalf of the
Senior Noteholders, agrees that it shall not contest the validity, perfection,
priority or enforceability of any Lenders' Lien in Lenders' Collateral, in the
case of the Note Agent and the Senior Noteholders, or any Senior Noteholders'
Lien in Senior Noteholders' Collateral, in the case of the Credit Agent and the
Lenders, so long as such Lien is permitted by this Agreement.
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3.10 Further Assurances. From time to time during the term
hereof:
(a) Each of the Credit Agent and the Note Agent, at the
reasonable request of the other, shall execute and deliver to the other
such notices of the subordination and other provisions of this
Agreement, in recordable form, and shall execute and deliver such other
documents and instruments and take such other actions, as shall
reasonably be necessary to carry out the intentions or to facilitate
the performance of this Agreement including, without limitation, in
connection with any Remedial Action of which such Person has received
notice; and
(b) If, in connection with any Remedial Action permitted by
Section 3.2 or any Disposition of any Anchor Property contemplated by
Section 3.5, it becomes necessary or advisable for the Credit Agent,
the Note Agent or the Borrower to obtain a release or discharge of any
subordinate Lenders' Lien or any subordinate Senior Noteholders' Lien
in any such Property in order to convey title thereto unencumbered by
such Lien, then so long as such Remedial Action or Disposition, and the
application of the Proceeds derived therefrom, have been or will
contemporaneously be accomplished in conformity with this Agreement,
the Credit Agent or the Note Agent (to the extent permitted by the
TIA), as appropriate, shall, upon the request of the other (or of the
Borrower), execute such instruments of release or discharge of such
Liens, in recordable form, as may be reasonable and appropriate in the
circumstances; provided, however, that any such release or discharge
may, to the extent required under the BTCC Credit Agreement, the BTCC
Credit Agreement Security Documents or the Senior Note Documents, be
expressly conditioned upon the requirement that any net Proceeds of
such Remedial Action or Disposition in excess of the amount necessary
to satisfy the BTCC Credit Agreement Obligations or Senior Note
Obligations, as the case may be, shall be paid over to the other for
application to the BTCC Credit Agreement Obligations (in the case of
the Credit Agent) and to the Senior Note Obligations (in the case of
the Note Agent) or as otherwise provided by Law.
3.11 Access to Collateral. (a) Each of the Credit Agent and
the Note Agent agrees to allow the other and its respective agents and employees
reasonable access to any Anchor Property in its possession or under its control,
including, without limitation, any Anchor Real Property and any customer lists,
software, data bases, business records data and other books and records of the
Borrower pertaining to any of the Collateral, for the purposes of any Remedial
Action then permitted by this Agreement and the relevant Security Documents. In
the event such utilization of the Senior Note Collateral is solely for the
purpose of removing and realizing on Bank
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<PAGE> 25
Collateral, the Lenders shall indemnify the Senior Noteholders from all damage
to or deterioration of the Senior Note Collateral during such utilization,
normal wear and tear excepted.
(b) In the event such utilization of the Senior Note
Collateral is for the purpose of processing and converting raw materials
(including work-in-process) into finished goods, the Lenders shall, in addition
to the indemnity referenced in paragraph (a) above, pay to the Senior
Noteholders the incremental costs (i.e. those costs which are directly
attributable to the Credit Agent's utilization of such Senior Note Collateral
over and above any such costs the Senior Noteholders would have incurred whether
or not the Credit Agent had so utilized the Senior Note Collateral) incurred by
the Senior Noteholders on account of utility rates and similar charges and any
increased insurance costs which the Senior Noteholders are required to pay as a
result of such utilization.
(c) If, and only if, the Credit Agent's utilization of the
Senior Note Collateral is materially disruptive to the operations of the plant
and facility, the Credit Agent shall pay to the Senior Noteholders fair market
value compensation on a weekly basis in respect of its use of the plant and
facility proportionate to the amount of disruption to the operations of the
plant and facility provided that if in the event the Credit Agent and the Senior
Noteholders are unable to agree as to the amount of such fair market value
compensation they shall submit such dispute to arbitration.
(d) Nothing in this Section 3.11 shall prevent the Note Agent
or the Credit Agent from entering into a contract of sale, transfer or other
disposition of, or otherwise foreclosing on, any of the Senior Note Collateral
or Bank Collateral so long as such contract provides, or such foreclosure is
subject to providing, the Credit Agent or the Note Agent, as the case may be,
with the same access to such Collateral as provided by this Section 3.11.
(e) The Note Agent agrees that it shall not take any legal
action or commence any legal proceeding to prevent the Credit Agent's use of the
Senior Note Collateral as provided in this Section 3.11 or the Credit Agent's
non-exclusive use of any Patents, Patent Licenses or General Intangibles
necessary or desirable to convert raw materials constituting Bank Collateral
into inventory, to the extent that the Borrower has granted the Credit Agent the
right to use any such property for such purpose.
3.12 Trademark Licenses. (a) The Note Agent consents to the
granting by the Borrower to the Credit Agent of a nonexclusive license to use
each Trademark of the Borrower to enable them to manufacture and sell the Bank
Collateral. Such license and such right shall be world-wide and royalty free.
The Credit Agent
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covenants and agrees that it will use reasonable efforts after the acceleration
of the BTCC Credit Agreement Obligations to obtain possession of the Bank
Collateral and to promptly terminate such license with respect to any Trademark
by notice to the Note Agent at the time any such Property (in the judgment of
the Credit Agent) is no longer necessary or desirable in connection with the
manufacture or sale of the Bank Collateral. In addition to the foregoing, the
Note Agent agrees that, notwithstanding anything to the contrary contained in
Section 3.1, the Senior Noteholders' Lien in all such Trademarks shall be
subject to the Credit Agent's interest therein by virtue of such license or
sublicense (that is, foreclosure on such Lien will not terminate such license or
sublicense). The right of the Note Agent to take Remedial Actions with respect
to such Trademarks shall not be affected by the immediately preceding sentence
or any provision set forth in Section 3.12(d), but any conveyance by the Note
Agent of such Trademarks and Trademark Licenses or any interest therein shall be
subject to the aforesaid limited licenses granted in favor of the Credit Agent
or the prior security interest of the Credit Agent to the extent of such
security interest set forth in Section 3.12(d).
(b) The Credit Agent acknowledges that, to the extent that the
Note Agent shall have the right to use or license the Trademarks, the Note Agent
shall have the right to grant nonexclusive licenses and sublicenses in the
Trademarks and the Trademark Licenses to Persons other than the Credit Agent
notwithstanding the grant of the license to the Credit Agent contemplated by
Section 3.12(a).
(c) The Credit Agent shall not have any right to assign,
convey, transfer or grant licenses and sublicenses in the Trademarks and the
Trademark Licenses to any other Person, other than, subject to the limitations
of this Section 3.12, in connection with the uses permitted by Section 3.12(a)
above to any Person acquiring Inventory from the Credit Agent in connection with
the exercise by the Credit Agent of its rights as a secured creditor of the
Borrower with respect to such Inventory, and any purported assignment,
conveyance, transfer or grant (except as expressly permitted herein) shall be
void.
(d) Notwithstanding anything to the contrary set forth in this
Agreement, in the event that the trademark license granted to the Credit Agent
referred to in Section 3.12(a) above, does not for any reason (including,
without limitation, by reason of the occurrence of any bankruptcy, insolvency or
other similar event with respect to the Borrower) confer on the Credit Agent the
rights and benefits contemplated thereby, then the security interest of the
Credit Agent in the Trademarks shall be pari passu with the security interest of
the Note Agent, solely to the extent necessary to confer on the Credit Agent the
use of the Trademarks as contemplated by such trademark license. Notwithstanding
anything in the immediately preceding sentence to the contrary, in the
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case of any Disposition of any of the Trademarks, any Proceeds of such
Disposition shall constitute Senior Note Collateral and otherwise be distributed
and applied as Senior Note Collateral in accordance with the terms of this
Agreement. The rights of the Note Agent to take Remedial Action with respect to
such Trademarks shall not be affected by such security interest, but any
conveyance by the Note Agent of such Trademarks or any interest therein shall be
subject to the Credit Agent's security interest, but only to the extent of such
security interest as provided in this Section 3.12(d).
4. Reliance, Waivers, Etc.
4.1 Creation of Future Obligations. (a) All of the BTCC Credit
Agreement Obligations shall be deemed to have been funded by the Lenders and
incurred by the Borrower in reliance upon this Agreement, and the Note Agent and
each Senior Noteholder expressly waive notice to the Note Agent or any Senior
Noteholder of the acceptance of the subordination and other agreements set forth
herein, notice of reliance on such subordination and other agreements and notice
of the creation of any of the BTCC Credit Agreement Obligations after the date
hereof, and agree that the Lenders shall be entitled to rely upon the
subordination and other agreements set forth herein at all times in creating the
BTCC Credit Agreement obligations.
(b) All of the Senior Note Obligations shall he deemed to have
been funded by the Senior Noteholders and incurred by the Borrower in reliance
upon this Agreement, and the Credit Agent and each Lender expressly waive notice
to the Credit Agent or any Lender of the acceptance of the subordination and
other agreements set forth herein, notice of reliance on such subordination and
other agreements and notice of the creation of any of the Senior Note
Obligations after the date hereof and agree that the Senior Noteholders shall be
entitled to rely upon the subordination and other agreements set forth herein at
all times in creating the Senior Note Obligations.
4.2 Right to Amend, Etc. As between the Lenders and the Senior
Noteholders:
(a) The Credit Agent and the Lenders may at any time and from
time to time, in their sole discretion, and without any obligation to
give any notice or receive any consent from the Note Agent or any
Senior Noteholder, change the manner, place or terms of payment, or
change or extend the time of payment of, or renew, alter, refinance,
increase or add to the BTCC Credit Agreement Obligations, or obtain,
release, or dispose of any Collateral therefor, or amend or supplement
in any manner the BTCC Credit Agreement, the BTCC Credit Agreement
Security Documents or any other agreements or instruments
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evidencing, securing or relating to the BTCC Credit Agreement
Obligations, and this Agreement shall continue in full force and effect
with respect to all such BTCC Credit Agreement Obligations; provided,
however, that the Credit Agent shall comply with all applicable
provisions of this Agreement in respect of any of the foregoing.
(b) The Note Agent and the Senior Noteholders may at any time
and from time to time, in their sole discretion, and without any
obligation to give any notice or receive any consent from the Credit
Agent or any Lender, change the manner, place or terms of payment, or
change or extend the time of payment of, or renew, alter, refinance,
increase or add to the Senior Note Obligations, or obtain, release, or
dispose of any Collateral therefor, or amend or supplement in any
manner the Senior Credit Agreement, the Senior Note Security Documents
or any other agreements or instruments evidencing, securing or relating
to the Senior Note Obligations, and this Agreement shall continue in
full force and effect with respect to all such Senior Note Obligations;
provided, however, that the Note Agent shall comply with all applicable
provisions of this Agreement in respect of any of the foregoing.
4.3 Responsibility For Credit Decisions; No Duty to Inform
Other Parties. (a) The Note Agent has, independently and without reliance on the
Credit Agent, any Lender or the directors, officers, agents, employees or
attorneys of any thereof, and instead in reliance upon information supplied to
it on behalf of the Borrower and upon such other information as it has deemed
appropriate (including, without limitation, all such information as it deemed
advisable with respect to the Borrower's compliance or non-compliance with any
environmental Laws), made its own independent decision to enter into the Senior
Note Documents and to serve as Note Agent thereunder and under the Senior Note
Security Documents; and the Note Agent shall, for itself and on behalf of the
Senior Noteholders, independently and without reliance upon the Credit Agent,
any Lender or the directors, officers, agents, employees or attorneys of any
thereof, continue to make its own independent analysis and decisions in acting
or not acting under the Senior Note Documents.
(b) The Credit Agent has, independently and without reliance
on the Note Agent, any Senior Noteholder or the directors, officers, agents,
employees or attorneys of any thereof, and instead in reliance upon information
supplied to it on behalf of the Borrower and upon such other information as it
has deemed appropriate (including, without limitation, all such information as
it deemed advisable with respect to the Borrower's compliance or non-compliance
with any environmental Laws), made its own independent decision to enter into
the BTCC Credit Agreement and to serve as the Credit Agent thereunder and under
the BTCC Credit Agreement Security
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Documents and the Credit Agent shall, for itself and on behalf of the Lenders,
independently and without reliance upon the Note Agent, any Senior Noteholder or
the directors, officers, agents, employees or attorneys of any thereof, continue
to make its own independent analysis and decisions in acting or not acting under
the BTCC Credit Agreement and the BTCC Credit Agreement Security Documents.
(c) Neither the Credit Agent nor any Lender shall have any
present or future duty or responsibility to the Note Agent or any Senior
Noteholder to advise it of information known to any of them regarding the
financial condition of the Borrower or of any circumstances bearing upon the
risk of nonpayment of the BTCC Credit Agreement Obligations or the Senior Note
Obligations and the Note Agent and each Senior Noteholder acknowledges that
neither the Credit Agent nor any Lender has made any representations or
warranties to the Note Agent or any Senior Noteholder with respect to the due
execution, delivery, validity or enforceability of the BTCC Credit Agreement or
the BTCC Credit Agreement Security Documents, the validity or perfection of the
Lenders' Liens, the validity or enforceability of the BTCC Credit Agreement
Obligations, the existence, condition or value of any of the Lenders' Collateral
or as to any other matter whatsoever. If, notwithstanding the foregoing, any
such information is conveyed by the Credit Agent or any Lender to the Note Agent
or any Senior Noteholder, neither the Credit Agent nor any Lender shall have any
responsibility to the Note Agent or any Senior Noteholder for the accuracy or
completeness of any such information, nor any continuing duty or responsibility
to advise the Note Agent or any Senior Noteholder of any inaccuracy in such
information that is subsequently discovered, or of any updated or subsequent
information, whether or not of like kind.
(d) Neither the Note Agent nor any Senior Noteholder shall
have any present or future duty or responsibility to the Credit Agent or any
Lender to advise it of information known to any of them regarding the financial
condition of the Borrower or of any circumstances bearing upon the risk of
nonpayment of the Senior Note Obligations or the BTCC Credit Agreement
Obligations and the Credit Agent on behalf of itself and each Lender
acknowledges that neither the Note Agent nor any Senior Noteholder has made any
representations or warranties to the Credit Agent or any Lender with respect to
the due execution, delivery, validity or enforceability of the Senior Note
Documents, the validity or perfection of the Senior Noteholders' Liens, the
validity or enforceability of the Senior Note Obligations, the existence,
condition or value of any of the Senior Noteholders' Collateral or as to any
other matter whatsoever. If, notwithstanding the foregoing, any such information
is conveyed by the Note Agent or any Senior Noteholder to the Credit Agent or
any Lender, neither the Note Agent nor any Senior Noteholder shall have any
responsibility to the Credit Agent or any Lender for the accuracy or
completeness of any such information, nor any continuing
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duty or responsibility to advise the Credit Agent or any Lender of any
inaccuracy in such information that,is subsequently discovered, or of any
updated or subsequent information, whether or not of like kind.
4.4 Order of Enforcement of Remedial Actions. Subject to all
of the terms and conditions of this Agreement, including, without limitation,
Section 3.3 hereof:
(a) The Credit Agent and the Lenders shall have the right at
any and all times to determine the order in which (i) any Remedial
Action or other recourse is sought against the Borrower or any other
obligor with respect to the BTCC Credit Agreement Obligations, and (ii)
any or all of the Lenders' Liens shall be enforced; and the Note Agent,
on behalf of itself and each Senior Noteholder, hereby waives any and
all rights to require that the Credit Agent pursue or exhaust any
rights or remedies with respect to the Borrower or any Anchor Property
prior to exercising its rights and remedies with respect to the Bank
Collateral or in any other manner to require the marshalling of assets
or security in connection with the exercise by the Credit Agent or any
Lender of any Remedial Action with respect to the BTCC Credit Agreement
Obligations and the Bank Collateral.
(b) The Note Agent and the Senior Noteholders shall have the
right at any and all times to determine the order in which (i) any
Remedial Action or other recourse is sought against the Borrower or any
other obligor with respect to the Senior Note Obligations, and (ii) any
or all of the Senior Noteholders' Liens shall be enforced; and the
Credit Agent, on behalf of itself and the Lenders, hereby waives any
and all rights to require that the Note Agent pursue or exhaust any
rights or remedies with respect to the Borrower or any Anchor Property
prior to exercising its rights and remedies with respect to Senior Note
Collateral or in any other manner to require the marshalling of assets
or security in connection with the exercise by the Note Agent or any
Senior Noteholder of any Remedial Action with respect to Senior Note
Obligations and Senior Note Collateral.
4.5 Waiver of Liability For Actions Taken With Respect To
Obligations and Collateral. (a) Except as provided in Section 3.11(b), neither
the Credit Agent nor any Lender shall have any liability to the Note Agent or
any Senior Noteholder for, and the Note Agent, on behalf of itself and each
Senior Noteholder, hereby waives to the extent permitted by applicable Law any
claim, right, action or cause of action which it may now or hereafter have
against the Credit Agent or any Lender (including, without limitation, any and
all claims, rights, actions or causes of action that the Note
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Agent or any Senior Noteholder may otherwise have against the Agent or any
Lender under Sections 9-207, 9-504 and 9-507 of the UCC) arising out of, any and
all actions which any Lender or the Credit Agent, in good faith, takes or omits
to take with respect to the BTCC Credit Agreement Obligations, any obligor with
respect to the BTCC Credit Agreement Obligations or any Bank Collateral,
including, without limitation, actions with respect to: the creation, perfection
or continuation of Liens with respect to any Bank Collateral; any Remedial
Action or Disposition of any Bank Collateral; the release of any Bank
Collateral; the custody, valuation, protection, preservation, use or
depreciation of any Bank Collateral; the realizing upon or failure to realize
upon any Bank Collateral; or the collection of the BTCC Credit Agreement
Obligations. To the extent that any of the foregoing waivers is not permitted by
applicable Law, the Note Agent agrees that the applicable standard by which any
non-waivable rights, duties or claims are to be measured shall be that neither
the Credit Agent nor any Lender shall have any liability or responsibility to
the Note Agent or to any Senior Noteholders for any actions or omissions other
than actions or omissions constituting gross negligence or wilful misconduct.
(b) Neither the Note Agent nor any Senior Noteholder shall
have any liability to the Credit Agent or the Lenders for, and the Credit Agent,
on behalf of itself and each Lender, hereby waives any claim, right, action or
cause of action which it may now or hereafter have against the Note Agent or any
Senior Noteholder (including, without limitation, any and all claims, rights,
actions or causes of action that the Credit Agent or any Lender may otherwise
have against the Note Agent or any Senior Noteholder under Sections 9-207, 9-504
and 9-507 of the UCC) arising out of, any and all actions which the Note Agent
or any Senior Noteholder, in good faith, takes or omits to take with respect to
the Senior Note Obligations, any obligor with respect to the Senior Note
Obligations or any Senior Note Collateral, including, without limitation,
actions with respect to: the creation, perfection or continuation of Liens with
respect to any Senior Note Collateral; any Remedial Action or Disposition of any
Senior Note Collateral; the release of any Senior Note Collateral; the custody,
valuation, protection, preservation, use or depreciation of any Senior Note
Collateral; the realizing upon or failure to realize upon any Senior Note
Collateral; or the collection of the Senior Note Obligations. To the extent that
any of the foregoing waivers is not permitted by applicable Law, the Credit
Agent agrees that the applicable standard by which any non-waivable rights,
duties or claims are to be measured shall be that neither the Note Agent nor any
Senior Noteholder shall have any liability or responsibility to the Credit Agent
or to any Lender for any actions or omissions other than actions or omissions
constituting gross negligence or wilful misconduct.
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5. Agency.
5.1 Appointment of Shared Collateral Agent; Powers and
Limitations. (a) Subject to the resignation and removal provisions of Section
5.5 hereof, the Credit Agent and the Note Agent hereby irrevocably designate,
appoint and authorize the Credit Agent as Shared Collateral Agent hereunder (the
Credit Agent in such capacity being hereinafter referred to as the "Shared
Collateral Agent") to take such action, including, without limitation, the
exercise of rights and the pursuit of remedies pursuant to this Agreement and
the Shared Collateral Security Documents, as agent on their behalf and to
exercise such other powers under this Agreement and the Shared Collateral
Security Documents as are expressly delegated to the Shared Collateral Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto.
(b) Nothing herein or in the Shared Collateral Security
Documents shall impose or be construed to impose on the Shared Collateral Agent
any duties or obligations, other than those expressly provided for herein or
therein or any fiduciary relationship with the Credit Agent or the Note Agent
and no implied covenants, functions or responsibilities shall be read into the
Agreement or the Shared Collateral Security Documents.
5.2 Instructions, Voting and Meetings. (a) Notwithstanding any
provisions of this Agreement, the Shared Collateral Agent is authorized, but not
obligated, (i) to take any action reasonably required to perfect or continue the
perfection of the Liens on the Shared Collateral for the benefit of the Lenders
and the Senior Noteholders and (ii) when instructions from the Required Parties
have been requested by the Shared Collateral Agent but have not yet been
received, to take any action which the Shared Collateral Agent, in good faith,
believes to be reasonably required to promote and protect the interests of the
Lenders and the Senior Noteholders in the Shared Collateral; provided that once
instructions have been received, the actions of the Shared Collateral Agent
shall be governed thereby and the Shared Collateral Agent shall not take any
further action which would be contrary thereto.
(b) As to any matters relating to the Shared Collateral or the
Shared Collateral Security Documents not otherwise expressly delegated to the
Shared Collateral Agent, the Note Agent or the Credit Agent by the BTCC Credit
Agreement, the Security Documents or the Senior Note Documents, the Shared
Collateral Agent shall act or refrain from acting on the instructions of the
Required Parties. Without limiting the generality of the foregoing, in the event
the Shared Collateral Agent shall act or refrain from acting upon the direction
of Lenders constituting the Required Parties, such action or inaction, as the
case may be, shall not constitute a breach of any
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fiduciary obligation which the Shared Collateral Agent might owe to the Note
Agent or the Senior Noteholders even if the Note Agent or the Senior Noteholders
are damaged by such action or inaction.
(c) If, with respect to a proposed action to be taken by it,
the Shared Collateral Agent shall determine in good faith that the provisions of
this Agreement or any Shared Collateral Security Document relating to the
functions or responsibilities or discretionary powers of the Shared Collateral
Agent are or may be ambiguous or inconsistent, the Shared Collateral Agent shall
notify the Credit Agent and the Note Agent, identifying the proposed action and
the provisions that it considers are or may be ambiguous or inconsistent, and
may decline either to perform such function or responsibility or to exercise
such discretionary power unless it has received the written confirmation of the
Required Parties that the Required Parties concur in the circumstances that the
action proposed to be taken by the Shared Collateral Agent is consistent with
the terms of this Agreement or such Shared Collateral Security Document or is
otherwise appropriate. The Shared Collateral Agent shall be fully protected in
acting or refraining from acting upon the confirmation of the Required Parties
in this respect, and such confirmation shall be binding upon the Shared
Collateral Agent, the Lenders, the Note Agent and the Senior Noteholders.
(d) Notwithstanding any provisions herein, the Shared
Collateral Agent shall not be required to take any action that exposes or, in
the good faith judgment of the Shared Collateral Agent may expose, the Shared
Collateral Agent or its officers, directors, agents or employees to personal
liability unless the Shared Collateral Agent shall be adequately indemnified as
provided herein or that is, or in the good faith judgment of the Shared
Collateral Agent may be, contrary to the Shared Collateral Security Documents or
applicable law.
(e) Except for action expressly required of the Shared
Collateral Agent hereunder the Shared Collateral Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall be
indemnified (in addition to the indemnity provided by Section 5.4 hereof) to its
satisfaction by the Credit Agent and the Note Agent in advance against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
(f) Notwithstanding anything to the contrary in this Agreement
or the Shared Collateral Security Documents, the Shared Collateral Agent shall
not be required to exercise any rights or remedies under this Agreement or any
of the Shared Collateral Security Documents or give any consent under this
Agreement or any of the Shared Collateral Security Documents or enter into any
agreement amending, modifying,
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supplementing or waiving any provision of this Agreement or any Shared
Collateral Security Document unless it shall have been directed to do so by the
Required Parties.
5.3 Disclaimer; Good Faith Reliance on Advice and Information.
(a) Neither the Shared Collateral Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with the Shared Collateral Security
Documents, except for its or their own gross negligence, willful misconduct or
knowing violations of law. Without limiting the generality of the foregoing, the
Shared Collateral Agent (i) may consult with legal counsel, independent public
accountants, appraisers and other experts selected by the Shared Collateral
Agent and shall not be liable for any action taken or omitted to be taken in
good faith in accordance with the advice of such counsel, accountants,
appraisers or experts, and (ii) shall incur no liability under or in respect of
the Shared Collateral Security Documents by acting upon any representation or
warranty of the Borrower made in connection therewith or by relying upon any
written information supplied by any predecessor Shared Collateral Agent(s) or by
acting upon any notice, instruction, consent, certificate or other instrument,
writing or communication (which may be by telegram, cable, telex or telephone)
in good faith believed by it to be genuine and to have been signed, sent or made
by the proper party or parties.
(b) For purposes of this Section 5.3, "known" shall mean that
information has come to the attention of an officer of a party with
responsibility for the applicable transaction under this Agreement giving such
party actual knowledge of the existence or non-existence of the fact in
question.
(c) The Shared Collateral Agent shall not be responsible to
any Person for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Shared Collateral Security Documents,
any Shared Collateral provided thereunder, or any other instrument or document
furnished pursuant thereto; (ii) the priority of any Lien granted under the
Shared Collateral Security Documents; (iii) any omissions or errors on the part
of government officials, failure of mail deliveries, losses of documents by
Federal Express or other courier services, mistakes by title companies or lien
search companies, or other similar events; (iv) any recital, statement,
representation or warranty made by the Borrower, or any affiliate of the
Borrower or any officer, employee or agent of any such party in the Shared
Collateral Security Documents or any certificate or other document referred to
or provided for therein; (v) any failure by the Borrower, or any affiliate of
the Borrower to perform its obligations under the Shared Collateral Security
Documents of any document or instrument related thereto; or (vi) any conflict
among the Shared Collateral Security Documents or any other instrument or
document to which the Borrower or any Lender or Senior
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Noteholder is a party. The Shared Collateral Agent shall not be under any
obligation to the Credit Agent, the Note Agent, the Lenders or the Senior
Noteholders to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or the
Shared Collateral Security Documents.
5.4 Indemnity; Expenses. (a) Each of the Credit Agent and the
Note Agent agrees to indemnify and hold harmless the Shared Collateral Agent and
its officers, directors, agents and employees (each an "Indemnitee"), ratably
according to the Pro Rata Share(s) held by the Lenders and the Senior
Noteholders, respectively, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, claims or disbursements ("Claims") of any kind or nature whatsoever
that may be imposed on, incurred by, or asserted against the Indemnitee in any
way relating directly or indirectly to or arising directly or indirectly
(whether before or after termination of this Agreement) out of (i) this
Agreement or any of the Shared Collateral Security Documents (including without
limitation the negotiation, execution, and enforcement thereof), or any
transaction contemplated thereby, (ii) any action taken or omitted by the
Indemnitee pursuant to this Agreement or any of the Shared Collateral Security
Documents, or (iii) any breach of any agreement or instrument as a result of any
action taken or omitted by the Indemnitee hereunder or under any of the Shared
Collateral Security Documents; provided, however, that neither the Credit Agent
nor the Note Agent shall be liable for any portion of such Claims found to
result from the Indemnitee's gross negligence, willful misconduct or knowing
violations of law (as may be determined by New York law), unless such breach has
been waived by the Required Parties or the Required Parties shall have
instructed the Shared Collateral Agent to take an action which violates
applicable law. The Pro Rata Shares of the Lenders and the Senior Noteholders
for purposes of this Section 5.4(a) shall be determined (i) in the case the
Shared Collateral Agent has taken any Remedial Action with respect to the Shared
Collateral, at the time of the commencement of such Remedial Action and (ii) in
the case the Shared Collateral Agent has not taken any such action, as of the
date such Claim commenced to be incurred, in each case, as determined by the
Shared Collateral Agent in good faith.
(b) Without limiting the generality of the foregoing, and to
the extent that the Indemnitee is not promptly reimbursed for such expenses by
the Borrower, the Credit Agent and the Note Agent severally agree to reimburse
the Indemnitee promptly upon demand ratably according to the Pro Rata Shares
held by the Lenders and the Senior Noteholders, respectively, for any
out-of-pocket expenses (including regular time billing charges of in-house or
outside counsel) incurred by the Indemnitee and permitted by this Section 5.4 in
connection with the administration or enforcement of, or legal advice in respect
of rights or responsibilities hereunder or under any of the Shared Collateral
Security Documents (including without limitation the enforcement of this
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indemnity). The Pro Rata Shares of the Lenders and the Senior Noteholders for
purposes of this Section 5.4(b) shall be determined (i) in the case the Shared
Collateral Agent has taken any Remedial Action with respect to the Shared
Collateral, at the time of the commencement of such Remedial Action and (ii) in
the case the Shared Collateral Agent has not taken any such action, as of the
date such Claim commenced to be incurred, in each case, as determined by the
Shared Collateral Agent in good faith.
(c) Any Indemnitee may retain its own counsel to prosecute,
negotiate or defend any Claims; provided, however, that the indemnification
obligations under this Section 5.4 shall only apply to one counsel with respect
to any Claim regardless of the number of Indemnitees. Any Indemnitee shall have
the right to compromise any Claims with the consent of the Required Parties.
(d) The obligations of the Credit Agent and the Note Agent,
respectively, under this Section 5.4 shall survive the payment of all BTCC
Credit Agreement Obligations and the Senior Note Obligations and the termination
of this Agreement.
(e) The obligations of the Note Agent under this Section 5.4
shall in no event exceed the amounts actually paid to and received by the Note
Agent from the Borrower to reimburse the Note Agent for such obligations plus
the proceeds of Collateral received by the Note Agent and available to pay such
obligations in accordance with the terms of the Senior Note Documents. The
obligations of the Credit Agent under this Section 5.4 shall in no event exceed
the amounts actually paid to and received by the Credit Agent from the Borrower
to reimburse the Credit Agent for such obligations plus the proceeds of
Collateral received by the Credit Agent and available to pay such obligations in
accordance with the terms of the BTCC Credit Agreement and the BTCC Credit
Agreement Security Documents.
5.5 Resignation and Removal of Shared Collateral Agent. (a)
(i) The Shared Collateral Agent may resign at any time by giving sixty (60) days
prior written notice thereof to the Note Agent, the Credit Agent and the
Borrower and may be removed at any time, with or without cause, by the Required
Parties by written notice delivered to the Borrower, the Note Agent and the
Credit Agent.
(ii) Upon receiving notice of any such resignation or removal,
a successor Shared Collateral Agent shall be appointed by the Note Agent and the
Credit Agent; provided, however, that such successor Shared Collateral Agent
shall be (A) a bank or trust company having a combined capital and surplus of at
least $100,000,000 subject to supervision or examination by a federal or state
banking authority; and (B) authorized under the laws of the jurisdiction of its
incorporation or organization to
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assume the functions of the Shared Collateral Agent. If the appointment of such
successor shall not have become effective (as hereafter provided) within such
sixty (60) day period after the Shared Collateral Agent shall have given such
notice, then the Shared Collateral Agent may assign the Liens and its duties
hereunder and under the Shared Collateral Security Documents to the Note Agent
and the Credit Agent, as their interests may appear, and in such case all
references herein to "Shared Collateral Agent" shall be deemed to refer to
"Required Parties." The Required Parties may petition a court of competent
jurisdiction for the appointment of a successor Shared Collateral Agent. Such
court shall, after such notice as it may deem proper, appoint a successor Shared
Collateral Agent meeting the qualifications specified in this Section 5.5(a).
The Note Agent, the Credit Agent, the Lenders and the Senior Noteholders hereby
consent to such petition and appointment so long as such criteria are met.
(iii) The resignation or removal of a Shared Collateral Agent
shall become effective upon the execution and delivery of such documents or
instruments as are necessary to transfer the rights and obligations of the
Shared Collateral Agent under the Shared Collateral Security Documents. Copies
of each such document or instrument shall be delivered to the Note Agent and the
Credit Agent. The appointment of a successor Shared Collateral Agent pursuant to
this Section 5.5(a) shall become effective upon the acceptance of such
appointment and such successor Shared Collateral Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Shared Collateral Agent.
(b) After any resignation or removal hereunder of the Shared
Collateral Agent, the provisions of this Section 5 shall continue to inure to
its benefit as to any actions taken or omitted to be taken by it in connection
with its agency hereunder while it was Shared Collateral Agent.
5.6 Shares of Collateral. Where the Shared Collateral Agent is
required or permitted hereunder, under any of the Shared Collateral Security
Documents or otherwise to do or refrain from doing any act in accordance with
the consent or instructions of the Note Agent, the Credit Agent, the Lenders,
the Senior Noteholders or any group thereof, and where the Shared Collateral
Agent is required or permitted to make any payment, disbursement or distribution
to any such Person (or to require any payment from any such Person), then in
calculating the BTCC Credit Agreement Obligations or Senior Note Obligations
held by any such Person or the amount of any payments to be made to any such
Person (anything to the contrary herein or elsewhere notwithstanding) the Shared
Collateral Agent may assume in the absence of a written representation to the
contrary that (i) all scheduled payments of principal and interest have been
made as required by the Senior Note Documents and the BTCC Credit Agreement; and
(ii) no prepayments on the BTCC Credit Agreement Obligations or
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Senior Note Obligations have been received since the last date the Credit Agent
reported the outstanding principal amount of the BTCC Credit Agreement
Obligations to the Shared Collateral Agent except those received by the Shared
Collateral Agent in accordance with this Agreement and disbursed to the Note
Agent and the Credit Agent in accordance with the provisions hereof. In the
event of any controversy with respect to any payment or prepayment made, the
Shared Collateral Agent shall be permitted to rely conclusively (in the absence
of manifest error) upon its own records with respect to any payments made to or
by the Shared Collateral Agent and, in every other case, upon the written
representation of any of the Note Agent, the Credit Agent, a Lender or a Senior
Noteholder as to facts regarding the BTCC Credit Agreement Obligations or Senior
Note Obligations owed to it, notwithstanding any contrary representation by any
other party. The Shared Collateral Agent shall be entitled to retain funds or
make a partial distribution of funds to any such Person pending any
investigation or resolution of any such controversy.
5.7 Compensation and Expenses. The Shared Collateral Agent
shall be entitled to charge such reasonable fees (in addition to its expenses)
for services as the Shared Collateral Agent as may be agreed from time to time
between the Shared Collateral Agent and the Borrower. The Shared Collateral
Agent may incur such reasonable expenses (including, without limitation,
attorneys' fees and regular time billing charges of in-house or outside counsel)
directly or indirectly in connection with the discharge or exercise of any of
its rights, powers or obligations hereunder and under the Shared Collateral
Security Documents as it in its sole and absolute discretion may deem necessary
or appropriate. Said fees and expenses shall be charged to the Borrower by the
Shared Collateral Agent and shall be included in the amounts secured by the
Shared Collateral Security Documents.
5.8 Authorized Investments. Any and all funds held by the
Shared Collateral Agent in its capacity as Shared Collateral Agent, whether
pursuant to any provision of any of the Shared Collateral Security Documents or
otherwise, shall to the extent feasible within a reasonable time be invested by
the Shared Collateral Agent in Cash Equivalent Investments. Any interest earned
on such funds shall be deposited into the Shared Collateral Account and
disbursed to the Note Agent and the Credit Agent in accordance with this
Agreement. The Shared Collateral Agent may hold any such funds in a common
interest bearing account. The Shared Collateral Agent shall have no duty to
place funds held pursuant to this Section 5.8 in investments which provide a
maximum return; provided, however, that the Shared Collateral Agent shall to the
extent feasible invest funds in Cash Equivalent Investments with reasonable
promptness. The Shared Collateral Agent shall not be responsible for any loss of
any funds invested in accordance with this Section 5.8.
-38-
<PAGE> 39
5.9 Shared Collateral Agent Counsel, Joint Defense Privilege.
The Note Agent and the Credit Agent acknowledge that the Shared Collateral Agent
may hire counsel to advise it with respect to its rights and duties hereunder,
and that such counsel does not and will not represent the interests of the Note
Agent, the Credit Agent, any Lender or any Senior Noteholder, individually. The
Note Agent and the Credit Agent acknowledge that conflicts may arise among such
Persons and waive any conflicts of interest which arise or exist for such
counsel as a result of counsel's representation of the Shared Collateral Agent.
The Note Agent and the Credit Agent further agree to be bound by the joint
defense privilege with respect to all matters relating to this Agreement, the
Shared Collateral Security Documents and the Shared Collateral. All
communications from the Shared Collateral Agent's counsel to the Credit Agent,
the Note Agent, the Shared Collateral Agent, any Lender or any Senior Noteholder
are subject to such privilege and each Person agrees not to waive such
privilege, or to disclose any such communications, without the consent of all
such Persons.
6. Term. This Agreement shall be irrevocable and shall remain
in full force and effect until (i) all of the letters of credit issued pursuant
to the BTCC Credit Agreement have been terminated and the loans, notes and
unpaid letter of credit drawings, together with interest, fees and all other
BTCC Credit Agreement obligations incurred thereunder are paid in full, all
obligations to extend further advances pursuant to the BTCC Credit Agreement
have been terminated and all Hedging Obligations have been paid in full and the
related agreements terminated, or (ii) the payment in full of all of the Senior
Notes and all other Senior Note Obligations then due and owing, subject to
Section 3.6 hereof, shall automatically terminate; provided, however, that (x)
the obligations of the Credit Agent and the Lenders under Section 3.11(b) shall
survive for a period of sixty (60) days following the termination of this
Agreement and, if any claim thereunder is asserted prior to the expiration of
such sixty (60) day period, shall survive thereafter, solely as to such claim,
until such claim has been fully resolved or until the expiration of such statute
of limitations applicable thereto (y) as set forth in Section 3.11(d) and
3.12(a), the rights of the Credit Agent pursuant to Sections 3.11 and 3.12 shall
continue to apply in accordance with the terms thereof notwithstanding any sale
of the Senior Note Collateral. At the time of such termination, (a) if such
termination occurs pursuant to clause (i) of the preceding sentence, the Credit
Agent shall (x) deliver to the Note Agent any Collateral then in its possession
unless the Note Agent advises the Credit Agent that possession of such
Collateral by the Note Agent is not required pursuant to the Senior Note
Security Documents and (y) terminate or assign to the Note Agent any landlords'
agreements, warehouse operators' agreements and similar agreements in favor of
the Credit Agent pertaining to the Collateral; and (b) if such termination
occurs pursuant to clause (ii) of the preceding sentence, the Note Agent shall
(x) deliver to the Credit Agent any Collateral then in its possession unless
-39-
<PAGE> 40
the Credit Agent advises the Note Agent that possession of such Collateral by
the Credit Agent is not required pursuant to the BTCC Credit Agreement Security
Documents and (y) terminate or assign to the Credit Agent any landlords'
agreements, warehouse operators' agreements and similar agreements in favor of
the Note Agent pertaining to the Collateral; and (c) if such termination occurs
pursuant to clauses (i) and (ii) concurrently, then each of the Credit Agent and
the Note Agent shall (x) deliver to the Borrower any Collateral then in its
possession and (y) terminate any landlords' agreements, warehouse operators'
agreements and similar agreements in its favor pertaining to the Collateral.
7. Representations and Warranties. Each of the Credit Agent,
the Note Agent and the Shared Collateral Agent represents and warrants to the
other that:
(a) It is a duly organized and validly existing banking
corporation under the laws of the State of New York, in the case of the
Credit Agent, and is a duly organized and validly existing banking
corporation under the laws of the State of New York, in the case of the
Note Agent and the Shared Collateral Agent; has all requisite power and
authority to execute, deliver and perform under this Agreement; and the
execution, delivery and performance by it of this Agreement have been
duly authorized by all requisite corporate or other action; and
(b) Pursuant to the terms of the BTCC Credit Agreement, the
Credit Agent has been granted all requisite authority to bind the
Lenders and pursuant to the terms of the Senior Note Documents, the
Note Agent has been granted all requisite authority to bind the Senior
Noteholders by their respective execution and delivery of this
Agreement, and pursuant to the terms of the Credit Agreement and the
Senior Note Documents, no further consent or approval on the part of
the Lenders or the Senior Noteholders, as the case may be, is or will
be required in connection with the execution, delivery and performance
of this Agreement.
8. Miscellaneous.
8.1 Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon either of the parties by the other, or whenever
either of the parties desires to give or serve upon the other any such
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
either shall be delivered in person with receipt acknowledged, delivered by
reputable overnight courier or telecopied and confirmed
-40-
<PAGE> 41
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, or mailed by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Credit Agent at:
BT Commercial Corporation
14 Wall Street
New York, New York 10005
Attention: Basil Palmeri
If to the Note Agent at:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Dalton Dwyer
If to the Shared Collateral Agent at:
BT Commercial Corporation
14 Wall Street
New York, New York 10005
Attention: Basil Palmeri
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, on the date of delivery by reputable overnight
courier service, on the date of telecopier transmission or three (3) Business
Days after the same shall have been deposited with the United States mail.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
8.2 Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the Credit Agent, the Note Agent and the Shared
Collateral Agent with respect to the subject matter hereof and supersedes all
prior negotiations,
-41-
<PAGE> 42
understandings and agreements between the Credit Agent, the Note Agent and the
Shared Collateral Agent in respect of such subject matter, whether written or
oral. This Agreement may be amended, modified or supplemented only by a written
instrument executed by the Credit Agent, the Note Agent and the Shared
Collateral Agent.
8.3 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. (a) EACH
OF THE PARTIES HERETO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT.
(b) EACH OF THE PARTIES HERETO SUBMITS FOR ITSELF AND ITS
PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT HEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF.
8.4 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
8.5 Survival. The representations and warranties of the
parties in this Agreement shall survive the execution, delivery and acceptance
hereof by the parties hereto until the termination of this Agreement pursuant to
Section 6 hereof.
8.6 Counterparts. This Agreement may be executed in any number
of counterparts, all of which, taken together, shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE.
-42-
<PAGE> 43
8.8 Parties. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto, the Lenders from time to time party
to the BTCC Credit Agreement, the Senior Noteholders from time to time issued
under the Senior Note Documents and their respective successors and assigns;
provided, however, that any successor Credit Agent or Note Agent shall expressly
assume the obligations of such party hereunder.
8.9 No Third Party Beneficiaries. Nothing contained in this
Agreement shall he deemed to indicate that this Agreement has been entered into
for the benefit of the Borrower or any other Person except for the parties
hereto, the Lenders, the Senior Noteholders and their respective successors and
assigns.
8.10 Trust Indenture Act. To the extent applicable, if any
provision of this Agreement limits, qualifies or conflicts with the duties
imposed on the Note Agent or the Shared Collateral Agent by the TIA, the TIA
shall control. Any action required to be taken in order to comply with the TIA
shall be taken by the Note Agent and the Shared Collateral Agent.
8.11 Legend. Each of the BTCC Credit Agreement, the BTCC
Credit Agreement Security Documents, the Senior Note Documents, the Senior Notes
and the Senior Note Security Documents shall be made specifically subject to the
terms and conditions of this Agreement.
8.12 Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 44
IN WITNESS WHEREOF, this Agreement has been signed and sealed
by the undersigned duly authorized signatories of the parties hereto as of the
date and year first above written.
BT COMMERCIAL CORPORATION,
as Credit Agent
By /s/ Rita Dagdelen-Keskinyan
----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Managing Director
BANKERS TRUST COMPANY,
as Note Agent
By /s/ Timothy Morris
----------------------------
Name: Timothy Morris
Title: Vice President
BT COMMERCIAL CORPORATION,
as Shared Collateral Agent
By /s/ Rita Dagdelen-Keskinyan
----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Managing Director
-44-
<PAGE> 45
Anchor Glass Acquisition Corporation, a Delaware corporation,
(a) acknowledges receipt of a copy of this Agreement and agrees to the
provisions hereof; (b) agrees to cooperate with the parties hereto by granting
all Liens, and by taking all such other actions, as are contemplated by Section
3.8(b) hereof; (c) acknowledges that, as provided by Section 8.9 hereof, it is
not a third party beneficiary hereof, and has no rights hereunder; (d)
acknowledges and consents to the priority of the liens purported to be
established by this Agreement, as in effect on the effective date of the Senior
Credit Agreement; (e) agrees not to object to the enforcement by the Credit
Agent against the Note Agent or the Note Agent against the Credit Agent of any
of the respective rights granted to them pursuant to Section 3.11(a) hereof, as
in effect on the effective date of the Senior Credit Agreement; (f) agrees to
the provision in Section 3.12(a), as in effect on the effective date of the
Senior Credit Agreement, pursuant to which the Borrower agrees to certain sales
of Collateral and the commercial reasonableness thereof; and (g) agrees not to
assert any provision hereof as a defense to any Remedial Action (except to the
extent that the provisions of this Agreement are expressly referred to in or
incorporated in the BTCC Credit Agreement, the Senior Note Documents or any
Security Document as a limitation on its obligations thereunder or on the Credit
Agent's, Lenders', the Note Agent's or the Senior Noteholders' rights
thereunder) nor to assert any such provision as a counterclaim or basis for
set-off or recoupment against any party hereto. Such acknowledgments and
agreements by Anchor Glass Acquisition Corporation do not, however, constitute
any amendment, modification, or waiver by them or either of them of any
provision of the BTCC Credit Agreement, the Senior Note Documents or any
Security Document or any right available to them or either of them thereunder.
ANCHOR GLASS ACQUISITION
CORPORATION
By /s/ John J. Ghaznavi
_________________________
Name: John J. Ghaznavi
Title: Chairman and Chief
Executive Officer
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<PAGE> 46
EXHIBIT A
---------
BANK COLLATERAL
All of the following Anchor Property (in the case of items
(c), (d) and (f)-(i) below, to the extent necessary to realize on the Bank
Collateral (including, but not limited to, the sale or marketing of the Bank
Collateral)), whether now existing or hereafter acquired, arising or created and
wheresoever located unless specifically excluded pursuant to the relevant BTCC
Credit Agreement Security Documents:
(a) each and every Receivable;
(b) all Inventory;
(c) the Cash Collateral Account of the BTCC Credit Agreement
established for the Borrower and all monies, securities and instruments
deposited or required to be deposited in such Cash Collateral Account;
(d) all of the Borrower's Collection Accounts and
Sub-Collection Accounts, all moneys, securities and instruments
deposited or required to be deposited in such Collection Accounts and
Sub-Collection Accounts;
(e) the Concentration Account and all moneys, securities and
instruments deposited or required to be deposited in such Concentration
Account;
(f) the Disbursement Account and all moneys deposited or
required to be deposited in such Disbursement Account;
(g) each Collection Bank Agreement to which the Borrower is a
party and each other agreement entered into by the Borrower with any
Collection Bank and all rights of the Borrower under each such
agreement;
(h) the Concentration Account Agreement and each other
agreement entered into by such Borrower with the Concentration Account
Bank and all rights of the Borrower under each such agreement;
(i) the BT Account and all moneys, securities, and instruments
deposited or required to be deposited in the BT Account; and
<PAGE> 47
EXHIBIT A
Page 2
(j) all Proceeds and products of any and all of the foregoing.
<PAGE> 48
EXHIBIT B
---------
SENIOR NOTE COLLATERAL
All of the assets, whether now existing or hereafter from time
to time acquired, by the Borrower or any of its present or future Subsidiaries,
including, without limitation:
(a) any and all real property and leasehold interest in real
property now or hereafter owned by the Borrower or its Subsidiaries;
(b) all Equipment;
(c) the Indemnity Account and all moneys, securities and
instruments deposited or required to be deposited in such Indemnity
Account;
(d) the Loss Proceeds Account and all moneys, securities and
instruments deposited or required to be deposited in such Loss Proceeds
Account;
(e) the Cash Collateral Account of the Senior Credit Agreement
and all moneys, securities and instruments deposited or required to be
deposited in such Cash Collateral Account of the Senior Credit
Agreement; and
(f) all Proceeds and products of any and all of the foregoing
provided, that, without limitation on any of the foregoing, the term
Collateral shall not include the Bank Collateral or the Shared
Collateral.
<PAGE> 49
EXHIBIT C
---------
SHARED COLLATERAL
-----------------
All of the following Anchor Property, whether now existing or
hereafter acquired, arising or created and wheresoever located:
(a) all Contracts, together with all Contract Rights arising
thereunder;
(b) all Trademarks, together with the registrations and right
to all renewals thereof, and the goodwill of the business of the
Borrower symbolized by such trademarks;
(c) all Patents (limited to any U.S. patent to which the
Borrower now or hereafter has title, as well as any application for a
U.S. patent now or hereafter made by the Borrower) and Copyrights and
all reissues, renewals or extensions thereof;
(d) all computer programs of the Borrower and all intellectual
property rights therein and all other proprietary information of the
Borrower, including, but not limited to, Trade Secret Rights;
(e) all insurance policies;
(f) all other Goods, General Intangibles, Chattel Paper,
Documents and Instruments; and
(g) all Proceeds and products of any and all of the foregoing.
<PAGE> 50
EXHIBIT D-1
-----------
[DATE]
[Address of Note Agent]
Ladies and Gentlemen:
Please refer to the Intercreditor Agreement dated as of
_____________, 1997 between you and BT Commercial Corporation, as Credit Agent,
to which the form of this letter is attached as Exhibit D-1 (the "Intercreditor
Agreement"). Capitalized terms which are defined in the Intercreditor Agreement
shall have the meanings assigned to them therein.
[THE BORROWER] has pledged the collateral described on
Schedule I attached hereto (the "Pledged Collateral") to the Note Agent as
security for the Senior Note Obligations pursuant to the Senior Note Security
Documents, and has delivered possession thereof to the Note Agent in order to
perfect the Senior Noteholders' Lien therein. [THE BORROWER] has further pledged
the Pledged Collateral to the Credit Agent as security for the BTCC Credit
Agreement Obligations pursuant to the BTCC Credit Agreement Security Documents.
As more fully set forth in the Intercreditor Agreement, the Lenders' Lien in
such Pledged Collateral is subordinate to the Senior Noteholders' Lien in such
pledged collateral, to the extent set forth in the Intercreditor Agreement.
The undersigned, the Credit Agent and [THE BORROWER], hereby
(a) notify the Note Agent, as a bailee of the Pledged Collateral by virtue of
the pledge and delivery of the Pledged Collateral to the Note Agent under the
Senior Note Security Documents, of the Lender's Lien in such Pledged Securities;
(b) acknowledge that possession of the Pledged Securities by the Note Agent, as
bailee, will perfect the subordinate Lenders' Lien in such Pledged Collateral
pursuant to Section 9-304 or 9-305 of the UCC; and (c) authorize and direct the
Note Agent, upon the termination of the Senior Noteholders' Lien in the Pledged
Collateral, to deliver possession of such Pledged Collateral to the Credit Agent
to be held in accordance with the BTCC Credit Agreement.
<PAGE> 51
EXHIBIT D-1
Page 2
Yours very truly,
[THE CREDIT AGENT]
By________________________
Name:
Title:
The undersigned joins in
the execution of this
letter to confirm the
matters set forth in this
letter and to authorize the
Note Agent to comply with
the instructions set forth
herein.
[THE BORROWER]
By________________________
Name:
Title:
The undersigned, as Note Agent,
acknowledges receipt of this
letter and agrees to comply
with the instructions set
forth herein.
[THE NOTE AGENT]
By________________________
Name:
Title:
<PAGE> 52
SCHEDULE I
----------
PLEDGED COLLATERAL
------------------
<PAGE> 53
EXHIBIT D-2
-----------
[DATE]
[Address of Credit Agent]
Ladies and Gentlemen:
Please refer to the Intercreditor Agreement dated as of
__________, 1997 between you and [Note Agent], as Note Agent, to which the form
of this letter is attached as Exhibit D-2 (the "Intercreditor Agreement").
Capitalized terms which are defined in the Intercreditor Agreement shall have
the meanings assigned to them therein.
[THE BORROWER] has pledged the collateral described on
Schedule I attached hereto (the "Pledged Collateral") to the Credit Agent as
security for the BTCC Credit Agreement Obligations pursuant to the BTCC Credit
Agreement Security Documents, and has delivered possession thereof to the Credit
Agent in order to perfect the Lenders' Lien therein. [THE BORROWER] has further
pledged the Pledged Collateral to the Note Agent as security for the Senior Note
Obligations pursuant to the Senior Note Security Documents. As more fully set
forth in the Intercreditor Agreement, the Senior Noteholders' Lien in such
Pledged Collateral is subordinate to the Lenders' Lien in such Pledged
Collateral, to the extent set forth in the Intercreditor Agreement.
The undersigned, the Note Agent and [THE BORROWER], hereby (a)
notify the Credit Agent, as a bailee of the Pledged Collateral by virtue of the
pledge and delivery of the Pledged Collateral to the Credit Agent under the BTCC
Credit Agreement Security Documents, of the Senior Noteholders' Lien in such
Pledged Securities; (b) acknowledge that possession of the Pledged Securities by
the Credit Agent, as bailee, will perfect the subordinate Senior Noteholders'
Lien in such Pledged Collateral pursuant to Section 9-304 or 9-305 of the UCC;
and (c) authorize and direct the Credit Agent, upon the termination of the
Lenders' Lien in the Pledged Collateral,
<PAGE> 54
EXHIBIT D-2
Page 3
to deliver possession of such Pledged Collateral to the Note Agent to be held in
accordance with the Senior Note Documents.
Yours very truly,
[NOTE AGENT]
By________________________
Name:
Title:
The undersigned joins in
the execution of this
letter to confirm the
matters set forth in this
letter and to authorize the
Credit Agent to comply with
the instructions set forth
herein.
[THE BORROWER]
By________________________
Name:
Title:
The undersigned, as Credit
Agent, acknowledges receipt
of this letter and agrees to
comply with the instructions
set forth herein.
[CREDIT AGENT]
By________________________
Name:
Title:
<PAGE> 55
SCHEDULE I
----------
PLEDGED COLLATERAL
------------------
<PAGE> 1
EXHIBIT 4.8
AMENDMENT NO. 1 TO INTERCREDITOR AGREEMENT
THIS AMENDMENT NO. 1, dated as of 17th day of April, 1997 (the
"Amendment"), to the Intercreditor Agreement dated as of the 5th day of
February, 1997 (the "Intercreditor Agreement"), by and among The Bank of New
York, which becomes the Note Agent under the Intercreditor Agreement on the date
hereof, and BT Commercial Corporation, as Credit Agent and Shared Collateral
Agent;
1. Notwithstanding anything to the contrary in the Intercreditor
Agreement:
(a) (i) Insurance Proceeds (as defined in the Indenture, dated as
of the 17th day of April, 1997 (the "Indenture") in respect of the
Borrower's 11.25% First Mortgage Notes due 2005 between the Borrower and
the Note Agent) shall constitute Senior Note Collateral and not Bank
Collateral or Shared Collateral, (ii) the words "and Improvements" are
added at the end of clause (a) of Exhibit B to the Intercreditor
Agreement, (iii) the word "Cash" is deleted in all places in clause (e)
of Exhibit B to the Intercreditor Agreement and the reference to Senior
Credit Agreement in such clause (e) is replaced with "Permanent Senior
Note Documents"; (iv) the following items are added as Senior Note
Collateral for purposes of Exhibit B to the Intercreditor Agreement
utilizing terms as defined in the Indenture: (x) Capital Stock of a
Restricted Subsidiary and (y) non-cash consideration received as
consideration for an Asset Sale and (v) the words "(excluding Capital
Stock)" are added at the end of clause (f) of Exhibit C to the
Intercreditor Agreement;
(b) The Borrower or, upon foreclosure of the Senior Note
Collateral, the Trustee may dispose of Shared Collateral without the
consent of the Credit Agent, the Shared Collateral Agent or the Lenders
and without any continuing Lenders' Lien, and the Proceeds of any such
disposition shall constitute Senior Note Collateral and not Bank
Collateral or Shared Collateral; provided that (a) if such disposition
occurs after an Event of Default has occurred under the BTCC Credit
Agreement, the Credit Agent shall have a license to use such Shared
Collateral on the same terms as is provided for in respect of Trademarks
pursuant to Section 3.12 of the Intercreditor Agreement and (b) any such
disposition (after giving effect to any license referred to in (a))
shall not deprive the Credit Agent of access to Shared Collateral
sufficient to enable it to manufacture and sell the Bank Collateral.
<PAGE> 2
2. Except as otherwise expressly provided in this Amendment,
the Intercreditor Agreement is affirmed as of the date hereof in all
respects.
BT COMMERCIAL CORPORATION,
as Credit Agent
By /s/ Rita Dagdelen-Keskinyan
-----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Managing Director
THE BANK OF NEW YORK,
as Note Agent
By /s/ Paul J. Schmalzel
-----------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
BT COMMERCIAL CORPORATION,
as Shared Collateral Agent
By /s/ Rita Dagdelen-Keskinyan
-----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Managing Director
Acknowledged and Agreed:
ANCHOR GLASS CONTAINER CORPORATION
By /s/ M. William Lightner, Jr.
------------------------------
Name: M. William Lightner, Jr.
Title: Vice-President and
Chief Executive Officer
<PAGE> 1
EXHIBIT 4.9
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of April 17, 1997
By and Among
ANCHOR GLASS CONTAINER CORPORATION
as Issuer
and
CONSUMERS U.S. INC.
as Guarantor
and
BT SECURITIES CORPORATION
and
TD SECURITIES (USA) INC.
as Initial Purchasers
================================================================================
$150,000,000
11 1/4 % FIRST MORTGAGE NOTES DUE 2005
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions............................................................... 1
2. Exchange Offer............................................................ 5
3. Shelf Registration........................................................ 8
4. Additional Interest....................................................... 8
5. Registration Procedures................................................... 10
6. Registration Expenses..................................................... 17
7. Indemnification........................................................... 18
8. Rules 144 and 144A........................................................ 21
9. Underwritten Registrations................................................ 22
10. Miscellaneous............................................................. 22
(a) No Inconsistent Agreements......................................... 22
(b) Adjustments Affecting Registrable Notes............................ 22
(c) Amendments and Waivers............................................. 22
(d) Notices............................................................ 23
(e) Successors and Assigns............................................. 24
(f) Counterparts....................................................... 24
(g) Headings........................................................... 24
(h) Governing Law...................................................... 24
(i) Severability....................................................... 24
(j) Notes Held by the Company or its Affiliates........................ 24
(k) Third Party Beneficiaries.......................................... 25
</TABLE>
i
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as
of April 17, 1997, by and among ANCHOR GLASS CONTAINER CORPORATION, a
corporation organized under the laws of the State of Delaware (the "Company"),
CONSUMERS U.S. INC., as Guarantor, (the "Guarantor") and BT SECURITIES
CORPORATION and TD SECURITIES (USA), INC. (the "Initial Purchasers").
This Agreement is being entered into in connection with the
Purchase Agreement, dated April 10, 1997, between the Company, the Guarantor and
the Initial Purchasers (the "Purchase Agreement"), which provides for the sale
by the Company to the Initial Purchasers of $150,000,000 aggregate principal
amount of the Company's 11 1/4 % First Mortgage Notes due 2005 (the "Notes"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and their direct and
indirect transferees. The execution and delivery of this Agreement is a
condition to the obligation of the Initial Purchasers to purchase the Notes
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
"Additional Interest" has the meaning ascribed to such term in
Section 4(a) hereof.
"Advice" has the meaning ascribed to such term in Section 5
hereof.
"Agreement" has the meaning ascribed to such term in the
introductory paragraph hereto.
"Applicable Period" has the meaning ascribed to such term in
Section 2(b) hereof.
"Closing Date" has the meaning ascribed to such term in the
Purchase Agreement.
"Company" has the meaning ascribed to such term in the first
introductory paragraph hereto.
"Effective Date" means the 180th day after the Issue Date.
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"Effectiveness Period" has the meaning ascribed to such term in
Section 3(a) hereof.
"Event Date" has the meaning ascribed to such term in Section
4(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder, all as
the same shall be in effect from time to time.
"Exchange Notes" has the meaning ascribed to such term in Section
2(a) hereof.
"Exchange Offer" has the meaning ascribed to such term in Section
2(a) hereof.
"Exchange Offer Registration Statement" has the meaning ascribed
to such term in Section 2(a) hereof.
"Filing Date" means (A) if no Registration Statement has been
filed by the Issuer pursuant to this Agreement, the 90th day after the issue
Date; provided, however, that if a Shelf Notice is given within 10 days of the
Filing Date, then the Filing Date with respect to the Shelf Registration shall
be the 15th calendar day after the date of the giving of such Shelf Notice; or
(B) in each other case (which may be applicable notwithstanding the consummation
of the Exchange Offer), the 30th day after the delivery of a Shelf Notice.
"Holder" means any holder of a Registrable Note or Registrable
Notes.
"Indemnified Person" has the meaning ascribed to such term in
Section 7(c) hereof.
"Indemnifying Person" has the meaning ascribed to such term in
Section 7(c) hereof.
"Indenture" means the Indenture, dated as of April 17, 1997
between the Company, the Guarantor and The Bank of New York, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.
"Initial Purchasers" has the meaning ascribed to such term in the
first introductory paragraph hereto.
"Inspectors" has the meaning ascribed to such term in Section
5(o) hereof.
"Issue Date" means the date of original issuance of the Notes
sold to the Initial Purchasers pursuant to the Purchase Agreement.
"NASD" has the meaning ascribed to such term in Section 5(s)
hereof.
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"Notes" has the meaning ascribed to such term in the second
introductory paragraph hereto.
"Participant" has the meaning ascribed to such term in Section
7(a) hereof.
"Participating Broker-Dealer" has the meaning ascribed to such
term in Section 2(b) hereof.
"Person" means any individual, firm, trustee, corporation,
partnership, limited liability company, joint venture, joint stock company,
trust or trustee, incorporated or unincorporated association, union, business
association, government (or any department, agency or political subdivision
thereof), firm or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
"Private Exchange" has the meaning ascribed to such term in
Section 2(b) hereof.
"Private Exchange Notes" has the meaning ascribed to such term in
Section 2(b) hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including
post-effective amendments, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning provided in the second
introductory paragraph hereto.
"Records" has the meaning ascribed to such term in Section 5(o)
hereof.
"Registrable Notes" means each Note upon original issuance of the
Notes and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(iv) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Note as to which Section 2(c)(iv) hereof is applicable, the Exchange
Registration Statement) covering such Note, Exchange Note or Private Exchange
Note, as the case may be, has been declared effective by the SEC and such Note
(unless such Note was not tendered for exchange by the Holder thereof), Exchange
Note or Private Exchange Note, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Note, Exchange
Note or Private Exchange Note, as the case may be, is sold in compliance with
Rule 144, or (iii) such Note,
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Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.
"Registration Statement" means any registration statement of the
Company, including, but not limited to, the Exchange Offer Registration
Statement, that covers any of the Registrable Notes filed with the SEC under the
Securities Act, including the Prospectus included in such registration
statement.
"Rule 144" means Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act, all as the same shall be in effect from time to time.
"Rule 144A" means Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC, all as the same shall be
in effect from time to time.
"Rule 415" means Rule 415 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Shelf Notice" has the meaning ascribed to such term in Section
2(c) hereof.
"Shelf Registration" has the meaning ascribed to such term in
Section 3(a) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company and the Guarantor which covers all of the Registrable
Notes on an appropriate form for an offering to be made on a continuous basis
under Rule 415, and all amendments and supplements to such registration
statement, including post effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means the trustee under the Indenture and the trustee
(if any) under any indenture governing the Exchange Notes.
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"Underwritten Registration or Underwritten Offering" means a
registration in which securities of the Company or the Guarantor are sold to an
underwriter for reoffering to the public.
2. Exchange Offer
(a) The Company and the Guarantor agree to file with the SEC no
later than the Filing Date an offer to exchange (the "Exchange Offer") any and
all of the Registrable Notes (other than the Private Exchange Notes, if any) for
a like aggregate principal amount of debt securities of the Company, guaranteed
by the Guarantor, which are identical in all material respects to the Notes (the
"Exchange Notes") (and which are entitled to the benefits of the Indenture or a
trust indenture which is identical in all material respects to the Indenture
(other than such changes to the Indenture or any such identical trust indenture
as are necessary to comply with any requirements of the SEC to effect or
maintain the qualification thereof under the TIA) and which, in either case, has
been qualified under the TIA), except that the Exchange Notes (other than
Private Exchange Notes, if any) shall have been registered pursuant to an
effective Registration Statement under the Securities Act and shall contain no
restrictive legend thereon. The Exchange Offer shall be registered under the
Securities Act on the appropriate form (the "Exchange Offer Registration
Statement") and shall comply with all applicable tender offer rules and
regulations under the Exchange Act. The Company and the Guarantor agree to (x)
use their best efforts to cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act on or before the Effective Date; (y)
keep the Exchange Offer open for at least 30 business days (or longer if
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; and (z) use their best efforts to consummate the Exchange
Offer on or prior to the 225th day following the Issue Date. If after such
Exchange Offer Registration Statement is declared effective by the SEC, the
Exchange Offer or the issuance of the Exchange Notes thereunder is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such Exchange Offer Registration
Statement shall be deemed not to have become effective for purposes of this
Agreement.
Each Holder that participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder is not an affiliate
of the Company or the Guarantor within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the Company and the Guarantor shall have no further obligations to
register Registrable Notes (other than the Private Exchange Notes and other than
in respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 hereof. No securities other than the Exchange Notes shall
be included in the Exchange Offer Registration Statement.
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(b) The Company and the Guarantor shall include within the
Prospectus included in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," reasonably acceptable to the Initial
Purchasers, which shall contain a summary statement of the positions taken or
policies made by the Staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated by the Staff of the
SEC or such positions or policies, in the judgment of the Initial Purchasers,
represent the prevailing views of the Staff of the SEC. Such "Plan of
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Notes.
The Company and the Guarantor shall use their best efforts to
keep the Exchange Registration Statement effective and to amend and supplement
the Prospectus contained therein for a period of 180 days after consummation of
the Exchange Offer (or such longer period if extended pursuant to the last
paragraph of Section 5 hereof) (the "Applicable Period"), in order to permit
such Prospectus to be lawfully delivered by any Participating Broker-Dealer
subject to the prospectus delivery requirements of the Securities Act for such
period of time as is necessary to comply with applicable law in connection with
any resale of the Exchange Notes.
If, prior to the consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having the status of an unsold
allotment in the initial distribution, the Company and the Guarantor shall, upon
the request of any of the Initial Purchasers, simultaneously with the delivery
of the Exchange Notes in the Exchange Offer (or if notice of the request for any
Private Exchange Notes is not given to the Company by the relevant Initial
Purchasers at least 5 business days prior to such delivery, within 5 days of
such notice) issue and deliver to the Initial Purchasers in exchange (the
"Private Exchange") for such Notes held by the Initial Purchasers a like
principal amount of debt securities of the Company, guaranteed by the Guarantor,
that are identical in all material respects to the Exchange Notes (the "Private
Exchange Notes") (and which are issued pursuant to the same Indenture as the
Exchange Notes) except for the placement of a restrictive legend on such Private
Exchange Notes. Private Exchange Notes shall bear the same CUSIP number as the
Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if no
interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company and the
Guarantor shall:
(1) mail to each Holder a copy of the Prospectus included in the
Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
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(2) keep the Exchange Offer open for at least 30 days (or longer
if required by applicable law) after the date that notice of the
Exchange Offer is mailed to the Holders;
(3) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York;
(4) permit Holders to withdraw tendered Notes at any time prior
to the close of business, New York time, on the last business day on
which the Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer or
the Private Exchange, as the case may be, the Company and the Guarantor shall:
(1) accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Registrable Notes
so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder that has tendered, and not withdrawn such tender,
Registrable Notes, Exchange Notes or Private Exchange Notes, as the case
may be, equal in principal amount to the Notes of such Holder so
accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture, which in either event shall provide that (1) the Exchange
Notes shall not be subject to the transfer restrictions set forth in the
Indenture and (2) the Private Exchange Notes shall be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture shall
provide that the Exchange Notes, the Private Exchange Notes and the Notes shall
vote and consent together on all matters as one class and that none of the
Exchange Notes, Private Exchange Notes or the Notes will have the right to vote
or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, the Company and the
Guarantor are not permitted to effect an Exchange Offer, (ii) the Exchange Offer
is not consummated within 225 days after the Issue Date, (iii) holders of a
majority in principal amount of the Private Exchange Notes so request within 60
days after the consummation of the Private Exchange or any Initial Purchaser so
requests in respect of Notes or Private Exchange Notes, acquired by it and
having the status of an unsold allotment in the initial distribution or (iv) in
the case of any Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of the Holder as an affiliate of the Company or the Guarantor within
the meaning of
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the Securities Act and other than the obligation of a broker-dealer to deliver
the Prospectus contained in the Exchange Offer Registration Statement), then the
Company and the Guarantor shall promptly deliver written notice thereof (the
"Shelf Notice") to the Trustee and, in the case of clauses (i) and (ii) above,
all Holders, and in the case of clause (iii) above, the Holders of the Private
Exchange Notes, and in the case of clause (iv) above, the affected Holder and
shall file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. Each of the Company and the Guarantor
shall, jointly and severally, at its cost, as promptly as practicable file with
the SEC a Shelf Registration Statement (a "Shelf Registration"). If the Company
and the Guarantor shall not have yet filed an Exchange Offer Registration
Statement, the Company and the Guarantor shall use their best efforts to file
with the SEC the Shelf Registration on or prior to the applicable Filing Date.
The Shelf Registration shall be on Form S-1 or another appropriate form
permitting registration of such Registrable Notes for resale by Holders in the
manner or manners designated by them (including, without limitation, one or more
underwritten offerings). The Company and the Guarantor shall not permit any
securities other than the Registrable Notes to be included in the Shelf
Registration.
The Company and the Guarantor shall use their best efforts to
cause the Shelf Registration to be declared effective under the Securities Act
on or prior to the Effectiveness Date and to keep the Shelf Registration
continuously effective under the Securities Act until the date which is two
years from the Issue Date, subject to extension pursuant to the last paragraph
of Section 5 hereof (the "Effectiveness Period"), or such shorter period ending
when all Registrable Notes covered by the Shelf Registration have been sold in
the manner set forth and as contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases
to be effective for any reason at any time during the Effectiveness Period
(other than because of the sale of all of the securities registered thereunder),
the Company and the Guarantor shall use their best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company and the Guarantor
shall promptly supplement and amend the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or by any underwriter
of such Registrable Notes.
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4. Additional Interest
The Company, the Guarantor and the Initial Purchasers agree that
the Holders of Registrable Notes will suffer damages if the Company and the
Guarantor fail to fulfill its obligations under Section 2 or Section 3 hereof
and that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, the Company and the Guarantor agree to pay, as
liquidated damages, additional interest on the Notes ("Additional Interest")
under the circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration Statement nor the
Shelf Registration Statement has been filed with the SEC on or prior to
the Filing Date, then, commencing on the 91st day after the Issue Date,
Additional Interest shall accrue on the Notes over and above the stated
interest at a rate of 0.50% per annum for the first 90 days immediately
following the Filing Date, such Additional Interest rate increasing by
an additional 0.50% per annum at the beginning of each subsequent 90-day
period;
(ii) if neither the Exchange Offer Registration Statement or the
Shelf Registration Statement is declared effective by the SEC on or
prior to the Effectiveness Date, then, commencing on the 181st day
(211th day in the case of the Shelf Registration Statement) following
the Issue Date, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.50% per annum for the first 90
days immediately following the Effectiveness Date, such Additional
Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 90-day period; and
(iii) if (A) the Company and the Guarantor have not exchanged
Exchange Notes for all Notes validly tendered in accordance with the
terms of the Exchange Offer and not withdrawn on or prior to 225th day
after the Issue Date or (B) the Exchange Offer Registration Statement
ceases to be effective at any time prior to the time that the Exchange
Offer is consummated or (C) if applicable, the Shelf Registration has
been declared effective and such Shelf Registration ceases to be
effective at any time during the Effectiveness Period, then Additional
Interest shall accrue on the Notes, over and above the stated interest
otherwise payable on such Notes, at a rate of 0.50% per annum for the
first 90 days commencing on (x) the 226th day after the Issue Date with
respect to the Notes validly tendered and not exchanged by the Issuer
and the Guarantor, in the case of (A) above (y) the day the Exchange
Registration Statement ceases to be effective in the case of (B) above,
or (z) the day such Shelf Registration ceases to be effective in the
case of (C) above, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each such subsequent
90-day period (it being understood and agreed that, notwithstanding any
provision to the contrary, so long as any Note which is the subject of a
Shelf Notice is then covered by an effective Shelf Registration
Statement, no Additional Interest shall accrue on such Note);
provided, however, that the Additional Interest rate on any affected Note may
not exceed in the aggregate 1.5% per annum; and provided, further, that (1) upon
the filing of the Exchange Offer Registration Statement or a Shelf Registration
(in the case of clause (i) above), (2) upon the
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effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Notes tendered and not validly withdrawn (in
the case of clause (iii)(A) above) or upon the effectiveness of the Exchange
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) above), or upon the effectiveness of the Shelf Registration which had
ceased to remain effective (in the case of (iii)(C) above), Additional Interest
on the Notes as a result of such clause (or the relevant subclause thereof), as
the case may be, shall cease to accrue.
(b) The Company and the Guarantor shall notify the Trustee within
three business days after each and every date on which an event occurs in
respect of which Additional Interest is required to be paid (an "Event Date").
Any amounts of Additional Interest due pursuant to clauses (a)(i), (ii) or (iii)
above will be payable to the Holders of affected Notes in cash, on the same
Interest Payment Dates as specified in the Notes. The amount of Additional
Interest will be determined by multiplying the applicable Additional Interest
rate by the principal amount of the Notes of such Holders, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company and the Guarantor shall effect
such registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company and the Guarantor hereunder, the Company and the Guarantor shall:
(a) Prepare and file with the SEC on or prior to the applicable
Filing Date a Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use their best efforts to cause each such
Registration Statement to become effective and remain effective as provided
herein; provided, however, that, if (1) such filing is pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer that seeks to sell Exchange
Notes during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Company and the
Guarantor shall, if requested, furnish to and afford the Holders of the
Registrable Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as, the case may be, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
five business days prior to such filing). The Company and the Guarantor shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration
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Statement, or any such Participating Broker-Dealer, as the case may be, their
counsel, or the managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness Period or
the Applicable Period or until consummation of the Exchange Offer, as the case
may be, cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act, and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus; the
Company and the Guarantor shall be deemed not to have used their best efforts to
keep a Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable Notes or such
Exchange Notes during that period unless such action is required by applicable
law or unless the Company and the Guarantor comply with this Agreement,
including without limitation, the provisions of paragraph 5(k) hereof and the
last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer that seeks to sell
Exchange Notes during the Applicable Period, notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be,
their counsel and the managing underwriters, if any, promptly (but in any event
within two business days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon request,
obtain, at the sole expense of the Company and the Guarantor, one conformed copy
of such Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers
upon written notice by any such Participating Broker-Dealer of a resale the
representations and warranties of the Company and the Guarantor contained in any
agreement (including any underwriting agreement), contemplated by Section 5(n)
hereof cease to be true and correct, (iv) of the receipt by the Company and the
Guarantor of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or any
of the Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-
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Dealer for offer or sale in any jurisdiction, or the initiation or threatening
of any proceeding for such purpose, (v) of the happening of any event, the
existence of any condition or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in or
amendments or supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
determination by the Company and the Guarantor that a post-effective amendment
to a Registration Statement would be appropriate.
(d) Use their best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes for sale in any jurisdiction, and, if any such order issued, to
use its best efforts to obtain the withdrawal of any such order at the earliest
possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), or the Holders
of a majority in aggregate principal amount of the Registrable Notes being sold
in connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters (if any), such Holders, or counsel for any
of them reasonably request to be included therein, (ii) make all required
filings of such prospectus supplement or such post-effective amendment as soon
as practicable after the Company and the Guarantor have received notification of
the matters to be incorporated in such prospectus supplement or post-effective
amendment, and (iii) supplement or make amendments to such Registration
Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer that seeks to sell
Exchange Notes during the Applicable Period, furnish to each selling Holder of
Registrable Notes and to each such Participating Broker-Dealer who so requests
and to their respective counsel and each managing underwriter, if any, at the
sole expense of the Company and the Guarantor, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2
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<PAGE> 15
hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer that seeks to sell Exchange Notes during the Applicable Period,
deliver to each selling Holder of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their respective counsel, and the
underwriters, if any, at the sole expense of the Company and the Guarantor, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Offer Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to register or qualify such Registrable
Notes (and to cooperate with selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes) for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Company and the
Guarantor agree to cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
5(h); keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange Notes
held by Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that the Company and the
Guarantor shall not be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or (C) subject themselves to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
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<PAGE> 16
(j) Use their best efforts to cause the Registrable Notes covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the Holders
thereof or the underwriter or underwriters, if any, to dispose of such
Registrable Notes, except as may be required solely as a consequence of the
nature of a selling Holder's business, in which case the Company and the
Guarantor will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer that seeks to sell Exchange
Notes during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole
expense of the Company and the Guarantor, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, neither the Issuer nor the Guarantor shall be required to amend or
supplement a Registration Statement, any related Prospectus or any document
incorporated therein by reference, in the event that, and for a period not to
exceed an aggregate of 60 days in any calendar year if, (i) an event occurs and
is continuing as a result of which the Shelf Registration would, in the Issuer's
or the Guarantor's good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) (a) the Issuer or the Guarantor, as the case may be,
determines in its good faith judgment that the disclosure of such event at such
time would have a material adverse effect on the business, operations or
prospects of the Issuer or the Guarantor, as the case may be, or (b) the
disclosure otherwise relates to a pending material business transaction that has
not yet been publicly disclosed.
(l) Use their best efforts to cause the Registrable Notes covered
by a Registration Statement or the Exchange Notes, as the case may be, to be
rated with the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes or Exchange Notes, as the case may be, in
a form eligible for deposit with The Depository Trust Company and (ii) provide a
CUSIP number for the Registrable Notes or Exchange Notes, as the case may be.
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<PAGE> 17
(n) In connection with any underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the Notes
and take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to facilitate the registration or the
disposition of such Registrable Notes and, in such connection, (i) make such
representations and warranties to, and covenants with, the underwriters with
respect to the business of the Company, its subsidiaries and the Guarantor and
the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in underwritten offerings of debt securities
similar to the Notes, and confirm the same in writing if and when requested;
(ii) obtain the written opinion of counsel to the Company and the Guarantor and
written updates thereof in form, scope and substance reasonably satisfactory to
the managing underwriter or underwriters, addressed to the underwriters covering
the matters customarily covered in opinions requested in underwritten offerings
of debt similar to the Notes and such other matters as may be reasonably
requested by the managing underwriter or underwriters; (iii) use their
reasonable best efforts to obtain "cold comfort" letters and updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Company
and the Guarantor (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included or incorporated by reference in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of debt similar to the Notes and such
other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer that seeks to sell Exchange
Notes during the Applicable Period, make available for inspection by any selling
Holder of such Registrable Notes being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant or other
agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
instruments of the Company, its subsidiaries and the Guarantor (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company, its subsidiaries and the Guarantor to supply all
information
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<PAGE> 18
reasonably requested by any such Inspector in connection with such Registration
Statement and Prospectus. Records which the Company and the Guarantor determine,
in good faith, to be confidential and any Records which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) disclosure of such information is, in the
opinion of counsel for any Inspector, necessary or advisable in connection with
any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, relating
to, or involving this Agreement, or any transactions contemplated hereby or
arising hereunder, or (iv) the information in such Records has been made
generally available to the public. Each selling Holder of such Registrable
Securities and each such Participating Broker-Dealer will be required to agree
that information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such information
is generally available to the public. Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to further
agree that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and the Guarantor
and allow the Company and the Guarantor to undertake appropriate action to
prevent disclosure of the Records deemed confidential at the Company and the
Guarantor's sole expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable such indenture
to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the Company
and the Guarantor (or to such other
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<PAGE> 19
Person as directed by the Company and the Guarantor) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the Company
and the Guarantor shall mark, or cause to be marked, on such Registrable Notes
that such Registrable Notes are being canceled in exchange for the Exchange
Notes or the Private Exchange Note, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
(s) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(t) Use their best efforts to take all other steps necessary or
advisable to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.
The Company and the Guarantor may require each seller of
Registrable Notes as to which any Registration is being effected to furnish to
the Company and the Guarantor such information regarding such seller and the
distribution of such Registrable Notes as the Company and the Guarantor may,
from time to time, reasonably request. The Company and the Guarantor may exclude
from such registration the Registrable Notes of any seller who unreasonably
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected agrees
to furnish promptly to the Company and the Guarantor all information required to
be disclosed in order to make the information previously furnished to the
Company and the Guarantor by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
actual receipt of any notice from the Company and the Guarantor of the happening
of any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or
5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Registrable Notes covered by such Registration Statement or Prospectus or
Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the
case may be, until such Holder's or Participating Broker-Dealer's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof, or until it is advised in writing (the "Advice") by the Company and the
Guarantor that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event the
Company and the Guarantor shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice.
6. Registration Expenses
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<PAGE> 20
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company and the Guarantor shall be borne
by the Company and the Guarantor whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation, (i)
all registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing Prospectuses if the printing of Prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or sold by any Participating Broker-Dealer, as the case may be, (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(n)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) rating agency fees, if any,
and any fees associated with making the Registrable Notes or Exchange Notes
eligible for trading through The Depository Trust Company, (vii) Securities Act
liability insurance, if the Company and the Guarantor desire such insurance,
(viii) fees and expenses of all other Persons retained by the Company and the
Guarantor, (ix) internal expenses of the Company and the Guarantor (including,
without limitation, all salaries and expenses of officers and employees of the
Company and the Guarantor performing legal or accounting duties), (x) the
expense of any annual audit, (xi) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
if applicable, and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) The Company and the Guarantor shall reimburse the Holders of
the Notes being registered in a Shelf Registration for the reasonable fees and
disbursements of one counsel chosen by the Holders of a majority in aggregate
principal amount of the Notes to be included in such Shelf Registration
Statement and reimburse reasonable out-of-pocket expenses (other than legal
expenses) of Holders of Notes incurred in connection with the registration and
sale of the Registrable Notes pursuant to the Shelf Registration.
7. Indemnification
(a) The Company and the Guarantor, jointly and severally, agree
to indemnify and hold harmless each Holder of Registrable Notes offered pursuant
to a Shelf Registration Statement and each Participating Broker-Dealer selling
Exchange Notes during the Applicable
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<PAGE> 21
Period, the affiliates, directors, officers, agents, representatives and
employees of each such Person or its affiliates, and each other Person, if any,
who controls, any such Person or its affiliates within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Registrable Notes or Exchange
Notes, as the case may be, is registered (or any amendment thereto) or related
Prospectus (or any amendments or supplements thereto) or any related preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company and
the Guarantor will not be required to indemnify a Participant if (i) such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Company
or the Guarantor in writing by or on behalf of such Participant expressly for
use therein or (ii) if such Participant sold to the person asserting the claim
the Registrable Notes or Exchange Notes which are the subject of such claim and
such untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto and the Prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and it is
established by the Company or the Guarantor in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company or the Guarantor with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantor, their respective
affiliates, directors and officers, agents, representatives and employees and
each Person who controls the Company and the Guarantor within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act to the
same extent as the foregoing indemnity from the Company and the Guarantor to
each Participant, but only (i) with reference to information relating to such
Participant furnished to the Company and the Guarantor in writing by or on
behalf of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus
or (ii) with respect to any untrue statement or representation made by such
Participant in writing to the Company or the Guarantor. The liability of any
Participant under this paragraph shall in no event exceed the proceeds received
by such Participant from sales of Registrable Notes or Exchange Notes giving
rise to such obligations.
(c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted
against any Person in respect of
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<PAGE> 22
which indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "Indemnified Person") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person, upon request of the Indemnified Person,
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred by such counsel related to such proceeding; provided,
however, that the failure to so notify the Indemnifying Person shall not relieve
it of any obligation or liability which it may have hereunder or otherwise
(unless and only to the extent that such failure directly results in the loss or
compromise of any material rights or defenses by the Indemnifying Person and the
Indemnifying Person was not otherwise aware of such action or claim). In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person shall have failed within a reasonable period of time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that, unless there
exists a conflict among Indemnified Persons, the Indemnifying Person shall not,
in connection with any one such proceeding or separate but substantially similar
related proceeding in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed promptly as they are incurred. Any
such separate firm for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Notes and Exchange Notes sold by all such Participants and any
such separate firm for the Company, its directors, its officers and such control
Persons of the Company and the Guarantor shall be designated in writing by the
Company and the Guarantor. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its prior written consent, but if
settled with such consent or if there be a final non-appealable judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, the Indemnifying Person agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for reasonable fees and expenses actually
incurred by counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Person is contesting, in good faith, the request for reimbursement.
No Indemnifying Person shall, without
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<PAGE> 23
the prior written consent of the Indemnified Person, effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantor on the one hand or such Participant or
such other Indemnified Person, as the case may be, on the other, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
21
<PAGE> 24
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Company and the Guarantor covenant that they will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
in accordance with the requirements of the Securities Act and the Exchange Act
and, if at any time the Company and the Guarantor are not required to file such
reports, it will, upon the request of any Holder of Registrable Notes, make
publicly available annual reports and such information, documents and other
reports of the type specified in Sections 13 and 15(d) of the Exchange Act. The
Company and the Guarantor further covenant, for so long as any Registrable Notes
remain outstanding, to make available to any Holder or beneficial owner of
Registrable Notes in connection with any sale thereof and any prospective
purchaser of such Registrable Notes from such Holder or beneficial owner the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Company and the
Guarantor.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Company and the Guarantor
have not entered, as of the date hereof, and the Company and the Guarantor will
not, after the date of this Agreement, enter into any agreement with respect to
any of its securities that is inconsistent with the rights granted to the
Holders of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. The Company and the Guarantor have not entered and the
Company and the Guarantor will not enter into any agreement with respect to any
of its securities which will grant to any Person piggy-back registration rights
with respect to any Registration Statement other than pursuant to the Warrant
Agreement dated as of February 5, 1997 between the Company and Bankers Trust
Company.
22
<PAGE> 25
(b) Adjustments Affecting Registrable Notes. The Company and the
Guarantor will not, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, otherwise than with the prior
written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Notes may be given by Holders of at least
a majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of such Holder
or Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture,
with a copy to BT Securities Corporation on behalf of the
Initial Purchasers as follows:
BT Securities Corporation
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No: (212) 250-7200
Attention: Corporate Finance Department
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
1 Liberty Plaza
New York, New York 10003
Facsimile No: (212) 225-3999
Attention: William Gorin, Esq.
23
<PAGE> 26
(ii) if to the Initial Purchasers, at the address
specified in Section 10(d)(i);
(iii) if to the Company, as follows:
Anchor Glass Container Corporation
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, FL 33634-7513
Facsimile No: (813) 882-7859
Attention: Chief Financial Officer
with copies to the Guarantor:
Consumers U.S. Inc.
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, FL 33634-7513
Facsimile No.: (813) 882-7859
Attention: Chief Financial Officer
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign holds Registrable Notes. Each future Guarantor of the
Notes shall become a party to this Agreement and all references to Guarantor
hereunder shall include any such Guarantor.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
24
<PAGE> 27
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
25
<PAGE> 28
(k) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ M. William Lightner, Jr.
--------------------------------
Name: M. William Lightner, Jr.
Title: Vice President and
Chief Financial Officer
CONSUMERS U.S., INC.
By: /s/ M. William Lightner, Jr.
--------------------------------
Name: M. William Lightner, Jr.
Title: Vice President and
Chief Financial Officer
for itself and on behalf of the other initial
purchasers:
BT SECURITIES CORPORATION
By: /s/ Julie Persily
--------------------------------
Name: Julie Persily
Title: Vice President
26
<PAGE> 1
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
among
ANCHOR GLASS ACQUISITION CORPORATION
VARIOUS FINANCIAL INSTITUTIONS,
BANKERS TRUST COMPANY,
as Issuing Bank,
BT COMMERCIAL CORPORATION,
as Agent and Co-Syndication Agent
and
PNC BANK, NATIONAL ASSOCIATION,
as Co-Syndication Agent and Issuing Bank
Dated as of February 5, 1997
$110,000,000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE 1. Definitions....................................................... 1
1.1 General Definitions............................................... 1
1.2 Accounting Terms and Determinations............................... 33
1.3 Other Defined Terms............................................... 33
ARTICLE 2. Revolving Loans................................................... 34
2.1 Commitments....................................................... 34
2.2 Determination of Borrowing Base................................... 34
2.3 Borrowing Mechanics............................................... 35
2.4 Settlements Among the Payments Administrator and the Lenders...... 37
2.5 Mandatory and Voluntary Payments: Mandatory and Voluntary
Reduction of Commitments....................................... 40
2.6 Payments and Computations......................................... 44
2.7 Maintenance of Account............................................ 45
2.8 Statement of Account.............................................. 45
2.9 Taxes............................................................. 46
2.10 Sharing of Payments............................................... 48
ARTICLE 3. Letters of Credit................................................. 48
3.1 Issuance of Letters of Credit..................................... 48
3.2 Terms of Letters of Credit........................................ 49
3.3 Lenders' Participation............................................ 49
3.4 Notice of Issuance................................................ 50
3.5 Payment of Amount Drawn Under Letters of Credit................... 50
3.6 Payment by Lenders................................................ 51
3.7 Nature of Issuing Bank's Duties................................... 51
3.8 Obligations Absolute.............................................. 52
ARTICLE 4. Interest, Fees and Expenses....................................... 53
4.1 Interest on Eurodollar Rate Loans................................. 53
4.2 Interest on Base Rate Loans....................................... 53
4.3 Notice of Continuation and Notice of Conversion................... 53
4.4 Interest After Default............................................ 55
4.5 Reimbursement of Expenses......................................... 55
</TABLE>
(i)
<PAGE> 3
<TABLE>
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4.6 Unused Line Fee................................................... 56
4.7 Letter of Credit Fees............................................. 56
4.8 Other Fees and Expenses........................................... 57
4.9 Authorization to Charge Account................................... 57
4.10 Indemnification in Certain Events................................. 57
4.11 Calculations...................................................... 58
4.12 Change of Applicable Lending Office............................... 58
ARTICLE 5. Conditions Precedent.............................................. 59
5.1 Conditions to Initial Loans and Letters of Credit................. 59
(a)Execution of Agreement; Notes.................................. 59
(b)Officer's Certificate.......................................... 59
(c)Opinions of Counsel............................................ 59
(d)Security Agreement............................................. 60
(e)Collateral Access Agreements................................... 60
(f)Collection Bank Agreements; Concentration Account
Agreement................................................... 60
(g)Intercreditor Agreement........................................ 61
(h)Borrowing Base Certificate..................................... 61
(i)Equity Issuances............................................... 61
(j)Issuance of Bridge Senior Notes................................ 61
(k)Acquisition Agreement; Indemnity Agreement; Plant
Sales; etc.................................................. 62
(l)Existing Credit Agreement, etc................................. 63
(m) Approvals................................................... 63
(n)Material Adverse Change, etc................................... 64
(o)Litigation..................................................... 64
(p)Corporate Proceedings.......................................... 64
(q)Plans; Collective Bargaining Agreements; Existing
Indebtedness Agreements; Shareholders' Agreements;
Management Agreements; Employment Agreements;
Tax Sharing Agreements; Affiliate Transaction
Agreement................................................... 64
(r)Solvency Opinion............................................... 66
(s)Projections; Plant Closures, etc............................... 66
(t)Insurance Policies............................................. 66
(u)Consent Letter................................................. 66
(v)Payment of Fees................................................ 66
(w) Collateral Examination...................................... 67
(x)Environmental Reports.......................................... 67
(y)Management..................................................... 67
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
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(z)U.S. Holdco Guaranty........................................... 67
(aa) O-I Assurance Agreement..................................... 67
(bb) Capital Call Agreement...................................... 67
(cc) Assignment and Assumption Agreement......................... 67
(dd) Pledge Agreement............................................ 68
(ee) Closing Expenses............................................ 68
ARTICLE 6. Representations and Warranties.................................... 69
6.1 Corporate Status.................................................. 69
6.2 Corporate Power and Authority..................................... 69
6.3 No Violation...................................................... 70
6.4 Litigation........................................................ 70
6.5 Use of Proceeds................................................... 70
6.6 Governmental Approvals............................................ 70
6.7 Investment Company Act............................................ 71
6.8 Public Utility Holding Company Act................................ 71
6.9 True and Complete Disclosure...................................... 71
6.10 Financial Condition; Financial Statements......................... 71
6.11 Locations of Offices, Records and Inventory....................... 72
6.12 Fictitious Business Names......................................... 73
6.13 Security Interests................................................ 73
6.14 Tax Returns and Payments.......................................... 73
6.15 Compliance with ERISA............................................. 74
6.16 Subsidiaries...................................................... 75
6.17 Patents, etc...................................................... 75
6.18 Compliance with Statutes, etc..................................... 75
6.19 Properties........................................................ 77
6.20 Labor Relations; Collective Bargaining Agreements................. 77
6.21 Restrictions on Subsidiaries...................................... 77
6.22 Status of Accounts................................................ 78
6.23 Material Contracts................................................ 78
6.24 Existing Indebtedness and Operating Leases........................ 78
6.25 Tax Sharing Agreements............................................ 78
ARTICLE 7. Affirmative Covenants............................................. 78
7.1 Financial Information............................................. 78
7.2 Inventory Reconciliation.......................................... 82
7.3 Corporate Franchises.............................................. 82
7.4 Compliance with Statutes, etc..................................... 82
7.5 ERISA............................................................. 83
7.6 Good Repair....................................................... 85
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
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7.7 Books and Records................................................. 85
7.8 Collateral Records................................................ 86
7.9 Security Interests................................................ 86
7.10 Insurance; Casualty Loss.......................................... 86
7.11 Taxes............................................................. 87
7.12 End of Fiscal Years; Fiscal Quarters.............................. 88
7.13 Further Assurances................................................ 88
7.14 Maintenance of Corporate Separateness............................. 88
7.15 Interest Rate Agreement........................................... 88
7.16 Releases and Terminations......................................... 88
7.17 Perfection of Intellectual Property Security Interests............ 89
7.18 Payment of Certain Plan Obligations............................... 89
7.19 Name Change....................................................... 89
ARTICLE 8. Negative Covenants................................................ 89
8.1 Consolidation, Merger, Sale or Purchase of Assets, etc............ 89
8.2 Liens............................................................. 90
8.3 Indebtedness...................................................... 92
8.4 Capital Expenditures.............................................. 93
8.5 Investments....................................................... 95
8.6 Dividends, etc.................................................... 96
8.7 Transactions with Affiliates...................................... 98
8.8 Changes in Business...............................................100
8.9 Consolidated Net Worth............................................100
8.10 Working Capital Ratio.............................................101
8.11 Interest Coverage Ratio...........................................101
8.12 Pay-in-Kind Interest..............................................102
8.13 Creation of Subsidiaries..........................................102
8.14 Additional Negative Pledges.......................................102
8.15 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Governing Documents,
Preferred Stock and Certain Other Agreements; etc..............103
8.16 Issuance of Stock.................................................104
8.17 Limitation on Restrictions Affecting Subsidiaries.................104
8.18 No Additional Bank Accounts.......................................104
8.19 No Excess Cash....................................................105
8.20 Operating Leases..................................................105
8.21 Plant Closing Expenses............................................105
8.22 Minimum Availability..............................................106
8.23 Headquarters Lease................................................106
8.24 Account Terms.....................................................107
</TABLE>
(iv)
<PAGE> 6
<TABLE>
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ARTICLE 9. Events of Default and Remedies....................................107
9.1 Events of Default.................................................107
(a) Payments..........................................................107
(b) Representations, etc..............................................107
(c) Covenants.........................................................108
(d) Default Under Other Agreements....................................108
(e) Bankruptcy, etc...................................................108
(f) ERISA.............................................................109
(g) Collateral Documents..............................................110
(h) Judgments.........................................................110
(i) Change of Control.................................................110
(j) U.S. Holdco Guaranty..............................................110
(k) Technical Assistance and License Agreement........................110
(l) Canadian Holdco...................................................111
(m) Affiliate Transactions Agreement..................................111
(n) Capital Call Agreement............................................111
ARTICLE 10. The Agent.........................................................112
10.1 Appointment.......................................................112
10.2 Nature of Duties of Agent.........................................112
10.3 Lack of Reliance on Agent.........................................112
10.4 Certain Rights of the Agent.......................................113
10.5 Reliance by Agent.................................................113
10.6 Indemnification of Agent..........................................114
10.7 The Agent in its Individual Capacity..............................114
10.8 Holders of Notes..................................................114
10.9 Successor Agent...................................................114
10.10 Collateral Matters................................................115
10.11 Actions with Respect to Defaults..................................116
10.12 Delivery of Information...........................................117
10.13 Co-Syndication Agents.............................................117
ARTICLE 11. Miscellaneous.....................................................117
11.1 Submission to Jurisdiction; Waivers...............................117
11.2 Waiver of Jury Trial..............................................118
11.3 Governing Law.....................................................118
11.4 Delays: Partial Exercise of Remedies..............................118
11.5 Notices...........................................................119
11.6 Benefit of Agreement..............................................119
11.7 Confidentiality...................................................122
11.8 Indemnification...................................................123
</TABLE>
(v)
<PAGE> 7
<TABLE>
<CAPTION>
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<S> <C> <C>
11.9 Entire Agreement; Successors and Assigns..........................124
11.10 Amendment or Waiver...............................................124
11.11 Nonliability of Agent and Lenders.................................124
11.12 Independent Nature of Lenders' Rights.............................125
11.13 Counterparts......................................................125
11.14 Effectiveness.....................................................125
11.15 Headings Descriptive..............................................125
11.16 Maximum Rate......................................................125
11.17 Right of Setoff...................................................126
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SCHEDULE I Lenders
SCHEDULE II Chief Executive Offices, Records Locations and Inventory
Locations
SCHEDULE III Fictitious Business Names
SCHEDULE IV ERISA Matters
SCHEDULE V Environmental Matters
SCHEDULE VI Real Properties
SCHEDULE VII Collective Bargaining Agreements
SCHEDULE VIII Material Contracts
SCHEDULE IX Existing Indebtedness
SCHEDULE X Insurance
SCHEDULE XI Existing Liens
SCHEDULE XII Existing Investments
SCHEDULE XIII Bank Accounts
SCHEDULE XIV Large Accounts
SCHEDULE XV Extended Term Accounts
SCHEDULE XVI Designated Properties
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT A Form of Revolving Note
EXHIBIT B-1 Form of Notice of Borrowing
EXHIBIT B-2 Form of Letter of Credit Request
EXHIBIT B-3 Form of Notice of Continuation
EXHIBIT B-4 Form of Notice of Conversion
EXHIBIT C-1 Form of Collection Bank Agreement
EXHIBIT C-2 Form of Concentration Account Agreement
EXHIBIT D Form of Section 2.9(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of Eckert Seamans Cherin & Mellott and Jones Day
Reavis & Pogue, special counsels to the Borrower
EXHIBIT E-2 Form of Opinion of Fraser & Beatty, Special Counsel to Consumers
EXHIBIT E-3 Form of Opinion of White & Case
</TABLE>
(vi)
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT F Form of Security Agreement
EXHIBIT G Form of Collateral Access Agreement
EXHIBIT H Form of Intercreditor Agreement
EXHIBIT I Form of Officer's Certificate
EXHIBIT J Form of Consent Letter
EXHIBIT K Form of Compliance Certificate
EXHIBIT L Form of Borrowing Base Certificate
EXHIBIT M1 Form of Assignment and Assumption Agreement
EXHIBIT M2 Form of Notice of Assignment
EXHIBIT N Form of Confidentiality Agreement
EXHIBIT O Form of U.S. Holdco Guaranty
EXHIBIT P Form of O-I Assurance Agreement
EXHIBIT Q Form of Capital Call Agreement
EXHIBIT R Form of Pledge Agreement
</TABLE>
(vii)
<PAGE> 9
THIS CREDIT AGREEMENT is entered into as of February 5, 1997,
among Anchor Glass Acquisition Corporation, a Delaware corporation (the
"Borrower"), each of those financial institutions listed from time to time on
Schedule I hereto (each, a "Lender" and, collectively, the "Lenders"), BANKERS
TRUST COMPANY, as an Issuing Bank, BT COMMERCIAL CORPORATION, acting as
Co-Syndication Agent and Agent in the manner and to the extent described in
Article 10 hereof and PNC BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent
and as an Issuing Bank. Capitalized terms used and not otherwise defined herein
have the respective meanings set forth in Section 1.1 hereof.
W I T N E S S E T H :
WHEREAS, the Borrower wishes to obtain a credit facility (i) to
make payments in connection with the Transaction, (ii) for the working capital
needs and general corporate purposes of the Borrower and (iii) for the ongoing
letter of credit requirements of the Borrower; and
WHEREAS, upon the terms and subject to the conditions set forth
herein, the Lenders are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1.
Definitions
1.1 General Definitions. As used herein, the following terms
shall have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
Accounts shall mean, with respect to any Person, all present and
future accounts, contract rights and other rights to payment for goods sold or
leased (whether or not delivered) or for services rendered which are not
evidenced by an instrument or chattel paper, whether or not they have been
earned by performance, and any letter of credit, guarantee, security interest or
other security issued or granted to secure payment by an account debtor.
<PAGE> 10
Acquired Business shall mean the assets and liabilities of Old
Anchor Glass acquired by the Borrower pursuant to the Acquisition.
Acquisition shall mean the acquisition of certain assets and
liabilities of Old Anchor Glass by the Borrower pursuant to, and in accordance
with the terms of, the Acquisition Documents.
Acquisition Agreement shall mean the Asset Purchase Agreement,
dated as of December 18, 1996, among the Borrower, O-I and Old Anchor Glass, as
the same may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
Acquisition Documents shall mean the Acquisition Agreement, the
Indemnity Agreement and all other agreements and documents relating to the
Acquisition as same may be amended, modified or supplemented from time to time
in accordance with the terms hereof and thereof.
Adjusted Certificate of Deposit Rate shall mean on any day, the
sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing
(x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled "Select
Interest Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by BTCo on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing, by (y) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in Regulation D applicable
on such day to a three-month certificate of deposit in excess of $100,000 issued
by a member bank of the Federal Reserve System with deposits in excess of five
billion dollars (including, without limitation, any marginal, emergency,
supplemental, special or other reserves), plus (2) the then daily net annual
assessment rate as estimated by BTCo for determining the current annual
assessment payable by BTCo to the Federal Deposit Insurance Corporation for
insuring three month certificates of deposit.
Adjusted Eurodollar Rate shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate obtained by dividing (i)
the Eurodollar Rate for such Interest Period by (ii) a percentage equal to 100%
minus the stated maximum rate (stated as a decimal) of all reserves, if any,
required by the Board of Governors of the Federal Reserve System to be
maintained by a member bank of the Federal Reserve System in New York City with
deposits in excess of five billion dollars against "Eurocurrency liabilities" as
specified in Regulation D (or against any other category of liabilities which
includes
-2-
<PAGE> 11
deposits by reference to which the interest rate on Eurodollar Rate Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Lender to United States
residents).
Affiliate shall mean, with respect to any Person, any entity
which directly or indirectly controls, is controlled by, or is under common
control with, such Person or any Subsidiary of such Person or any Person who is
a director or officer of such Person or any Subsidiary of such Person. For
purposes of this definition, "control" shall mean the possession, directly or
indirectly, of the power to (i) vote ten percent (10%) or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of management and policies of that Person,
whether through the ownership of voting securities, by contract or otherwise and
either alone or in conjunction with others or any group. Neither (x) any Lender
nor any person controlling any Lender or under common control with such Lender
(including BTCo) and (y) any Lender under the Senior Credit Agreement, nor any
of their respective Subsidiaries shall be treated as an Affiliate of the
Borrower or its Subsidiaries.
Affiliate Transaction Agreement shall mean the Affiliate
Transaction Agreement dated as of the Closing Date, between Consumers, G&G
Investments, Inc., Glenshaw Glass Company, Hillsboro Glass Company, Canadian
Holdco, U.S. Holdco, I.M.T.E.C. Enterprises Inc., an Oklahoma corporation, the
Borrower and the Agent.
Agent shall mean BTCC in its capacity as Agent for the Lenders
hereunder, and shall include any successor thereof as Agent, appointed as such
pursuant to Section 10.9.
Agent Advance shall mean a Revolving Loan made by the Payments
Administrator to the Borrower pursuant to Section 2.3(c).
Agent Advance Period shall have the meaning given to such term in
Section 2.3(c).
Applicable Lending Office shall mean, with respect to each
Lender, such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Loan and such Lender's Domestic Lending Office in the case of a Base Rate Loan.
Applicable Margin shall mean the applicable percentage set forth
below based upon (x) (i) during the period from the Closing Date until the Test
Period ended December 31, 1997, Level III, (ii) at any time when any Default or
Event of Default is in existence, Level IV and (iii) at any time other than
those periods referred to in clauses (i)
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<PAGE> 12
and (ii) above, the Level for such Quarterly Period and (y) the Outstandings
hereunder as a percentage of the Available Borrowing Amount for such Quarterly
Period:
<TABLE>
<CAPTION>
Outstandings Equal or Exceed
Outstandings Do Not Exceed 50% 50% of Available Borrowing
of Available Borrowing Amount Amount
----------------------------- ----------------------------
Eurodollar Base Rate Eurodollar Base Rate
Level Rate Loan Loan Rate Loan Loan
----- --------- ---- --------- ----
<S> <C> <C> <C> <C>
Level I 1.50% .00% 1.75% 0.25%
Level II 1.75% .25% 2.00% 0.50%
Level III 2.00% .50% 2.25% 0.75%
Level IV 2.25% .75% 2.50% 1.00%
</TABLE>
The Leverage Ratio and Outstandings shall be determined based on the Financial
Statements delivered pursuant to Sections 7.1(a) and (b) for the fiscal quarter
ended immediately prior to the relevant Start Date. The Applicable Margin so
determined shall apply from the Start Date to the End Date. If no Financial
Statements shall have been delivered to the Agent on or prior to the relevant
End Date, the Applicable Level shall be Level IV until such Financial Statements
are delivered.
Assignment and Assumption Agreement shall mean an assignment and
assumption agreement entered into by an assigning Lender and an assignee Lender,
and accepted by the Agent, in accordance with Section 11.6, substantially in the
form of Exhibit M-1.
Auditors shall mean a nationally-recognized firm of independent
public accountants selected by the Borrower and reasonably satisfactory to the
Agent. For purposes of this Credit Agreement, the Borrower's current firm of
independent public accountants, Deloitte & Touche, L.L.P., or Arthur Andersen,
L.L.P., shall be deemed to be satisfactory to the Agent.
Available Borrowing Amount shall mean, at any time, the lesser of
(x) the Total Commitment then in effect and (y) the Borrowing Base then in
effect.
Average Borrowing Base shall mean, at any time, the average of
either (x) all Borrowing Base Certificates delivered for the immediately
preceding 12 months, or (y) if prior to the 12 month anniversary of the Closing
Date, all Borrowing Base Certificates previously delivered.
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Bankruptcy Code shall have the meaning given such term in Section
9.1(e).
Bankruptcy Court shall mean the United States Bankruptcy Court of
the District of Delaware.
Base Rate shall mean, at any time, the highest of (i) the Prime
Lending Rate, (ii) 1/2 of 1% in excess of the overnight Federal Funds Rate then
in effect and (iii) 1/2 of 1% in excess of the Adjusted Certificate of Deposit
Rate then in effect. If for any reason BTCo shall have determined (which
determination shall be final absent manifest error) that it is unable to
ascertain the Adjusted Certificate of Deposit Rate, the Base Rate shall be
determined without regard to clause (iii), until the circumstance giving rise to
such inability shall no longer exist.
Base Rate Loan shall mean each Revolving Loan bearing interest as
provided in Section 4.2.
Board of Directors shall mean the Board of Directors of the
Borrower.
Borrower shall have the meaning provided in the preamble to this
Credit Agreement.
Borrower Warrants shall mean each of (i) the Common Stock
Purchase Warrant dated as of February 5, 1997 issued to BTCo representing the
right to purchase shares of common stock of the Borrower and (ii) the Common
Stock Purchase Warrant to be issued in connection with the purchase of the
Permanent Senior Notes as described in the Bridge Senior Note Documents
representing the right to purchase shares of common stock of the Borrower, equal
in the aggregate of up to no more than 10% of the fully diluted common equity of
the Borrower, in each case, subject to the provisions of Section 2.01(b) of the
Warrant Agreement.
Borrowing shall mean an incurrence of Revolving Loans of the same
Type from all the Lenders on the same day (or resulting from Conversion or
Continuance on the same date), having, in the case of Eurodollar Rate Loans, the
same Interest Period.
Borrowing Base shall have the meaning given to such term in
Section 2.2.
Borrowing Base Certificate shall have the meaning given to such
term in Section 7.1(e).
Borrowing Base Deficiency shall mean, at any time, the amount, if
any, by which the Outstandings at such time exceeds the Borrowing Base at such
time.
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<PAGE> 14
Bridge Loan Conversion Date shall mean the date on which Bridge
Senior Notes convert from "Bridge Notes" to "Term Notes" (as defined in the
Senior Credit Agreement) in accordance with the terms of the Senior Credit
Agreement.
Bridge Senior Note Documents shall mean and include each of the
documents and other agreements entered into relating to the issuance by the
Borrower of the Bridge Senior Notes, as in effect on the Closing Date.
Bridge Senior Notes shall mean the Borrower's Senior Notes,
issued pursuant to the Senior Credit Agreement, dated as of the Closing Date,
between the Borrower and BTCo, as Agent and the lenders described therein. As
used herein, the term "Bridge Senior Notes" shall include any "Term Notes"
issued pursuant to the Senior Credit Agreement in exchange for theretofore
outstanding Bridge Senior Notes, as contemplated by the Senior Credit Agreement.
BT Account shall have the meaning given to such term in Section
2.6.
BTCo shall mean Bankers Trust Company.
BT Delaware shall have the meaning provided in Section 2.3(b).
BTCC shall mean BT Commercial Corporation, in its individual
capacity.
Business Day shall mean any day other than a Saturday, Sunday or
legal holiday on which commercial banks in New York, New York are authorized to
close. When used in connection with Eurodollar Rate Loans, this definition will
also exclude any day on which commercial banks are not open for dealing in U.S.
Dollar deposits in the New York interbank Eurodollar market.
Canadian Holdco shall mean 3282392 Canada Inc., a corporation
organized under the federal laws of Canada.
Capital Call Agreement shall have the meaning provided in Section
5.1(cc).
Capital Expenditures shall mean, as applied to any Person for any
period, the aggregate of all expenditures of (whether paid in cash or accrued as
liabilities (including Capitalized Lease Obligations)) such Person and its
Subsidiaries during that period that, in conformity with GAAP, are or are
required to be included in the property, plant or equipment reflected in the
consolidated balance sheet of such Person; provided, that Capital Expenditures
shall in any event include the purchase price paid in connection with the
acquisition of any Person (including through the purchase of all of the capital
stock or other
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<PAGE> 15
ownership interests of such Person or through merger or consolidation) to the
extent allocable to property, plant and equipment.
Capital Lease, as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person or any of its
Subsidiaries as lessee which, in conformity with GAAP, is accounted for as a
capital lease on the consolidated balance sheet of that Person.
Capitalized Lease Obligations shall mean the obligations under
Capital Leases of the Borrower and its Subsidiaries in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.
Cash Equivalents means (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"); (iii) commercial paper maturing not more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P's or Moody's; and (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $500,000,000; (v) shares of any money market
mutual fund that (a) has its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's; and (vi) repurchase agreements with respect to, and which are
fully secured by a perfected security interest in, obligations of a type
described in clause (i) or clause (ii) above and are with any commercial bank
described in clause (iv) above.
Casualty Loss shall have the meaning given to such term in
Section 7.10.
CERCLA shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.
Certificates of Designation shall mean the Series A Certificate
of Designation and the Series B Certificate of Designation.
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<PAGE> 16
Change of Control shall mean (a) the Permitted Holders either
directly or through one or more of their Wholly-Owned Subsidiaries, shall cease
to own a majority on a fully diluted basis of the economic and voting interest
represented by all of the classes of capital stock of Consumers, (b) Consumers,
either directly or through one or more of its Wholly-Owned Subsidiaries, shall
cease to own directly a majority on a fully diluted basis of the economic and
voting interest in the Borrower's capital stock, (c) any Person or "group"
(within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act
of 1934, as in effect on the Effective Date), other than the Permitted Holders
and Consumers and its Wholly-Owned Subsidiaries, shall have obtained the power
(whether or not exercised) to elect a majority of the Borrower's directors, (d)
the Board of Directors of the Borrower shall cease to consist of a majority of
Continuing Directors, or (e) any "Change of Control" as such term is defined in
any Existing Indebtedness Agreement, any Senior Note Document, the Preferred
Stock (or the Certificates of Designation therefore) or any successor or similar
provision, shall occur. For the foregoing purposes, any Subsidiary of a
Permitted Holder shall be deemed to be a Wholly-Owned Subsidiary of such
Permitted Holder to the extent 100% of the capital stock of such Subsidiary is
owned by one or more Permitted Holders.
Closing Date shall mean the date on which the Initial Credit
Event occurs.
Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement and any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
Collateral shall mean all of the Collateral as defined in the
Collateral Documents.
Collateral Access Agreements shall have the meaning given to such
term in Section 5.1(e).
Collateral Agent shall mean BTCC acting as collateral agent
pursuant to the Collateral Documents.
Collateral Documents shall mean all contracts, instruments and
other documents now or hereafter executed and delivered in connection with this
Credit Agreement, pursuant to which liens and security interests are granted to
the Collateral Agent in the Collateral for the benefit of the Lenders,
including, without limitation, the Security Agreement, the Pledge Agreement, the
Concentration Account Agreement and the Collection Bank Agreements.
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<PAGE> 17
Collection Account shall mean the account established at a
Collection Bank pursuant to the Collection Bank Agreement, into which funds on
deposit in the relevant Sub-Collection Account shall be transferred pursuant to
Section 2.6.
Collection Bank shall have the meaning given to such term in
Section 2.6.
Collection Bank Agreements shall have the meaning given to such
term in Section 2.6(b)(ii).
Collective Bargaining Agreements shall have the meaning given to
such term in Section 5.1(q)(ii).
Commitment of any Lender shall mean the amount set forth opposite
such Lender's name on Schedule I, as such Schedule may be amended from time to
time, under the heading "Commitment," as such amount may be reduced from time to
time pursuant to the terms of this Credit Agreement.
Commodity Hedge Agreement shall mean an agreement entered into
for the purpose of hedging risk with respect to potential fluctuation in the
price of a commodity including futures contracts, for the purchase, sale or
exchange of commodities.
Common Stock shall mean the Common Stock of the Borrower, par
value $0.10.
Common Stock Financing shall have the meaning given such term in
Section 5.1(i).
Computation Date shall mean the last Business Day of each month
and any other date specified in writing by an Issuing Bank with respect to a
Letter of Credit, or any replacement or renewal thereof.
Concentration Account shall have the meaning given to such term
in Section 2.6(c).
Concentration Account Agreement shall have the meaning given to
such term in Section 2.6(c).
Consolidated Debt shall mean, at any time, all Indebtedness of
the Borrower and its Subsidiaries (i) for borrowed money (including, without
limitation all Revolving Loans) and (ii) with respect to Capitalized Lease
Obligations, in each case determined on a consolidated basis.
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<PAGE> 18
Consolidated Net Income shall mean for any period the
consolidated net income of the Borrower and its Subsidiaries for such period as
determined in accordance with GAAP.
Consolidated Net Worth shall mean, as at any date of
determination, the excess of the assets of the Borrower and its Subsidiaries
over the liabilities of the Borrower and its Subsidiaries as determined on a
consolidated basis in accordance with GAAP; provided that for purposes of
determining Consolidated Net Worth, the Series A Preferred Stock shall be
considered equity.
Consumers shall mean Consumers Packaging Inc., a corporation
organized under the federal laws of Canada.
Contingent Obligations shall mean as to any Person any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
the term Contingent Obligations shall not include (x) endorsements of
instruments for deposit or collection in the ordinary course of business or (y)
guarantees made by a Person of the obligations of a Wholly-Owned Subsidiary of
such Person which do not constitute Indebtedness of such Wholly-Owned Subsidiary
and are incurred in the ordinary course of business of such Wholly-Owned
Subsidiary or (z) obligations of the Borrower under the Headquarters Lease (as
defined in the Acquisition Agreement) as in effect on the Closing Date. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
Continuation and Continuance each shall refer to a continuation
of Revolving Loans pursuant to Section 4.3, provided that neither term shall be
deemed to constitute the making of a Revolving Loan for purposes of this Credit
Agreement.
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<PAGE> 19
Continuing Directors shall mean the directors of the Borrower on
the Closing Date and each other director if such director's nomination for the
election to the Board of Directors of the Borrower is recommended by a majority
of the then Continuing Directors.
Convert, Conversion and Converted each shall refer to a
conversion of Revolving Loans of one Type into Revolving Loans of another Type
pursuant to Section 4.3, provided that each such term shall not constitute the
making of a Revolving Loan for purposes of this Credit Agreement.
Credit Agreement shall mean this Credit Agreement, as the same
may be modified, amended, extended, restated, amended and restated or
supplemented from time to time.
Credit Documents shall mean, collectively, this Credit Agreement,
the Revolving Notes, each of the Collateral Documents, the Intercreditor
Agreement, the U.S. Holdco Guaranty, the Capital Call Agreement and all other
documents, agreements, instruments and certificates now or hereafter executed
and delivered in connection herewith or therewith, as the same may be modified,
amended, extended, restated or supplemented from time to time.
Credit Event shall mean the making of a Revolving Loan or the
issuance of a Letter of Credit.
Current Assets shall mean all assets designated as "current" on a
consolidated balance sheet of the Borrower prepared in accordance with GAAP.
Current Liabilities shall mean all liabilities designated as
"current" on a consolidated balance sheet of the Borrower prepared in accordance
with GAAP (which shall include all Outstandings).
Default shall mean an event, condition or default which with the
giving of notice, the passage of time or both would be an Event of Default.
Defaulting Lender shall have the meaning given to such term in
Section 2.4(c).
Designated Asset Sales shall mean a sale or disposition involving
all or any portion of the Designated Properties.
Designated Properties shall mean the plants of the Borrower set
forth in Schedule XV.
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<PAGE> 20
Disbursement Account shall have the meaning given to such term in
Section 2.3(b).
Dividend shall have the meaning given to such term in Section
8.6.
Dollars and the sign $ shall each mean freely transferable lawful
money of the United States.
Domestic Lending Office shall mean, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I, as such annex may be amended from time to time.
EBITDA shall mean, in any fiscal period, the Consolidated Net
Income (other than extraordinary items and (except as provided in clause (vi)
below) non-recurring (as determined by the Agent in its reasonable discretion)
items of the Borrower and its Subsidiaries for such period but including any
Inventory adjustments), (i) plus the amount of all Interest Expense, income tax
expense, depreciation and amortization, including amortization of any goodwill
or other intangibles for such period, (ii) less gains and plus losses
attributable to any fixed asset sales, (iii) plus or minus (as the case may be)
any other non-cash items (other than any reserve established by the Borrower
against Accounts and/or Inventory) which have been subtracted or added, as the
case may be, in calculating Consolidated Net Income for such period (including,
without limitation, foreign exchange translation adjustments and hedging
transactions entered into pursuant to Commodities Hedging Agreements permitted
by this Agreement), all determined in accordance with GAAP, (iv) plus or minus
(as the case may be) any decrease or increase in the amount of deferred taxes as
shown on the balance sheet as of the end of such period since the first day of
the same period (but without duplication of any taxes included in clause (i) of
this definition), (v) plus or minus (as the case may be) any LIFO expense or
LIFO income, and (vi) plus all customary non-recurring fees and expenses
incurred or paid by the Borrower and its Subsidiaries in connection with the
Transaction, all to the extent added or deducted in calculating Consolidated Net
Income.
Eligible Accounts Receivable shall mean Accounts of the Borrower
payable in Dollars and deemed by the Agent in its Permitted Discretion to be
eligible for inclusion in the calculation of the Borrowing Base. In determining
the amount to be so included, the face amount of such Accounts shall be reduced
by the amount of all returns, discounts, claims, credits, charges, chargebacks,
rebates or other allowances and (but without duplication of any of the
foregoing) by the aggregate amount of all reserves, limits and deductions
provided for in this definition and elsewhere in this Credit Agreement. Unless
otherwise approved in writing by the Agent, no Account shall be deemed to be an
Eligible Account Receivable if:
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<PAGE> 21
(a) it arises out of a sale made by the Borrower to an Affiliate;
or
(b) the Account provides for payment on or before the date which
is 30 days after the date of the original invoice and is unpaid on the date
which is 60 days after the date on which the original invoice provides that such
payment is due; or
(c) the Account provides for payment after the date which is 30
days after the date of the original invoice and is unpaid on the date which is
the earlier of (i) 60 days after the date on which the original invoice provides
that such payment is due and (ii) 120 days after the date of the original
invoice; or
(d) the Account (other than Accounts listed on Schedule XVI
describing the account party and the payment terms, but including any such
Account if such Account is unpaid 30 days after the invoice provides for such
payment) provides for payment more than 91 days after the date of the original
invoice; or
(e) it is from the same account debtor (or any Subsidiary
thereof) and fifty percent (50%) or more, in face amount, of all Accounts from
such account debtor (or any Subsidiary thereof) are ineligible pursuant to (b)
above; or
(f) the Account, when aggregated with all other Accounts of such
account debtor, exceeds five percent (5%), or in the case of the account debtors
listed on Part A of Schedule XV, the percentage set forth opposite such account
debtor's name on Part A of Schedule XV (provided, however, that in no event
shall such percentage exceed 20% (or 25% in the case of the Accounts relating to
Anheuser Busch Brewing Company, Stroh Brewing Company, Bacardi International
Limited and its Affiliates and O-I)), in face value of all Accounts of the
Borrower then outstanding, to the extent of such excess; provided, however, that
Accounts supported or secured by an irrevocable letter of credit in form and
substance satisfactory to the Agent, issued by a financial institution
satisfactory to the Agent, and duly pledged to the Collateral Agent (together
with sufficient documentation to permit direct draws by the Collateral Agent)
shall be excluded for purposes of such calculation; or
(g) (i) the account debtor is also a creditor of the Borrower
(other than account debtors which have provided to the Agent a "no-offset"
letter in form and substance satisfactory to the Agent), (ii) the account debtor
has disputed its liability on, or the account debtor has made any claim with
respect to, such Account or any other Account due from such account debtor to
the Borrower, which has not been resolved or (iii) the Account otherwise is or
may become subject to any right of setoff by the account debtor; provided, that
any Account deemed ineligible pursuant to this clause (f) shall only be
ineligible to the extent of the amount owed by the Borrower to the account
debtor, the amount of such dispute or claim, or the amount of such setoff, as
applicable; or
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<PAGE> 22
(h) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for relief has
been entered by a court having jurisdiction over the account debtor in an
involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or if any other petition or other application for relief
under the federal bankruptcy laws has been filed by or against the account
debtor, or if the account debtor has filed a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound up, or shall
authorize or commence any action or proceeding for dissolution, winding-up or
liquidation, or if the account debtor has failed, suspended business, declared
itself to be insolvent, is generally not paying its debts as they become due or
has consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs,
unless the payment of Accounts from such account debtor is secured in a manner
satisfactory to the Agent or, if the Account from such account debtor arises
subsequent to a decree or order for relief with respect to such account debtor
under the federal bankruptcy laws, as now or hereafter in effect, the Agent
shall have determined that the timely payment and collection of such Account
will not be impaired; or
(i) the sale is to an account debtor outside of the United States
or Canada (except for Accounts listed on Part B of Schedule XV), unless the
account debtor thereon has supplied the Borrower with an irrevocable letter of
credit in form and substance satisfactory to the Agent, issued by a financial
institution satisfactory to the Agent and which has been duly pledged to the
Collateral Agent (together with sufficient documentation to permit direct draws
by the Collateral Agent); or
(j) the sale to the account debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or return
(other than pursuant to ordinary course of business warranties); or
(k) the Agent determines in its Permitted Discretion that such
Account may not be paid by reason of the account debtor's financial inability to
pay; or
(l) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower duly assigns
its rights to payment of such Account to the Collateral Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727 et seq.);
or
(m) title to the goods giving rise to such Account has not been
transferred to the account debtor or the services giving rise to such Account
have not been performed by the Borrower and accepted by the account debtor or
the Account otherwise does not represent a final sale; or
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<PAGE> 23
(n) the Account does not comply with all applicable legal
requirements, including, where applicable, the Federal Consumer Credit
Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board
of Governors of the Federal Reserve System, in each case as amended; or
(o) the amount of such Account relates to charges for pallets; or
(p) the Collateral Agent does not have a valid and perfected
first priority security interest in or Lien on such Account or the Account does
not otherwise conform to the representations and warranties contained in the
Credit Agreement or the other Credit Documents, except that the value of any
Account shall be reduced by the amount of any obligations secured by Permitted
Liens which are prior to the Lien in favor of the Collateral Agent.
Eligible Inventory shall mean Inventory of the Borrower held for
sale in the ordinary course of business deemed by the Agent acting in its
Permitted Discretion to be eligible for inclusion in the calculation of the
Borrowing Base. In any event, Eligible Inventory (i) shall exclude work in
process and inventory which is "held ware", (ii) shall account for reserves for
goods that are obsolete, slow moving (does not turn at least once per year),
rejected or returned, (iii) shall include finished goods and (iv) shall exclude
all goods warehoused in facilities holding less than $100,000 in goods. In
determining the amount to be so included, the amount of such Inventory shall be
valued on a FIFO basis at the lower of cost or market as adjusted from the
Borrower's month end balance sheet, less any goods returned or rejected by the
Borrower's customers and goods in transit (other than goods to which the
Borrower has title), less any reserves otherwise required by the Agent pursuant
to Section 2.2(b), and less any Inventory that the Agent determines to be
ineligible pursuant to Section 2.2(b). Unless otherwise approved in writing by
the Agent, no Inventory shall be deemed Eligible Inventory if:
(a) the Inventory is not owned solely by the Borrower and with
respect to which the Borrower does not have good, valid and marketable
title, or is held by a third party for sale on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis;
or
(b) the Inventory is not stored on property that is either (i)
owned or leased by the Borrower or (ii) owned or leased by a
warehouseman that has contracted with the Borrower to store Inventory on
such warehouseman's property provided that with respect to Inventory
stored on property leased by the Borrower, the Borrower shall have
delivered in favor of the Collateral Agent a Collateral Access Agreement
executed by the lessor of such property, and, with respect to Inventory
stored on property owned or leased by a warehouseman, the Borrower shall
have
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<PAGE> 24
delivered to the Collateral Agent a Collateral Access Agreement executed
by such warehouseman; or
(c) the Inventory is not subject to a perfected first priority
Lien in favor of the Collateral Agent except, (i) with respect to
Eligible Inventory stored at sites described in clause (b) above, for
Liens for normal and customary warehouseman charges and (ii) the value
of any Inventory shall be reduced by the amount of any obligations
secured by Permitted Liens which are prior to the Lien in favor of the
Collateral Agent; or
(d) the Inventory is not located in the United States or at the
Inventory location in Ontario Canada set forth on Schedule II; or
(e) the Inventory is obsolete, has been held by the Borrower for
360 days or more and not reserved, or the Inventory does not otherwise
conform to the representations and warranties contained in the Credit
Agreement or the other Credit Documents; or
(f) such Inventory is part of one product line (identified by
mold number) as disclosed on the schedules attached to the Borrowing
Base Certificate and the amount of such Inventory exceeds 20% of the
FIFO stock Inventory at such time (in the amount of such excess); or
(g) it consists of goods returned or rejected by the Borrower's
customers or goods in transit to third parties (other than to warehouse
sites covered by a Collateral Access Agreement); or
(h) whether or not located on property owned or leased by the
Borrower, it is not segregated or otherwise separately identifiable from
goods of others, if any, stored on the same premises as such Inventory;
or
(i) the Inventory consists of stores, supplies packing, shipping
or decorating materials (other than unlabeled cartons and dividers in an
amount not to exceed $2,000,000); or
(j) the Inventory consists of castings or molds.
Eligible Transferee shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D).
Employment Agreements shall have the meaning provided in Section
5.1(q)(vi).
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End Date shall mean the date occurring 45 days (or in the case of
the last fiscal quarter of the Borrower, 95 days) after the end of the fiscal
quarter in which the previous Start Date occurred.
Environmental Claims shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than internal
reports prepared by the Borrower or any of its Subsidiaries solely in the
ordinary course of such Person's business or as required in connection with a
financing transaction and not in response to any third party action or request
of any kind) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
Environmental Law shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, written guide,
written policy and rule of common law now or hereafter in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 300F et seq.; the Oil Pollution Act of
1990, 33 U.S.C Section 2701 et seq. and any applicable state and local or
foreign counterparts or equivalents.
Equity Financing shall have the meaning given such term in
Section 5.1(i).
Equity Financing Documents shall mean all of the agreements and
documents entered into in connection with or relating to the Equity Financing,
including without limitation, the TD Loan Agreement.
Equity Investors shall mean (i) Consumers and/or its Affiliates,
(ii) Smith Barney as escrow agent for certain creditors of Old Anchor Glass and
(iii) Anchor Glass Container Corporation Service Retirement Plan, Pension Plan
for Hourly Employees, Latchford Glass Company and Associated Companies and
Anchor Glass Container Corporation Retirement Plan for Salaried Employees.
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ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued there- under. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
ERISA Affiliate shall mean each person (as defined in Section
3(9) of ERISA) which together with the Borrower or a Subsidiary of the Borrower
would be deemed to be a "single employer" (i) within the meaning of Section
414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or a
Subsidiary of the Borrower being or having been a general partner of such
person.
Eurodollar Lending Office shall mean, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I, as such annex may be amended from time to time (or, if
no such office is specified, its Domestic Lending Office), or such other office
or Affiliate of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.
Eurodollar Rate shall mean, with respect to an Interest Period
for each Eurodollar Rate Loan comprising part of the same Borrowing, an interest
rate per annum equal to the average (rounded upward to the nearest whole
multiple of one-sixteenth (1/16) of one percent (1%) per annum, if such rate is
not such a multiple) of the offered quotation, if any, to first class banks in
the New York interbank Eurodollar market by BTCo for U.S. dollar deposits of
amounts in immediately available funds comparable to the principal amount of the
Eurodollar Rate Loan of BTCC for which the Eurodollar Rate is being determined
with maturities comparable to the Interest Period for which such Eurodollar Rate
will apply as of approximately 11:00 A.M. New York City time two (2) Business
Days prior to the commencement of such Interest Period.
Eurodollar Rate Loan shall mean a Revolving Loan bearing interest
as provided in Section 4.1.
Event of Default shall have the meaning provided for in Section
9.1 of this Credit Agreement.
Existing Credit Agreement shall mean the Credit Agreement among
Old Anchor Glass, Foothill Capital Corporation and Congress Financial
Corporation, as amended, modified or supplemented to and including the Closing
Date.
Existing Indebtedness shall mean all Indebtedness of the Acquired
Business outstanding prior to, and to remain outstanding on and after, the
Closing Date, and set forth
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on Schedule IX, without giving effect to extensions or renewals thereto, except
as expressly provided therein.
Existing Indebtedness Agreements shall have the meaning given to
such term in Section 5.1(q)(iii) hereof.
Existing Liens shall have the meaning set forth in Section
8.2(e).
Existing Senior Secured Notes shall mean the Series A Senior
Secured Notes due July 15, 1998, the Series B Senior Secured Notes due July 15,
1999 and the Series C Senior Secured Notes due July 15, 1999.
Expenses shall mean all present and future invoiced expenses
incurred by or on behalf of the Agent in connection with this Credit Agreement,
any other Credit Document or otherwise in its capacity as the Agent under this
Credit Agreement, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to, the cost of record searches, the reasonable
fees and expenses of attorneys and paralegals, all costs and expenses incurred
by the Agent in opening bank accounts, depositing checks, electronically or
otherwise receiving and transferring funds, and any charges imposed on the Agent
due to insufficient funds of deposited checks and the standard fee of the Agent
relating thereto, collateral examination fees and expenses, reasonable fees and
expenses of accountants, appraisers or other consultants, experts or advisors
employed or retained by the Agent, out of pocket syndication fees and expenses,
fees and taxes relative to the filing of financing statements, costs of
preparing and recording any other Collateral Documents, all expenses, costs and
fees set forth in Article 4 of this Credit Agreement, all other fees and
expenses required to be paid pursuant to the Fee Letter and all fees and
expenses incurred in connection with releasing Collateral and the amendment or
termination of any of the Credit Documents.
Expiration Date shall mean February 5, 2002.
Facing Fees shall have the meaning provided in Section 4.7.
Federal Funds Rate shall mean, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such day
on such transactions received by the Payments Administrator from three Federal
Funds brokers of recognized standing selected by it.
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Fee Letter shall mean that certain letter dated as of December 2,
1996 among BTCC and Consumers providing for the payment of certain fees in
connection with this Credit Agreement.
Fees shall mean, collectively, the Unused Line Fee, the Letter of
Credit Fees, the Facing Fees, the Issuing Bank Fees and the other fees provided
for in the Fee Letter.
Financial Statements shall mean the consolidated and
consolidating balance sheets and statements of operations and consolidated
statements of cash flows and statements of changes in shareholder's equity of
the Borrower for the period specified prepared in accordance with GAAP, which
shall include for purposes of Financial Statements to be delivered pursuant to
Section 7.1(a) plant-by-plant statements of operations.
GAAP shall mean generally accepted accounting principles in the
United States as in effect from time to time subject to Section 1.2.
Governing Documents shall mean, as to any Person, the certificate
or articles of incorporation and by-laws or other organizational or governing
documents of such Person.
Governmental Authority shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Hazardous Materials shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contained dielectric fluid containing levels of polychlorinated biphenyls;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
Headquarters Property shall have the meaning provided in Section
8.23.
Headquarters Reserve shall have the meaning provided in Section
8.23.
Highest Lawful Rate shall mean, at any given time during which
any Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that
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at any time or from time to time may be contracted for, taken, reserved, charged
or received on the Obligations owing under this Credit Agreement and any other
Credit Document, under the laws of the State of New York (or the law of any
other jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Credit Agreement and the other Credit Documents), or
under applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under New York (or
such other jurisdiction's) law, in any case after taking into account, to the
extent permitted by applicable law, any and all relevant payments or charges
under this Credit Agreement and any other Credit Documents executed in
connection herewith, and any available exemptions, exceptions and exclusions.
Indebtedness of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, but only to the extent of the value
of the assets secured by such Lien if such indebtedness has not been assumed,
(v) all Capitalized Lease Obligations of such Person, (vi) the net payment
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vii) all net payment obligations of such Person under Interest
Rate Agreements, (viii) Commodity Hedging Agreements, (ix) all reimbursement or
other monetary obligations with respect to surety, performance and bid bonds,
and (x) all Contingent Obligations of such Person; provided, that Indebtedness
shall not include trade payables and accrued expenses, in each case arising in
the ordinary course of business.
Indemnity Agreement shall mean the Indemnity Agreement, dated as
of December 18, 1996, among the Borrower, Consumers and Vitro, Socieded Anonima,
as the same may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
Independent Financial Advisor shall mean a firm (i) which does
not, and whose directors, officers and employees or Affiliates do not, have a
direct or indirect financial interest in the Borrower, (ii) which, in the
judgment of the Board of Directors of the Borrower, is otherwise independent and
qualified to perform the task for which it is to be engaged and (iii) which
shall, in the case of machinery and equipment, be a qualified appraiser.
Initial Credit Event shall mean the making of the initial
Revolving Loans or the issuance of the initial Letter of Credit hereunder.
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Intercreditor Agreement shall have the meaning provided in
Section 5.1(g).
Interest Coverage Ratio shall mean for any period the ratio for
such period of (x) the sum of (a) EBITDA and (b) Operating Lease Payments to (y)
the sum of (i) Interest Expense and (ii) Operating Lease Payments.
Interest Expense shall mean the aggregate consolidated interest
accrued and/or paid by the Borrower and its Subsidiaries in respect of
Indebtedness determined on a consolidated basis in accordance with GAAP,
including, without limitation, amortization of original issue discount on any
Indebtedness and of all fees payable in connection with the incurrence of such
Indebtedness (to the extent included in interest expense), the interest portion
of any deferred payment obligation the interest component of any Capital Lease
Obligations, net cash costs under any Interest Rate Agreements or Commodity
Hedge Agreements, all capitalized interest and interest paid by the Borrower or
its Subsidiaries on debt guaranteed by the Borrower or its Subsidiaries.
Interest Period shall mean for any Eurodollar Rate Loan the
period commencing on the date of the Borrowing, Conversion or Continuance
thereof and ending on the last day of the period selected by the Borrower
pursuant to the provisions below. The duration of each such Interest Period
shall be one, two, three or six months, in each case as the Borrower may, in an
appropriate Notice of Borrowing, Notice of Continuation or Notice of Conversion,
select; provided, however, that the Borrower may not select any Interest Period
that ends after the Expiration Date. Whenever the last day of any Interest
Period would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding Business
Day; provided, however, that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding Business Day. Whenever
any Interest Period 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), such Interest Period shall end on the last
Business Day of the applicable calendar month.
Interest Rate Agreement shall mean any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement under which the
Borrower or any of its Subsidiaries is a party or beneficiary.
Inventory shall mean all of the inventory owned by the Borrower,
including without limitation: (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in the
Borrower's business; (ii) all goods, wares and merchandise, finished or
unfinished, held for sale or lease or leased or furnished or to
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be furnished under contracts of service; and (iii) all goods returned or
repossessed by the Borrower.
Inventory Sublimit shall have the meaning given to such term in
Section 2.2(a).
Investment shall have the meaning given to such term in Section
8.5.
Issuing Bank shall mean BTCo, PNC or any Lender that is
acceptable to the Agent which has agreed to issue a Letter of Credit for the
account of the Borrower under this Credit Agreement.
Issuing Bank Fees shall have the meaning given to such term in
Section 4.7.
Lease Reserve Amount shall initially mean zero, and shall be
increased and reduced by the amounts and at the times set forth in Section 8.23.
Lender shall have the meaning given to such term in the preamble
to this Credit Agreement.
Letter of Credit Fees shall have the meaning given to such term
in 4.7.
Letter of Credit Obligations shall mean, at any time, the sum of
(i) the aggregate undrawn amount of all Letters of Credit outstanding at such
time, plus (ii) the aggregate amount of all drawings under Letters of Credit
which have not been reimbursed by the Borrower (including through the incurrence
of Revolving Loans).
Letter of Credit Request shall have the meaning given to such
term in Section 3.4.
Letters of Credit shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of inventory, equipment or
otherwise) issued for the account of the Borrower pursuant to Article 3 of this
Credit Agreement and all amendments, renewals, extensions or replacements
thereof.
Level shall mean and include Level I, Level II, Level III or
Level IV, whichever is then in effect.
Level I shall be in effect at any time Leverage Ratio is less
than 2.25 to 1.
Level II shall be in effect at any time Leverage Ratio is equal
to or greater than 2.25 to 1 but less than 2.75 to 1.
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Level III shall be in effect at any time Leverage Ratio is equal
to or greater than 2.75 to 1 but less than 3.25 to 1.
Level IV shall be in effect at any time Leverage Ratio is equal
to or greater than 3.25 to 1.
Leverage Ratio shall mean, at any time, the ratio of Consolidated
Debt at such time to EBITDA on the last day of the Test Period.
Lien(s) shall mean any lien, charge, pledge, security interest,
deed of trust, mortgage, other encumbrance or other arrangement having the
practical effect of the foregoing or other preferential arrangement of any other
kind and shall include the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement.
Management Agreements shall have the meaning given to such term
in Section 5.1(q)(v).
Margin Stock shall have the meaning provided in Regulation U.
Material Adverse Effect shall mean a material adverse effect on
(i) the business, operations, results of operations, assets, liabilities,
financial condition or prospects of the Acquired Business, U.S. Holdco or the
Borrower and its Subsidiaries taken as a whole (except as resulting from the
bankruptcy proceeding of Old Anchor Glass), (ii) the value of Collateral or the
amount which the Agent and the Lenders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral, (iii) U.S. Holdco's and the Borrower's ability to perform
its material obligations under the Credit Documents to which it is a party, or
(iv) the material rights and remedies of the Agent, the Issuing Banks or the
Lenders under any Credit Document.
Material Contract shall mean any contract or other arrangement
(other than the Credit Documents), whether written or oral, to which the
Borrower or any of its Subsidiaries is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto may be
reasonably expected to have a Material Adverse Effect.
Moody's shall mean Moody's Investors Service, Inc.
Multiemployer Plan shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
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Net Sale Proceeds shall mean for any sale, lease, transfer or
other disposition of assets, the gross cash proceeds (including any cash
received by way of deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) received by the Borrower or any of its
Wholly-Owned Subsidiaries from such sale, lease, transfer or other disposition,
net of reasonable transaction costs (including, without limitation, income taxes
estimated to be payable as a result of such sale, lease, transfer or other
disposition, any underwriting, brokerage or other customary selling commissions
and reasonable legal, advisory and other fees and expenses, including title and
recording expenses and reasonable expenses incurred for preparing such assets
for sale, associated therewith) and payments of unassumed liabilities relating
to the assets sold at the time of, or within 30 days after, the date of such
sale, the amount of such gross cash proceeds required to be used to repay any
Indebtedness (other than Indebtedness to the Lenders pursuant to this Credit
Agreement) which is secured by the respective assets which were sold.
Notice of Borrowing shall have the meaning given to such term in
Section 2.3(a)(i) and shall include any deemed Notice of Borrowing pursuant to
Section 3.5.
Notice of Continuation shall have the meaning given to such term
in Section 4.3(a).
Notice of Conversion shall have the meaning given to such term in
Section 4.3(b).
Obligations shall mean, without duplication, the unpaid principal
of and interest on (including interest accruing on or after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower or any Subsidiary of the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Revolving Notes, any reimbursement obligation or indemnity
of the Borrower or any Subsidiary of the Borrower on account of Letters of
Credit or any accommodation extended with respect to applications for Letters of
Credit, the Fees, the Expenses and all other obligations and liabilities of the
Borrower or any Subsidiary of the Borrower to the Agent, the Issuing Banks or to
the Lenders, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Credit Agreement, the Revolving Notes, any other
Credit Document and any other document made, delivered or given in connection
herewith or therewith.
Old Anchor Glass shall mean Anchor Glass Container Corporation, a
Delaware corporation as debtor-in-possession.
O-I shall mean Owens-Brockway Glass Container, Inc., a Delaware
corporation.
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O-I Assurance Agreement shall have the meaning provided in
Section 5.1(aa).
Operating Lease shall mean as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person other than a
Capitalized Lease Obligation.
Operating Lease Payment shall mean any payment made by the
Borrower or any of its Subsidiaries under an Operating Lease.
Orders shall mean the Sale Order and any other orders of the
Bankruptcy Court entered in connection with the Transaction.
Outstandings shall mean, at any time, the sum of (i) the
principal amount of Revolving Loans outstanding at such time plus (ii) the
Letter of Credit Obligations at such time.
Payment Office shall mean 14 Wall Street, New York, New York
10005 or any other office within the continental United States designated by the
Payments Administrator to the Borrower from time to time as the office for
payment of all amounts required to be paid by the Borrower under this Credit
Agreement.
Payments Administrator shall mean BTCC; provided, however, that
if BTCC shall cease to be the Agent hereunder, the Lenders shall have the option
to appoint one of the remaining Lenders as the Payments Administrator by written
notice to the Borrower.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
Permanent Senior Note Documents shall mean all purchase
agreements, indentures and other instruments evidencing or entered into in
connection with the Permanent Senior Notes including, without limitation, the
Borrower's Common Stock Purchase Warrants.
Permanent Senior Notes shall mean senior secured notes of the
Borrower, issued pursuant to a private placement, public offering or similar
transaction, (x) with terms and conditions substantially as favorable or better
to the Borrower (in the reasonable judgment of the Agent) as the Description of
Notes delivered to the Lenders prior to the Closing Date.
Permitted Discretion shall mean, with respect to the Agent, the
Agent's judgment exercised in good faith based upon its consideration of any
factor which the Agent
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believes in good faith: (i) will or could adversely affect the value of any
Collateral, the enforceability or priority of the Collateral Agent's Liens
thereon or the amount which the Agent and the Lenders would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral; (ii) suggests that any collateral report or
financial information delivered to the Agent by any Person on behalf of the
Borrower or any Subsidiary of the Borrower is incomplete, inaccurate or
misleading in any material respect; (iii) materially increases the likelihood of
a bankruptcy, reorganization or other insolvency proceeding involving the
Borrower or any of the Borrower's Subsidiaries or any of the Collateral; or (iv)
creates or reasonably could be expected to create a Default or Event of Default.
In exercising such judgment, the Agent may consider such factors already
included in or tested by the definition of Eligible Accounts Receivable or
Eligible Inventory, as well as any of the following: (i) the financial and
business climate of the Borrower's industry; (ii) changes in collection history
and dilution with respect to the Accounts; (iii) significant changes in demand
for, and pricing of, Inventory; (iv) significant changes in any concentration of
risk with respect to Accounts and Inventory; and (v) any other factors that
significantly increase the credit risk of lending to the Borrower on the
security of the Accounts and Inventory. The Agent shall disclose to the Borrower
the basis on which its Permitted Discretion is exercised; however, the burden of
establishing lack of good faith hereunder shall be on the Borrower.
Permitted Holders means (a) John J. Ghaznavi and (b) any Person
as to which John J. Ghaznavi either (i) "beneficially" owns (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934) on a fully diluted
basis all of the economic and voting interest of all of the classes of capital
stock of such Person or (ii) is the sole trustee or general partner or otherwise
has the sole power to manage the business and affairs of such Person.
Permitted Liens shall have the meaning given to such term in
Section 8.2.
Permitted Materials shall have the meaning given to such term in
Section 6.18(c).
Person shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (including any division,
agency or department thereof), and, as applicable, the successors, heirs and
assigns of each.
Plan shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute by) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate which is organized under the laws of the United States and is
subject to Title I of ERISA, and each such plan for the five year period
immediately following the latest date on which the Borrower, or
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a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or
had an obligation to contribute to such plan.
Plant Closures shall mean the closing and discontinuance of
operation of plants in the ordinary course of business including Plant Closures
previously implemented by Old Anchor Glass and Plant Closures which may be
implemented by the Borrower.
Plant Sales shall mean the sale of (x) the Hayward, California
and Antioch, California manufacturing plants of Old Anchor Glass and (y) all of
Old Anchor Glass' interest in (1) the partnership arrangement between Old Anchor
Glass and Coors Brewing Company and (2) the Supply Agreement, dated as of the
1st day of January, 1995, between Old Anchor Glass and Coors Brewing Company to
O-I pursuant to the Acquisition Agreement.
Plan Termination Agreement shall have the meaning provided in
Section 5.1(k)(C).
Pledge Agreement shall have the meaning provided in Section
5.1(dd).
PNC shall mean PNC Bank, National Association.
PNC Expense Letter shall mean that certain letter dated as of
January __, 1997 between PNC and Consumers providing for the payment of certain
expenses in connection with this Credit Agreement.
Preferred Stock shall mean the Series A Preferred Stock and the
Series B Preferred Stock.
Preferred Stock Financing shall have the meaning given such term
in Section 5.1(i).
Prime Lending Rate shall mean the rate which BTCo publicly
announces in New York City from time to time as its prime lending rate, as in
effect from time to time. The Prime Lending Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer. BTCo may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
Projections shall have the meaning provided in Section 5.1(s).
Proportionate Share shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the amount
of such Lender's Commitment and the denominator of which shall be the Total
Commitments or, if the
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Commitments are terminated, a fraction the numerator of which shall be the
amount of such Lender's Revolving Loans and the denominator of which shall be
the aggregate amount of then outstanding Revolving Loans of all the Lenders.
Quarterly Period shall mean that period commencing on the
relevant Start Date and ending on the relevant End Date.
RCRA shall mean the Resources Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.
Real Property of any Person shall mean all of the right, title
and interest of such Person in and to land, improvements and fixtures, including
leaseholds.
Regulation D shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
thereto.
Regulation U shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
thereto.
Replaced Lender shall have the meaning provided in Section
11.6(d).
Replacement Lender shall have the meaning provided in Section
11.6(d).
Reportable Event shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events to the extent to which the 30-day notice period is waived under
subsection .22, .23, .25, .27, .28, .29, .30, .31 or .32(c)(2), (3) or (4) of
PBGC Regulation Section 4043.
Required Lenders shall mean, at any time, those Lenders then owed
or holding in the aggregate more than 50% of the sum of the then existing
aggregate unpaid principal amount of the Revolving Loans and the then existing
aggregate undrawn amount of the Total Commitments.
Requirement of Law shall mean, as to any Person, the Governing
Documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
Revolving Loans shall have the meaning given to such term in
Section 2.1.
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Revolving Note shall mean a promissory note of the Borrower
payable to the order of a Lender, in the form of Exhibit A, evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from the
Revolving Loans made by such Lender or acquired by such Lender pursuant to
Section 11.6.
S&P shall mean Standard & Poor's Rating Services.
Sale Order shall have the meaning provided in Section 5.1(k)(E).
Section 2.9(b)(ii) Certificate shall have the meaning given such
term in Section 2.9(b)(ii).
Security Agreement shall have the meaning given such term in
Section 5.1(d).
Senior Credit Agreement shall mean that Credit Agreement dated as
of February 5, 1997 among Anchor Glass Acquisition Corporation, the Guarantors
named therein, the Lenders named therein and Bankers Trust Company as Agent.
Senior Note Documents shall mean the Bridge Senior Note Documents
and the Permanent Senior Note Documents.
Senior Notes shall mean the Bridge Senior Notes and the Permanent
Senior Notes.
Series A Certificate of Designation shall mean the Certificate of
Designation, Preferences and Relative, Participating, Optional or other Rights,
and the Qualifications, Limitations or Restrictions thereof, of the Series A 10%
Cumulative Convertible Preferred Stock of the Borrower.
Series A Preferred Stock shall mean the Series A 10% Cumulative
Convertible Preferred Stock of the Borrower described in the Series A
Certificate of Designation.
Series B Certificate of Designation shall mean the Certificate of
Designation, Preferences and Relative, Participating, Optional or other Rights,
and the Qualifications, Limitations or Restrictions thereof, of the Series B 8%
Cumulative Convertible Preferred Stock of the Borrower.
Series B Preferred Stock shall mean the Series B 8% Cumulative
Convertible Preferred Stock of the Borrower described in the Series B
Certificate of Designation.
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Settlement Date shall have the meaning given to such term in
Section 2.4(b)(i).
Shared Collateral shall have the meaning provided in the
Intercreditor Agreement.
Shareholders' Agreements shall have the meaning given to such
term in Section 5.1(q)(iv).
Start Date shall mean the date occurring 45 days (or in the case
of the last fiscal quarter of the Borrower, 95 days) after the end of each
fiscal quarter of the Borrower.
Stroh's Payments shall mean payments of up to $6.0 million in
1997 and $7.0 million in 1998 to The Stroh Brewing Company pursuant to the
Agreement dated June 17, 1996 between The Stroh Brewing Company and Old Anchor
as in effect on the date hereof.
Sub-Collection Account shall have the meaning given to such term
in Section 2.6(b)(i).
Subsidiary shall mean as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Credit Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.
Syndication Agents shall mean BTCC and PNC, together with their
affiliates acting as co-syndication agents under this Agreement.
Syndication Date shall mean the earlier of (x) the date which is
90 days after the Closing Date and (y) the date upon which the Agent determines
in its sole discretion (and notifies the Borrower) that the primary syndication
(and the resulting addition of institutions as Lenders pursuant to Section 11.6)
has been completed, notice of which shall be promptly given to the Borrower.
Tax Sharing Agreements shall have the meaning given to such term
in Section 5.1(q)(vii).
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Taxes shall have the meaning given to such term in Section 2.9.
Technical Assistance and License Agreement shall mean the
Technical Assistance and License Agreement dated as of December 18, 1996 between
O-I and Consumers with respect to which the Borrower has rights as a member of
the "License Group" (as defined therein).
Test Period shall mean, at any time, the four consecutive fiscal
quarters of the Borrower then last ended (taken as a whole).
TD Loan Agreement shall mean that amended and restated loan
agreement dated as of January 31, 1997 among Consumers and Toronto-Dominion,
Canadian Imperial Bank of Commerce and of the financial institutions from time
to time admitted as Lenders thereunder.
Toronto-Dominion shall mean Toronto-Dominion Bank.
Total Commitments shall mean the aggregate of the Commitments of
all the Lenders.
Transaction shall mean, collectively, (i) the Equity Financing,
(ii) the issuance of the Bridge Senior Notes, (iii) the Plant Sales, (iv) the
Acquisition and (v) the occurrence of the Initial Credit Event on the Closing
Date.
Transaction Documents shall mean, collectively, (i) the Bridge
Senior Note Documents, (ii) the Credit Documents, (iii) the Equity Financing
Documents and (iv) the Acquisition Documents.
Type shall mean, with respect to any Revolving Loan, whether such
Revolving Loan is a Eurodollar Rate Loan or a Base Rate Loan.
UCC shall mean the Uniform Commercial Code.
Unfunded Current Liability of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year, determined in accordance
with actuarial assumptions at such time consistent with Statement of Financial
Accounting Standards No. 87, exceeds the market value of the assets allocable
thereto.
Unused Line Fee shall have the meaning given to such term in
Section 4.6.
U.S. Holdco shall mean Consumers U.S., Inc., a Delaware
corporation.
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U.S. Holdco Guaranty shall have the meaning provided in Section
5.1(z).
Vitro shall mean Vitro, Sociedad Anonima, a corporation organized
under the laws of the United Mexican States.
Wholly-Owned Subsidiary of any Person shall mean any Subsidiary
of such Person to the extent all of the capital stock or other ownership
interests in such Subsidiary, other than directors' qualifying shares, is owned
directly or indirectly by such Person or a Wholly-Owned Subsidiary thereof.
Working Capital Ratio shall mean, at any time, the ratio of
Current Assets divided by Current Liabilities.
1.2 Accounting Terms and Determinations. Unless otherwise defined
or specified herein, all accounting terms used herein shall have the meanings
customarily given in accordance with GAAP, and all financial computations to be
made under this Credit Agreement shall, unless otherwise specifically provided
herein, be made in accordance with GAAP in effect on the Closing Date (including
the fresh start financial reporting of the Borrower previously described to the
Agent). All accounting determinations for purposes of determining compliance
with Sections 8.9 through 8.12 hereof shall be made in accordance with GAAP as
in effect on the Closing Date (including the fresh start financial reporting of
the Borrower previously described to the Agent) and shall exclude in any event
the effects, if any, of the adoption and continuing implementation of statements
106 and 109 of the Financial Accounting Standards Board. The Financial
Statements required to be delivered hereunder from and after the Closing Date
and all financial records shall be maintained in accordance with GAAP as in
effect on the Closing Date (including the fresh start financial reporting of the
Borrower previously described to the Agent). If GAAP shall change after the
Closing Date, the certificates required to be delivered pursuant to Section 7.1
demonstrating compliance with the covenants contained herein shall include
calculations setting forth the adjustments necessary to demonstrate how the
Borrower is in compliance with the financial covenants based upon GAAP as
utilized on the Closing Date (including the fresh start financial reporting of
the Borrower previously described to the Agent). If, after the Closing Date, the
Borrower shall change its method of inventory accounting from the
first-in-first-out method to the last-in-first-out method, all calculations
necessary to determine compliance with the covenants contained herein shall be
made as if such method of inventory accounting had not been so changed. Any
reference herein to a fiscal quarter shall mean a fiscal quarter consisting of
63 Business Days, except in the case of 366-day year, in which case one fiscal
quarter may contain an additional Business Day. Any reference herein to a fiscal
month shall mean a fiscal month consisting of 21 Business Days.
1.3 Other Defined Terms. Terms not otherwise defined herein which
are defined in the UCC as in effect on the date hereof in the State of New York
shall have the
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meanings given them in such UCC. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Credit Agreement shall refer to
this Credit Agreement as a whole and not to any particular provision of this
Credit Agreement, and references to Article, Section, Schedule, Exhibit and like
references are references to this Credit Agreement unless otherwise specified.
An Event of Default shall "continue" or be "continuing" until such Event of
Default has been cured or waived in accordance with Section 11.10 hereof.
ARTICLE 2.
Revolving Loans
2.1 Commitments. Subject to the terms and conditions set forth in
this Credit Agreement, on and after the Closing Date and to and excluding the
Expiration Date, each of the Lenders severally agrees to make loans and advances
to the Borrower hereunder (the "Revolving Loans"). The Borrower hereby agrees to
execute and deliver to each Lender a Revolving Note in the form of Exhibit A to
evidence the Revolving Loans made by such Lender.
2.2 Determination of Borrowing Base. (a) Subject to Section
2.2(b) and Section 2.3(c), Revolving Loans shall not in aggregate principal
amount exceed the lesser of:
(i) the Total Commitments then in effect minus the Letter of
Credit Obligations; and
(ii) the amount then equal to:
(A) Eighty-five percent (85%) of the Eligible Accounts
Receivable, plus
(B) Fifty-five percent (55%) of the Eligible Inventory, and
minus
(C) the Lease Reserve Amount, if any, and minus
(D) the Letter of Credit Obligations.
The sum of the amounts calculated in accordance with clause (ii)(A), (B) and (C)
above is hereinafter referred to as the "Borrowing Base." In addition,
eighty-five percent (85%) of the Eligible Accounts Receivable shall at least be
thirty-five percent (35%) of Outstandings (the "Inventory Sublimit").
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(b) The Agent shall (x) at any time be entitled to (i) establish
and increase or decrease reserves against Eligible Accounts Receivable and
Eligible Inventory, and (ii) impose additional restrictions (or eliminate the
same) to the standards of "Eligible Accounts Receivable" and "Eligible
Inventory" and (y) upon not less than ten (10) days' prior notice to the
Borrower reduce the advance rates under Section 2.2(a)(ii)(A) or (B) or the
Inventory Sublimit or restore such advance rates to any level equal to or below
the advance rates stated in Section 2.2(a)(ii)(A) or (B) or the Inventory
Sublimit, and "Eligible Inventory," in the exercise of its Permitted Discretion.
The Agent may but shall not be required to rely on each Borrowing Base
Certificate and any other schedules or reports delivered to it in connection
herewith in determining the then eligibility of Accounts and Inventory. Reliance
thereon by the Agent from time to time shall not be deemed to limit the right of
the Agent to revise advance rates or standards of eligibility as provided in
this Section 2.2(b).
(c) The Borrowing Base will be computed weekly (or, if requested
by the Agent in the exercise of its Permitted Discretion, more frequently as so
requested) and a Borrowing Base Certificate presenting its computation will be
delivered promptly to the Agent as set forth in Section 7.1(e). Notwithstanding
anything to the contrary contained herein, the Agent shall be satisfied that
(based on the final collateral examination report delivered pursuant to Section
5.1(w) below), on the Closing Date and after giving effect to the consummation
of the Transaction, the Borrower shall be able to incur additional Outstandings,
after giving effect to the Outstandings on the Closing Date of $50,000,000 or
more in compliance with the Borrowing Base and Inventory Sublimits restrictions.
2.3 Borrowing Mechanics. (a) Except as provided in Section
2.3(b), Borrowings shall be made on notice from the Borrower to the Payments
Administrator, given not later than 1:00 P.M. New York City time on the date on
which the proposed Borrowing consisting of Base Rate Loans is requested to be
made and on the third Business Day prior to the date on which any proposed
Borrowing consisting of Eurodollar Rate Loans is requested to be made.
(i) Each Notice of Borrowing shall be given by either telephone,
telecopy, telex, facsimile or cable, and, if by telephone, confirmed in
writing, substantially in the form of Exhibit B-1 (the "Notice of
Borrowing"). Each Notice of Borrowing shall be irrevocable by and
binding on the Borrower.
(ii) The Borrower shall notify the Payments Administrator in
writing of the names of the officers authorized to request Revolving
Loans on behalf of Borrower, and shall provide the Payments
Administrator with a specimen signature of each such officer. The
Payments Administrator shall be entitled to rely conclusively on such
officers' authority to request Revolving Loans on behalf of the Borrower
until the Payments Administrator receives written notice to the
contrary. The Payments Administrator shall have no duty to verify the
authenticity of the
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signature appearing on any Notice of Borrowing or other writing
delivered pursuant to this Section 2.3(a) and, with respect to an oral
request for Revolving Loans, the Payments Administrator shall have no
duty to verify the identity of any individual representing himself as
one of the officers authorized to make such request on behalf of the
Borrower. Neither the Payments Administrator nor any of the Lenders
shall incur any liability to the Borrower as a result of acting upon any
telephonic notice referred to in this Section 2.3(a) which notice the
Payments Administrator believes in good faith to have been given by a
duly authorized officer or other individual authorized to request
Revolving Loans on behalf of the Borrower or for otherwise acting
reasonably and in good faith under this Section 2.3(a) and, upon the
funding of Revolving Loans by the Lenders in accordance with this Credit
Agreement, pursuant to any such telephonic notice, the Borrower shall be
deemed to have made a Borrowing of Revolving Loans hereunder.
(iii) In a Notice of Borrowing, the Borrower may request one or
more Borrowings on a single day. Each such Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Revolving
Loans of the same Type and shall be in an aggregate amount for all
Lenders of not less than $1,000,000 in the case of Eurodollar Rate Loans
or $500,000 in the case of Base Rate Loans. Unless otherwise requested
in the applicable Notice of Borrowing, all Revolving Loans shall be Base
Rate Loans. The right of the Borrower to choose Eurodollar Rate Loans is
subject to the provisions of Section 4.3(c).
(iv) Notwithstanding the foregoing, the Borrower may not incur
Eurodollar Rate Loans prior to the Syndication Date, except that the
Borrower may incur (to the extent it has not elected to Convert Base
Rate Loans into such Eurodollar Rate Loans) one Borrowing of Eurodollar
Rate Loans with one month Interest Period on or prior to the fifth day
following the Closing Date.
(b) The Borrower has informed the Agent that it has decided to
open a checking account (the "Disbursement Account") with Bankers Trust
(Delaware) ("BT Delaware") for general corporate purposes, including the purpose
of paying trade payables and other operating expenses. The Lenders hereby
authorize the Payments Administrator, and so long as the conditions for
Borrowing in Article 5 remain satisfied, the Payments Administrator on behalf of
the Lenders may but shall not be obligated to make Revolving Loans to cover the
amount of checks presented for payment and other disbursements from the
Disbursement Account. Advice from BT Delaware of amounts required to cover such
amounts will be deemed a sufficient Notice of Borrowing. Such Borrowings shall
be of Base Rate Loans only and will not be subject to the minimum amount
requirement of Section 2.3(a)(iii).
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(c) In the event the Borrower is unable to comply with (i) the
Borrowing Base limitations set forth in Section 2.2(a) or the Inventory Sublimit
or (ii) the conditions precedent to the making of a Revolving Loan or the
issuance of a Letter of Credit set forth in Section 5.2, the Lenders authorize
the Payments Administrator, for the account of the Lenders, to make Agent
Advances to the Borrower for a period commencing on the date the Payments
Administrator first receives a Notice of Borrowing requesting an Agent Advance
until the earlier of (i) the fifteenth Business Day after such date, (ii) the
date the Borrower is again able to comply with the Borrowing Base limitations,
the Inventory Sublimit, and the conditions precedent to the making of Revolving
Loans and issuance of Letters of Credit, or obtains an amendment or waiver with
respect thereto, or (iii) the date the Required Lenders instruct the Payments
Administrator to cease making Agent Advances (in each case, the "Agent Advance
Period"). The Payments Administrator shall not make any Agent Advance to the
extent that at such time the amount of such Agent Advance when added to the
aggregate outstanding amount of other Agent Advances would exceed the lesser of
(A) the remainder of (i) the Total Commitments at such time less (ii) the
Outstandings at such time and (B) the lesser of (x) $10,000,000 or (y) 10% of
the Outstandings at such time.
2.4 Settlements Among the Payments Administrator and the Lenders.
(a) Except as provided in Section 2.4(b), the Payments Administrator shall give
to each Lender prompt notice of each Notice of Borrowing by telecopy, telex,
facsimile or cable. No later than 12:00 Noon New York City time on the date of
each Borrowing representing the incurrence of Revolving Loans (unless the
Closing Date is the date of such incurrence, in which case no later than 11:00
A.M. New York City time on the Closing Date), each Lender will make available
for the account of its Applicable Lending Office, to the Payments Administrator
at its Payment Office, in immediately available funds, its Proportionate Share
of such Borrowing. Unless the Payments Administrator shall have been notified by
any Lender prior to the date of such Borrowing that such Lender does not intend
to make available to the Payments Administrator its portion of such Borrowing to
be made on such date, the Payments Administrator may assume that such Lender
will make such amount available to the Payments Administrator at its Payment
Office on such date of Borrowing, or, if applicable, the Settlement Date (as
defined below) and the Payments Administrator, in reliance upon such assumption,
may but shall not be obligated to make available the amount of the Borrowing to
be provided by such Lender. Except as provided in Section 2.4(b) and subject to
Section 2.4(e), promptly after its receipt of payments from or on behalf of the
Borrower (other than amounts payable to the Agent to reimburse the Agent and any
Issuing Bank for fees and expenses payable solely to them), the Payments
Administrator will cause such payments to be distributed ratably to the Lenders.
The Lenders will apply such payments in accordance with Section 2.6(d).
(b) Unless the Required Lenders have instructed the Payments
Administrator to the contrary, the Payments Administrator on behalf of the
Lenders may
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but shall not be obligated to make Base Rate Loans under Section 2.3 without
prior notice of the proposed Borrowing to the Lenders, as follows:
(i) The amount of each Lender's Proportionate Share of Revolving
Loans shall be computed weekly (or more frequently in the Payment
Administrator's discretion) and shall be adjusted upward or downward on
the basis of the amount of outstanding Revolving Loans as of 5:00 P.M.
New York City time on the last Business Day of the period specified by
the Payments Administrator (such date, the "Settlement Date"). The
Payments Administrator shall deliver to each of the Lenders promptly
after the Settlement Date a summary statement of the amount of
outstanding Revolving Loans for such period. The Lenders shall transfer
to the Payments Administrator, or, subject to Section 2.4(e), the
Payments Administrator shall transfer to the Lenders, such amounts as
are necessary so that (after giving effect to all such transfers) the
amount of Revolving Loans made by each Lender shall be equal to such
Lender's Proportionate Share of the aggregate amount of Revolving Loans
outstanding as of such Settlement Date. If the summary statement is
received by the Lenders prior to 12:00 Noon New York City time on any
Business Day, each Lender shall make the transfers described above in
immediately available funds no later than 3:00 P.M. New York City time
on the day such summary statement was received; and if such summary
statement is received by the Lenders after 12:00 Noon New York City time
on such day, each Lender shall make such transfers no later than 3:00
P.M. New York City time on the next succeeding Business Day. The
obligation of each of the Lenders to transfer such funds shall be
irrevocable and unconditional and without recourse to or warranty by the
Payments Administrator. Each of the Payments Administrator and the
Lenders agree to mark their respective books and records on the
Settlement Date to show at all times the dollar amount of their
respective Proportionate Shares of the outstanding Revolving Loans.
(ii) To the extent that the settlement described above shall not
yet have occurred, upon repayment of Revolving Loans by the Borrower,
the Payments Administrator may apply such amounts repaid directly to the
amounts made available by the Payments Administrator pursuant to this
Section 2.4(b).
(iii) Because the Payments Administrator on behalf of the Lenders
may be advancing and/or may be repaid Revolving Loans prior to the time
when the Lenders will actually advance and/or be repaid Revolving Loans,
interest with respect to Revolving Loans shall be allocated by the
Payments Administrator to each Lender and the Payments Administrator in
accordance with the amount of Revolving Loans actually advanced by and
repaid to each Lender and the Payments Administrator and shall accrue
from and including the date such Revolving Loans are so advanced to but
excluding the date such Revolving Loans are either repaid
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by the Borrower in accordance with Section 2.5 or actually settled by
the applicable Lender as described in this Section 2.4(b).
(c) If any amount described in this Section 2.4 is not made
available to the Payments Administrator by a Lender (such Lender being
hereinafter referred to as a "Defaulting Lender") and the Payments Administrator
has made such amount available to the Borrower, the Payments Administrator shall
be entitled to recover such amount on demand from such Defaulting Lender. If
such Defaulting Lender does not pay such amount forthwith upon the Payments
Administrator's demand therefor, the Payments Administrator shall promptly
notify the Borrower and the Borrower shall promptly (but in any event no later
than five Business Days after such demand) pay such amount to the Payments
Administrator. The Payments Administrator shall also be entitled to recover from
such Defaulting Lender and the Borrower, (x) interest on such amount in respect
of each day from the date such corresponding amount was made available by the
Payments Administrator to the Borrower to the date such amount is recovered by
the Payments Administrator, at a rate per annum equal to either (i) if paid by
such Defaulting Lender, the overnight Federal Funds Rate or (ii) if paid by the
Borrower, the then applicable rate of interest, calculated in accordance with
Section 4.1 or Section 4.2 hereof, plus (y) in each case, an amount equal to any
costs (including legal expenses) and losses incurred as a result of the failure
of such Defaulting Lender to provide such amount as provided in this Credit
Agreement; provided, however, that the Payments Administrator shall not be
entitled to demand payment by the Borrower of any amount under clause (y) above
unless demand therefor has been made of the Defaulting Lender and not paid
within five Business Days of such demand. Nothing herein shall be deemed to
relieve any Lender from its duty to fulfill its obligations hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any default by such Lender hereunder, including, without limitation, the
right of the Borrower to seek reimbursement from any Defaulting Lender for any
amounts paid by the Borrower under clause (y) above on account of such
Defaulting Lender's default.
(d) The failure of any Lender to make the Revolving Loan to be
made by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Revolving Loan on the date of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Revolving Loan to be made by such other Lender on the date of
any Borrowing.
(e) Notwithstanding anything contained herein to the contrary, so
long as any Lender is a Defaulting Lender or has rejected or repudiated its
Commitment, the Payments Administrator shall not be obligated to transfer to
such Lender any payments made by the Borrower to the Payments Administrator for
the benefit of such Lender; and, such Lender shall not be entitled to the
sharing of any payments pursuant to Section 2.10. Amounts payable to such Lender
under Section 2.10 shall instead be paid to the Payments
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Administrator. The Payments Administrator may hold and, in its discretion,
re-lend to the Borrower the amount of all such payments received by it for such
Lender. For purposes of voting or consenting to matters with respect to the
Credit Documents and determining Proportionate Share, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero (0). This Section 2.4(e) shall remain effective with respect
to such Defaulting Lender until (x) the Obligations under this Agreement shall
have been paid in full to the Payments Administrator and/or the Lenders other
than the Defaulting Lender or (y) the Required Lenders, the Payments
Administrator and the Borrower shall have waived such Defaulting Lender's
default in writing. No Commitment of any Lender shall be increased or otherwise
affected, and performance by the Borrower shall not be excused, by the operation
of this Section 2.4(e).
2.5 Mandatory and Voluntary Payments: Mandatory and Voluntary
Reduction of Commitments. (a) Revolving Loans shall be due and payable without
any demand at any time that (A) the aggregate balance of Revolving Loans and all
Letter of Credit Obligations outstanding at such time exceeds the Borrowing Base
or the Total Commitments, in the amount of such excess and (B) the Inventory
Sublimit is exceeded, in the amount of such excess, provided, that (i) no such
payment shall be required pursuant to the foregoing clauses (A) and (B) as a
result of a Borrowing Base Deficiency during an Agent Advance Period and (ii) if
the then aggregate outstanding principal amount of Revolving Loans is less than
either such excess (after giving effect to the foregoing clause (i)), Letters of
Credit will be required to be cash collateralized (to the satisfaction of the
Collateral Agent) in the amount of such difference.
(b) On the Expiration Date, the Total Commitments (and the
Commitment of each Lender) shall automatically reduce to zero and all
outstanding Revolving Loans shall be repaid in full.
(c) The Borrower shall have the right to prepay the Revolving
Loans, without premium or penalty, in whole or in part at any time and from time
to time on the following terms and conditions: (i) the Borrower shall give the
Agent prior to 12:00 Noon (New York City time) (x) at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay Base Rate Loans and (y) at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay Eurodollar Rate Loans, the amount of such prepayment and the
Types of Loans to be prepaid and, in the case of Eurodollar Rate Loans, the
specific Borrowing or Borrowings pursuant to which made, which notice the Agent
shall promptly transmit to each of the Lenders; and (ii) prepayments of
Eurodollar Rate Loans made pursuant to this Section 2.5(c) may only be made on
the last day of an Interest Period applicable thereto.
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(d) With respect to each repayment of Revolving Loans pursuant to
this Section 2.5, the Borrower may designate the Types of Loans which are to be
repaid and the specific Borrowing(s) pursuant to which made; provided, that (i)
Eurodollar Rate Loans may be designated for repayment as a result of Section
2.5(a) only on the last day of an Interest Period applicable thereto unless all
Eurodollar Rate Loans with Interest Periods ending on such date of required
prepayment and all Base Rate Loans have been paid in full; (ii) if any partial
prepayment of Eurodollar Rate Loans made pursuant to any Borrowing shall reduce
the outstanding Eurodollar Rate Loans made pursuant to such Borrowing to an
amount less than $1,000,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Rate Loans and any election of an Interest Period with
respect thereto given by the Borrower shall have no force or effect; and (iii)
each repayment of any Revolving Loans made pursuant to a Borrowing shall, except
as provided in Section 2.4(e), be applied pro rata among the Lenders which made
such Revolving Loans. In the absence of a designation by the Borrower as
described in the preceding sentence, the Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs.
(e) The Borrower may reduce or terminate the unutilized Total
Commitments at any time and from time to time in whole or in part upon at least
three (3) Business Days' prior written notice to the Agent; provided, however,
that each such reduction must be in an amount not less than $1,000,000 (and in
increments of $100,000 thereafter); and provided further, that (i) if the
Borrower seeks to reduce the Total Commitments to an amount less than
$5,000,000, then the Total Commitments shall be reduced to zero and the Credit
Agreement shall be terminated and (ii) once reduced, the amount of any such
reductions in the Total Commitments may not be reinstated.
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 2.5, on each date after the Closing Date
upon which the Borrower receives any proceeds from any sale or issuance of its
equity (other than any issuance pursuant to the Borrower Warrants) or any
contribution to its capital, an amount equal to 100% of the cash proceeds of the
respective sale, issuance or contribution ((i) net of all reasonable costs
associated therewith, including, without limitation, all due diligence costs and
expenses paid for, or reimbursed by, the Borrower, underwriting or similar fees,
discounts and commissions, attorneys' fees and expenses paid for, or reimbursed
by, the Borrower and other direct costs associated therewith, (ii) excluding any
amount of such cash proceeds which are applied to repay Bridge Senior Notes and
(iii) excluding cash proceeds utilized as described in clause (k)(ii) below)
shall be applied as a mandatory reduction to the Total Commitments.
Notwithstanding the foregoing, after the occurrence, if any, of the Bridge Loan
Conversion Date and so long as Term Notes remain outstanding, the reduction to
the Total Commitments above shall be effected, such that the amount of such
reduction shall be allocated with repayments of the Bridge Senior Notes on a pro
rata
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basis (determined on the ratio of the Average Borrowing Base to the sum of (x)
the Average Borrowing Base and (y) aggregate outstanding Bridge Senior Notes).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 2.5, on the date of the receipt thereof by
the Borrower, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
the incurrence of Indebtedness by the Borrower (other than (i) Indebtedness
permitted to be incurred by Section 8.3 (other than amounts described in Section
2.5(j)) or (ii) any other Indebtedness incurred with the consent of the Required
Lenders, the proceeds of which are applied to repay Bridge Senior Notes) shall
be applied as a mandatory reduction to the Total Commitments. Notwithstanding
the foregoing, after the occurrence, if any, of the Bridge Loan Conversion Date
and so long as Term Notes remain outstanding, the reduction to Total Commitments
above shall be effected, such that the amount of such reduction shall be
allocated with repayments of the Bridge Senior Notes on a pro rata basis
(determined on the ratio of the Average Borrowing Base to the sum of (x) the
Average Borrowing Base and (y) the aggregate outstanding Bridge Senior Notes).
(h) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 2.5, on each date after the Closing Date
upon which the Borrower receives Net Sale Proceeds from any sale of assets
(including capital stock and securities held thereby, but excluding (i) sales of
Inventory in the ordinary course of business, (ii) sales or other dispositions
of assets which do not constitute Collateral and the proceeds of which are
applied to repay Senior Notes, (iii) sales or other dispositions of obsolete or
uneconomic equipment in the ordinary course of business to the extent that the
Borrower has delivered a certificate to the Agent on or prior to such date
stating that it intends to reinvest the Net Sale Proceeds therefrom in
replacement equipment within 180 days after the respective date of sale or
disposition or, in lieu thereof, commit to so invest such Net Sale Proceeds
within 180 days after such date of sale and actually expend the funds pursuant
to such commitment within 365 days after such date of sale or disposition and
(iv) proceeds of sales of assets pursuant to Section 8.1(d)) an amount equal to
100% of the Net Sale Proceeds therefrom shall be applied as a mandatory
reduction of the Total Commitments excluding any amount of such Net Sale
Proceeds which is applied to repay Bridge Senior Notes; provided, however, that
to the extent any Net Sale Proceeds are not required to be applied pursuant to
this Section 2.5(h) as a result of clause (iii) contained in the parenthetical
above, then (x) on the 180th day after the date of the respective sale or
disposition, the Net Sale Proceeds of the respective sale or disposition shall
be applied as otherwise required by this Section 2.5(h) to the extent not
actually used or committed to be used as contemplated by said clause (iii) by
such 180th day and (y) on the 365th day after the date of the respective sale or
disposition, any Net Sale Proceeds of the respective sale or disposition shall
be applied as otherwise required by this Section 2.5(h) to the extent same were
committed to be used within 180 days after the respective date of sale or other
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disposition but were not in fact used by such 365th day as contemplated by said
clause (iii). Notwithstanding the foregoing, in the event of an asset sale
involving Shared Collateral, the reduction to Total Commitments above shall be
effected, such that the amount of such reduction shall be allocated with
repayments of the Bridge Senior Notes on a pro rata basis (determined on the
ratio of the Average Borrowing Base to the sum of (x) the Average Borrowing Base
and (y) the aggregate outstanding Bridge Senior Notes).
(i) Upon the occurrence of a Change of Control, unless the
Required Lenders otherwise consent, the Total Commitments shall automatically be
reduced to zero.
(j) In addition to any mandatory repayments or commitment
reductions pursuant to this Section 2.5, on the date of the receipt thereof by
the Borrower, an amount equal to the amount of proceeds received by the Borrower
pursuant to the issuance of the Permanent Senior Notes that are not used to
repay Bridge Senior Notes shall be used to prepay the Revolving Loans to the
extent Revolving Loans are outstanding (without any reduction to the Total
Commitment at such time).
(k) In addition to any mandatory repayments or commitment
reductions pursuant to this Section 2.5, if the Permanent Senior Notes are
outstanding, and the Borrower receives any cash proceeds from any sale or
issuance of equity (other than any issuance pursuant to the Borrower Warrants)
or contribution to its capital, net of all reasonable costs associated therewith
(including without limitation all due diligence costs and expenses paid for, or
reimbursed by, the Borrower, underwriting or similar fees, discounts and
commissions, attorneys' fees and expenses paid for, or reimbursed by, the
Borrower, and other direct costs associated therewith), the Borrower shall apply
all such proceeds to repay Revolving Loans (without any reduction to the Total
Commitment at such time). On the Business Day after such repayment, the Borrower
shall elect, by written notice to the Agent to either (i) reduce the Total
Commitment (which shall automatically reduce upon such election or upon the
failure by the Borrower to make any election pursuant to this sentence) or (ii)
redeem Permanent Senior Notes in accordance with the "equity clawback"
provisions set forth in the Permanent Senior Note Documents, in which case the
Borrower shall, if no Default or Event of Default shall exist or arise
therefrom, be permitted to redeem Permanent Senior Notes in accordance with the
Permanent Senior Note Documents in an amount not to exceed the lesser of (x) 35%
of the aggregate principal amount of Permanent Senior Notes originally issued
and (y) 50% of the proceeds so received.
(l) In addition to any mandatory repayments or commitment
reductions pursuant to this Section 2.5, on the date of the receipt thereof by
the Borrower, an amount equal to the amount of proceeds received by the Borrower
pursuant to the Capital Contribution (as defined in the Capital Call Agreement)
shall be used to prepay the
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Revolving Loans to the extent Revolving Loans are outstanding (without any
reduction to the Total Commitment at such time).
(m) Any reduction to the Total Commitments pursuant to this
Section 2.5 shall reduce the Commitment of each of the Lenders pro rata.
2.6 Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Revolving Notes not later than 3:00 P.M. New
York City time on the day when due in Dollars to the Payments Administrator at
its Payment Office in immediately available funds. The Borrower's obligations to
the Lenders with respect to such payments shall be discharged by making such
payments to the Payments Administrator pursuant to this Section 2.6 or, if such
payments are not received prior to the foregoing deadline, by the Payments
Administrator's adding such payments to the principal amount of the Revolving
Loans outstanding by charging such payments to the Borrower's Revolving Loan
account (which charge shall constitute an incurrence of Revolving Loans (that
are Base Rate Loans) in an aggregate principal amount equal to the amount so
charged).
(b)(i) The Borrower shall have established and shall maintain one
or more accounts for the collection of payments made in respect of Accounts
(each, a "Sub- Collection Account") and shall instruct all account debtors on
the Accounts of the Borrower to remit all payments to its Sub-Collection
Account. All amounts received by the Borrower from any account debtor, in
addition to all other cash received from any other source, shall, subject to the
requirements of Section 8.19, upon receipt be deposited into a Sub-Collection
Account.
(ii) The Borrower, the Collateral Agent and financial
institutions selected by the Borrower and acceptable to the Agent, which shall
include PNC so long as PNC is a Lender, (the "Collection Banks") shall enter
into agreements substantially in the form of Exhibit C-1 (as modified, amended
or supplemented from time to time in accordance with the terms hereof and
thereof the "Collection Bank Agreements"), providing, among other things, for
all receipts received in respect of Accounts to be transferred at the end of
each day from each Sub-Collection Account to the appropriate Collection Account.
(iii) The Borrower may close Sub-Collection Accounts and/or open
new Sub-Collection Accounts with the prior written consent of the Collateral
Agent and subject to prior execution and delivery to the Collateral Agent of
Collection Bank Agreements consistent with the provisions of this Section 2.6
and in form and substance satisfactory to the Agent.
(c) Upon the terms and subject to the conditions set forth in the
Collection Bank Agreements, all available amounts held in the Collection
Accounts shall be wired each Business Day into an account (the "Concentration
Account") established pursuant to a con-
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centration account agreement entered into among the Borrower, the Collateral
Agent and BTCo substantially in the form of Exhibit C-2 (the "Concentration
Account Agreement"). Subject to the terms and conditions of the Concentration
Account Agreement, all available funds in the Concentration Account shall be
transferred on every Business Day to an account (the "BT Account") maintained by
the Collateral Agent at BTCo.
(d) All available amounts held in the BT Account shall be
distributed and applied on a daily basis in the following order: first, to the
payment of any Fees, Expenses or other Obligations due and payable to the Agent
under any of the Credit Documents, including amounts advanced by the Payments
Administrator on behalf of the Lenders pursuant to Section 2.3(b), 2.3(c) or
2.4(b) for which invoices have been presented in accordance with Section 4.5(a)
hereof; second, to the payment of any Fees, Expenses or other Obligations due
and payable to any Issuing Bank under any of the Credit Documents; third, to the
ratable payment of any Fees, Expenses or other Obligations due and payable to
the Lenders under any of the Credit Documents other than those Obligations
specifically referred to in this Section 2.6(d); fourth, if required by the
Agent in its Permitted Discretion, to the ratable payment of interest due on the
Revolving Loans; and, fifth, to the ratable payment of principal on the
Revolving Loans. Any payment received hereunder as a distribution in any
proceeding referred to in Section 9.1(e) shall, unless paid with respect to
amounts specifically owing to the Agent or any Issuing Bank, be distributed and
applied by the Collateral Agent to the payment of the amounts due hereunder and
under the Revolving Notes ratably in accordance with such amounts (or, if a
court of competent jurisdiction shall otherwise specify, as specified by such
court).
2.7 Maintenance of Account. The Payments Administrator shall
maintain an account on its books in the name of the Borrower in which the
Borrower will be charged with all loans and advances made by the Lenders to the
Borrower or for the Borrower's account, including the Revolving Loans, the
Letter of Credit Obligations, the Fees, the Expenses and any other Obligations.
The Borrower will be credited, in accordance with Section 2.6 above, with all
amounts received by the Lenders from the Borrower or from others for the
Borrower's account, including, as set forth above, all amounts received by the
Payments Administrator in payment of Accounts and applied to the Obligations. In
no event shall prior recourse to any Accounts or other Collateral be a
prerequisite to the Payments Administrator's right to demand payment of any
Obligation upon its maturity. Further, the Payments Administrator shall have no
obligation whatsoever to perform in any respect any of the Borrower's contracts
or obligations relating to the Accounts.
2.8 Statement of Account. After the end of each month the
Payments Administrator shall send the Borrower a statement accounting for the
charges, loans, advances and other transactions occurring among and between the
Agent, the Lenders, the Issuing Banks and the Borrower during that month. The
monthly statements shall, absent
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manifest error, be an account stated, which is final, conclusive and binding on
the Borrower.
2.9 Taxes. (a) All payments made by the Borrower hereunder, under
any Revolving Note, or under any other Credit Document will be made without
setoff, counterclaim or other defense. Except as provided in Section 2.9(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax imposed on or measured by the net income or
net profits of a Lender pursuant to the laws of the jurisdiction in which such
Lender is organized or the jurisdiction in which the principal office or
Applicable Lending Office of such Lender is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due hereunder, under any Revolving Note, or under any other Credit Document,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Revolving Note or such other
Credit Document. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Lender, upon the
written request of such Lender, for taxes imposed on or measured by the net
income or net profits of such Lender pursuant to the laws of the jurisdiction in
which such Lender is organized or incorporated or in which the principal office
or Applicable Lending Office of such Lender is located or of any political
subdivision or taxing authority thereof or therein and for any withholding of
income or similar taxes as such Lender shall determine are payable by, or
withheld from, such Lender in respect of such amounts so paid to or on behalf of
such Lender pursuant to this or the preceding sentence. The Borrower will
furnish to the Payments Administrator within 45 days after the date the payment
of any Taxes, or any withholding or deduction on account thereof, is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower will indemnify and hold harmless the Agent
and each Lender, and reimburse the Agent or such Lender upon its written
request, for the amount of any Taxes so levied or imposed and paid or withheld
by such Lender.
(b) Each Lender that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal Income Tax
purposes agrees to deliver to the Borrower and the Agent on or prior to the
Closing Date, or in the case of a Lender that is an assignee or transferee of an
interest under this Agreement pursuant to Section 11.6 (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment or
transfer), on the date of such assignment or transfer to such Lender,
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(i) two accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments to be made under this Credit Agreement and under any Revolving Note, or
(ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a "Section 2.9(b)(ii) Certificate") and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8 (or successor form) certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Revolving Note. In
addition, each Lender agrees that from time to time after the Closing Date, when
a lapse in time or change in circumstances renders the previous certification
obsolete or inaccurate in any material respect, it will deliver to the Borrower
and the Agent two new accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001, or Form W-8 and a Section 2.9(b)(ii)
Certificate, as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Lender to a continued
exemption from or reduction in United States withholding tax with respect to
payments under this Agreement and any Revolving Note, or it shall immediately
notify the Borrower and the Agent of its inability to deliver any such Form or
Certificate, in which case such Lender shall not be required to deliver any such
Form or Certificate pursuant to this Section 2.9(b). Notwithstanding anything to
the contrary contained in Section 2.9(a), but subject to Section 11.6 and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Lender which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Lender has not provided to the Borrower
U.S. Internal Revenue Service Forms that establish a complete exemption from
such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 2.9(a) to gross-up payments to be made to a Lender in
respect of income or similar taxes imposed by the United States (I) if such
Lender has not provided to the Borrower the Internal Revenue Service Forms
required to be provided to the Borrower pursuant to this Section 2.9(b) or (II)
in the case of a payment, other than interest, to a Lender described in clause
(ii) above, to the extent that such Forms do not establish a complete exemption
from withholding of such taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 2.9 and except
as set forth in Section 11.6, the Borrower agrees to pay additional amounts and
to indemnify each Lender in the manner set forth in Section 2.9(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any Taxes deducted or withheld by it as described in
the immediately preceding sentence as a result of any changes after the Closing
Date (or, if later, the date such Lender became party to
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this Agreement) in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of such Taxes.
2.10 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off or
otherwise) on account of the Revolving Loans made by it or its participation in
Letters of Credit in excess of its Proportionate Share of payments on account of
the Revolving Loans or Letters of Credit obtained by all the Lenders (other than
any Lender that has waived its Proportionate Share in writing), such Lender
shall forthwith purchase from the other Lenders such participation in the
Revolving Loans made by them or in their participation in Letters of Credit as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and each such Lender shall repay to
the purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.10 may, to the fullest extent permitted by
law, exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
ARTICLE 3.
Letters of Credit
3.1 Issuance of Letters of Credit. Subject to the terms and
conditions of this Credit Agreement and in reliance upon the representations and
warranties of the Borrower set forth herein, upon the request of the Borrower
pursuant to Section 3.4, one or more Issuing Banks selected by the Borrower
shall issue Letters of Credit hereunder and for the Borrower's account, as more
specifically described below. No Issuing Bank shall be obligated to issue any
Letter of Credit for the account of the Borrower if at the time of such
requested issuance:
(a) The face amount of such requested Letter of Credit when added
to the Letter of Credit Obligations then outstanding, would (i) cause
the Letter of Credit Obligations to exceed $15,000,000 or (ii) when
added to the aggregate amount of Revolving Loans then outstanding would
exceed (x) the lesser of (A) the Total
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Commitments and (B) the Borrowing Base then in effect or (y) the
Inventory Sublimit;
(b) Any order, judgment or decree of any Governmental Authority
or arbitrator shall purport by its terms to enjoin or restrain such
Issuing Bank from issuing such Letter of Credit or any Requirement of
Law applicable to such Issuing Bank or any request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over such Issuing Bank shall prohibit, or request such
Issuing Bank to refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon
such Issuing Bank with respect to such Letter of Credit any restriction
or reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated) not in effect as of the Closing Date, or any
unreimbursed loss, cost or expense which was not applicable, in effect
or known to such Issuing Bank as of the Closing Date and which such
Issuing Bank deems in good faith to be material to it; or
(c) A default of any Lender's obligations to fund under Section
3.6 exists, or such Lender is a Defaulting Lender under Section 2.4(c),
or any Lender has rejected or repudiated its obligations in respect of
Letters of Credit, unless the Agent and the Issuing Banks have entered
into satisfactory arrangements with the Borrower to eliminate such
Issuing Bank's risk with respect to such Lender, including cash
collateralization of such Lender's Proportionate Share of the Letter of
Credit Obligations.
3.2 Terms of Letters of Credit. The Letters of Credit shall be in
a form customarily issued by the respective Issuing Bank or in such other form
as has been approved by such Issuing Bank. Each Letter of Credit shall be
denominated in Dollars. At the time of issuance, the amount and the terms and
conditions of each Letter of Credit, and the form of any drafts or acceptances
thereunder, shall be subject to approval by the Agent and the Borrower. In no
event may the term of any standby Letter of Credit issued hereunder exceed 12
months (except that such Letters of Credit may provide for annual renewal) nor
the term of any documentary Letter of Credit exceed 180 days, and all Letters of
Credit issued hereunder shall expire no later than the date that is five
Business Days prior to the Expiration Date. Any Letter of Credit containing an
automatic renewal provision shall also contain a provision pursuant to which,
notwithstanding any other provisions thereof, it shall expire no later than the
date that is five Business Days prior to the Expiration Date.
3.3 Lenders' Participation. Immediately upon the issuance or
amendment by any Issuing Bank of any Letter of Credit in accordance with the
procedures set forth in Section 3.1, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from such Issuing Bank,
without recourse or warranty, an undivided
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interest and participation to the extent of such Lender's Proportionate Share
(based upon its Commitment) of the liability with respect to such Letter of
Credit (including, without limitation, all obligations of the Borrower with
respect thereto, other than amounts owing to such Issuing Bank consisting of
Issuing Bank Fees or Facing Fees) and any security therefor or guaranty
pertaining thereto.
3.4 Notice of Issuance. Whenever the Borrower desires the
issuance of a Letter of Credit, the Borrower shall deliver to the Payments
Administrator and the respective Issuing Bank a written notice no later than
1:00 P.M. New York City time at least three Business Days (or such shorter
period as may be agreed to by such Issuing Bank) in advance of the proposed date
of issuance of a letter of credit request in substantially the form attached as
Exhibit B-2 (a "Letter of Credit Request"). The Payments Administrator shall
promptly transmit copies of each Letter of Credit Request to each Lender. The
transmittal by the Borrower of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Borrower that the Letter of Credit may
be issued in accordance with and will not violate any of the requirements of
Section 3.1 or 5.2. A Letter of Credit Request may be given in writing or
electronically with prompt confirmation in writing.
3.5 Payment of Amount Drawn Under Letters of Credit. In the event
of any request for drawing under any Letter of Credit by the beneficiary
thereof, the respective Issuing Bank shall notify the Payments Administrator,
which shall notify the Borrower of such request, not later than 11:00 A.M. on
the Business Day immediately prior to the date on which such Issuing Bank
intends to honor such drawing. The Borrower shall give notice to be received by
the Payments Administrator and the Issuing Bank not later than 1:00 P.M. on such
Business Day if it intends to reimburse such Issuing Bank for the amount of such
drawing with funds other than the proceeds of Revolving Loans. Such notice from
the Borrower shall be irrevocable and, if given, the Borrower shall reimburse
such Issuing Bank not later than the close of business New York City time on the
day on which such drawing is honored in an amount in same day funds equal to the
amount of such drawing. If the Payments Administrator shall not have timely
received such notice (i) the Borrower shall be deemed to have timely given a
Notice of Borrowing to the Payments Administrator to incur Revolving Loans on
the date on which such drawing is honored in an amount equal to the amount of
such drawing and (ii) subject to satisfaction or waiver of the conditions
specified in Section 5.2 hereof and the other terms and conditions of Borrowings
contained herein, the Lenders shall, on the date of such drawing, make Revolving
Loans in the amount of such drawing, the proceeds of which shall be applied
directly by the Payments Administrator to reimburse such Issuing Bank for the
amount of such drawing or payment. Borrowings pursuant to this Section 3.5 shall
not be subject to the minimum amount requirement of Section 2.3(a)(iii). If for
any reason, proceeds of Revolving Loans are not received by such Issuing Bank on
such date in an amount equal to the amount of such drawing, the Borrower shall
be obligated to and shall reimburse such
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Issuing Bank, on the Business Day immediately following the date of such
drawing, in an amount in same day funds equal to the excess of the amount of
such drawing over the amount of such Revolving Loans, if any, which are so
received, plus accrued interest on such amount at the rate set forth in Section
4.2; provided, however, that any such payments shall not prejudice any rights
that the Borrower may have against any Lender as a result of any default by such
Lender in funding such Revolving Loans, as provided in the final sentence of
Section 2.4(c).
3.6 Payment by Lenders. (a) In the event that the Borrower does
not reimburse an Issuing Bank for the amount of any drawing pursuant to Section
3.5 and the proceeds of Revolving Loans incurred for such purpose are
insufficient for such purpose, the Payments Administrator shall promptly notify
each Lender of the unreimbursed amount and of such Lender's respective
participation therein. Each Lender shall make available to such Issuing Bank an
amount equal to its respective participation in same day funds, at the office of
such Issuing Bank specified in such notice, not later than 1:00 P.M. New York
City time on the Business Day after the date notified by the Payments
Administrator. In the event that any Lender fails to make available to the
Issuing Bank the amount of such Lender's participation in such Letter of Credit
as provided in this Section 3.6, such Issuing Bank shall be entitled to recover
such amount on demand from such Lender, together with interest at the Federal
Funds Rate.
(b) The Payments Administrator or any Issuing Bank, as the case
may be, shall distribute to each Lender which has paid all amounts payable by it
under this Section 3.6 with respect to any Letter of Credit such Lender's
Proportionate Share of all payments subsequently received by the Payments
Administrator or the respective Issuing Bank, as the case may be, from the
Borrower in reimbursement of drawings honored under such Letter of Credit when
such payments are received.
3.7 Nature of Issuing Bank's Duties. In determining whether to
pay under any Letter of Credit, each Issuing Bank shall be responsible only to
determine that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they substantially comply on
their face with the requirements of that Letter of Credit. As between the
Borrower, an Issuing Bank and each other Lender, the Borrower assumes all risks
of the acts and omissions of, or misuse of the Letter of Credit issued by each
Issuing Bank by, the respective beneficiaries of such Letter of Credit. In
furtherance and not in limitation of the foregoing, no Issuing Bank nor any of
the other Lenders shall be responsible (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
such Letter of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign such Letter of Credit, or the rights or
benefits thereunder
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or proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex,
telecopy, facsimile or otherwise, whether or not they be in cipher, (iv) for
errors in interpretation of technical terms, (v) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit, or of the proceeds thereof, (vi) for the
misapplication by the beneficiary of such Letter of Credit of the proceeds of
any drawing honored under such Letter of Credit, and (vii) for any consequences
arising from actions or omissions taken or omitted in good faith or from causes
beyond the control of such Issuing Bank or the other Lenders; provided, however
that nothing in this sentence shall relieve an Issuing Bank of liability for its
own gross negligence or willful misconduct.
3.8 Obligations Absolute. The obligations of the Borrower to
reimburse an Issuing Bank for drawings honored under a Letter of Credit issued
by it and the obligations of the Lenders under Section 3.6 shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Credit Agreement under all circumstances including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, set-off, defense or other right
which the Borrower or any Affiliate of the Borrower may have at any time
against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such beneficiary or transferee may be
acting), such Issuing Bank, any Lender or any other Person, whether in
connection with this Credit Agreement, the transactions contemplated
herein or any unrelated transaction, provided, however, that nothing
contained herein shall preclude the Borrower from asserting any such
claim, defense or counterclaim in a separate judicial proceeding or by
compulsory counterclaim;
(c) any draft, demand, certificate or any other documents
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(d) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents;
(e) failure of any drawing under a Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of
any drawing; or
(f) the fact that a Default or Event of Default shall have
occurred and be continuing;
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provided, however, that the Borrower shall have no obligation to reimburse an
Issuing Bank and the Lenders shall have no obligation under Section 3.6 in the
event of such Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under the Letter of Credit comply with
the terms of such Letter of Credit or with respect to any other express
obligation an Issuing Bank may have under this Credit Agreement in making any
payment pursuant to any Letter of Credit.
ARTICLE 4.
Interest, Fees and Expenses
4.1 Interest on Eurodollar Rate Loans. Subject to the provisions
of Section 4.4 hereof, interest on Eurodollar Rate Loans shall be payable on the
last day of each Interest Period with respect to such Eurodollar Rate Loans
(and, if earlier, the date three months after the date of the incurrence,
Conversion or Continuance thereof), at the date of any Conversion thereof (or
portion thereof) to a Base Rate Loan, upon any prepayment (on the amount
prepaid) and at maturity at an interest rate per annum equal during each
Interest Period for such Eurodollar Rate Loan to the Adjusted Eurodollar Rate in
effect for such Interest Period in effect for such Eurodollar Rate Loan plus the
relevant Applicable Margin. The Payments Administrator upon determining the
Adjusted Eurodollar Rate for any Interest Period shall promptly notify the
Borrower and the Lenders thereof. Each determination by the Payments
Administrator of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
4.2 Interest on Base Rate Loans. Subject to the provisions of
Section 4.4 hereof, interest on Base Rate Loans shall be payable monthly as of
the end of each month, and at maturity at an interest rate per annum equal to
the Base Rate plus the relevant Applicable Margin. Each determination by the
Payments Administrator of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
4.3 Notice of Continuation and Notice of Conversion. (a) With
respect to any Borrowing consisting of Eurodollar Rate Loans, the Borrower may,
subject to the provisions of Section 4.3(c) and the condition that no Default or
Event of Default then exists, elect to maintain such Borrowing or any portion
thereof equal to at least $1,000,000 as Eurodollar Rate Loans by selecting a new
Interest Period for such Borrowing (or portion thereof), which new Interest
Period shall commence on the last day of the immediately preceding Interest
Period. Each selection of a new Interest Period (a "Continuation") shall be made
by notice given not later than 12:00 P.M. New York City time on the third
Business Day prior to the date of any such Continuation, by the Borrower to the
Payments Administrator. Such notice (a "Notice of Continuation") shall be by
telephone, telecopy, telex, facsimile or cable, confirmed immediately in writing
if by telephone, in substantially the
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form of Exhibit B-3, which shall be completed in such manner as is necessary to
comply with all limitations on Revolving Loans outstanding hereunder. If the
Borrower shall fail to, or does not have the right to, select a new Interest
Period for any Borrowing consisting of Eurodollar Rate Loans in accordance with
this Section 4.3(a), such Loans will automatically, on the last day of the then
existing Interest Period therefor, Convert into Base Rate Loans.
(b) The Borrower may on any Business Day occurring on or after
the Syndication Date (provided that no Default or Event of Default has occurred
and is continuing), upon notice (each such notice, a "Notice of Conversion")
given to the Payments Administrator, and subject to the provisions of Section
4.3(c), Convert the entire amount of or a portion of Revolving Loans of one Type
into a Borrowing of Revolving Loans of the other Type; provided, however, that
any Conversion of any Eurodollar Rate Loans into Base Rate Loans shall be made
on, and only on, the last day of an Interest Period for such Eurodollar Rate
Loans; provided further, however, the Borrower may elect (to the extent it has
not elected to make a Borrowing of such Eurodollar Rate Loans) make one
Conversion of Base Rate Loans into Eurodollar Rate Loans having a one month
Interest Period on or prior to the fifth day following the Closing Date. Each
such Notice of Conversion shall be given not later than 12:00 P.M. New York City
time on the Business Day prior to the date of any proposed Conversion into Base
Rate Loans and on the third Business Day prior to the date of any proposed
Conversion into Eurodollar Rate Loans. Subject to the restrictions specified
above, each Notice of Conversion shall be by telephone, telecopy, telex,
facsimile or cable, confirmed immediately in writing if by telephone, in
substantially the form of Exhibit B-4. Each Conversion shall be in an aggregate
amount for the Revolving Loans of all Lenders of not less than $1,000,000.
(c) Notwithstanding anything contained in Section 2.3 or Sections
4.3(a) and (b) above to the contrary,
(i) if the Payments Administrator is unable to determine the
Adjusted Eurodollar Rate for Eurodollar Rate Loans comprising any
requested Borrowing, Continuation or Conversion, the right of the
Borrower to select or maintain Eurodollar Rate Loans for such Borrowing
or any subsequent Borrowing shall be suspended until the Payments
Administrator shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and each
Revolving Loan comprising such Borrowing shall be made as, or Converted
into, a Base Rate Loan;
(ii) if the Required Lenders shall, at least one Business Day
before the date of any requested Borrowing, Continuation or Conversion,
notify the Payments Administrator that the Adjusted Eurodollar Rate for
Revolving Loans comprising such Borrowing will not adequately reflect
the cost to such Lenders of making or
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funding their respective Revolving Loans for such Borrowing, the right
of the Borrower to select Eurodollar Rate Loans for such Borrowing shall
be suspended until the Payments Administrator shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer
exist, and each Revolving Loan comprising such Borrowing shall be made
as, or Converted into, a Base Rate Loan; and
(iii) there shall not be at any one time more than five (5)
Interest Periods in effect with respect to Eurodollar Rate Loans.
(d) Each Notice of Continuation and Notice of Conversion shall be
irrevocable by and binding on the Borrower. In the case of any Borrowing,
Continuation or Conversion that the related Notice of Borrowing, Notice of
Continuation or Notice of Conversion specifies is to be comprised of Eurodollar
Rate Loans, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill, on or
before the date for such Borrowing, Continuation or Conversion specified in such
Notice of Borrowing, Notice of Continuation or Notice of Conversion, the
applicable conditions set forth in Article 5, including, without limitation, any
loss (excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or re-employment of deposits or other funds acquired by such
Lender to fund the Eurodollar Rate Loan to be made by such Lender as part of
such Borrowing, Continuation or Conversion.
4.4 Interest After Default. Interest on any amount of matured
principal of the Revolving Loans, and interest on the amount of principal of the
Revolving Loans outstanding as of the date an Event of Default under Section
9.1(a) or (c)(i) occurs, and at all times thereafter until the earlier of the
date upon which (i) all Obligations have been paid and satisfied in full or (ii)
such Event of Default shall have been cured or waived, shall be payable on
demand at a rate equal to the rate at which the Revolving Loans are bearing
interest pursuant to Sections 4.1 or 4.2 above plus 2%, or, if higher, the Base
Rate in effect from time to time plus the sum of (x) the Applicable Margin for
Base Rate Loans then in effect and (y) 2%.
4.5 Reimbursement of Expenses. (a) From and after the Closing
Date, the Borrower shall promptly reimburse the Agent for all Expenses of the
Agent as the same are incurred by the Agent and upon receipt of invoices
therefor and, if requested by the Borrower, such reasonable backup materials and
information (other than backup materials and information relating to the
calculation of breakage costs) as the Borrower shall reasonably request.
(b) If any payment of principal of, or any Conversion of, any
Eurodollar Rate Loan is made other than on the last day of an Interest Period
applicable thereto for any
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reason, the Borrower shall, upon demand by any Lender (with a copy of such
demand to the Payments Administrator), pay to the Payments Administrator for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Eurodollar Rate Loan.
4.6 Unused Line Fee. The Borrower shall pay to the Payments
Administrator for the benefit of each of the Lenders (other than a Defaulting
Lender for so long as such Lender is a Defaulting Lender) a non-refundable fee
(the "Unused Line Fee") equal to one-half of one percent (.50%) per annum on the
unused portion of such Lender's Commitment, which fee shall (i) accrue from the
date this Credit Agreement becomes effective pursuant to Section 11.14 until the
Expiration Date and (ii) be due and payable quarterly in arrears on the last
Business Day of March, June, September and December, and on the Expiration Date
or any earlier date on which the Total Commitment is terminated.
4.7 Letter of Credit Fees. (a) The Payments Administrator shall
be entitled to charge to the account of the Borrower (i) for the ratable benefit
of the Lenders, a fee (the "Letter of Credit Fee"), in an amount equal to the
Applicable Margin for Eurodollar Rate Loans per annum of the daily weighted
average amount of outstanding Letter of Credit Obligations during the
immediately preceding quarter, due and payable quarterly in arrears on the last
Business Day of March, June, September and December, and on the Expiration Date
or any earlier date on which all Letters of Credit have been terminated, (ii)
for the account of each Issuing Bank, a fee (the "Facing Fee"), in an amount
equal to one quarter of one percent (.25%) per annum of the daily weighted
average amount of Letters of Credit issued by it during the immediately
proceeding quarter, due and payable quarterly in arrears on the last Business
Day of March, June, September and December, and on the Expiration Date or any
earlier date on which the Letters of Credit have been terminated and (iii) as
and when incurred by the Payments Administrator or any Lender, any charges,
fees, costs and expenses charged to the Payments Administrator or any Lender for
the Borrower's account by any Issuing Bank (other than any fees charged to the
Payments Administrator or any Lender which would be duplicative of the Letter of
Credit Fee paid to the Payments Administrator for the benefit of the Lenders)
(the "Issuing Bank Fees") in connection with the issuance of any Letters of
Credit by any Issuing Bank. Each determination by the Payments Administrator of
Letter of Credit Fees hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(b) Letter of Credit Fees payable in respect of Letter of Credit
Obligations outstanding as of the date an Event of Default under Section 9.1(a)
or (c) occurs, and at all times thereafter until the earlier of the date upon
which (i) all Obligations have been paid
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and satisfied in full or (ii) such Event of Default shall have been cured or
waived, shall be payable on demand at a rate equal to the rate at which the
Letter of Credit Fees are charged pursuant to Section 4.7(a) above, plus 2%.
4.8 Other Fees and Expenses. The Borrower agrees to pay (i) fees
to BTCC in the amounts and at the times set forth in the Fee Letter, (ii)
expenses to PNC in the amounts and at the times set forth in the PNC Expense
Letter and (iii) shall be obligated to reimburse the Agent's Expenses promptly
upon demand.
4.9 Authorization to Charge Account. The Borrower hereby
authorizes the Payments Administrator, subject to prior notice to the Borrower,
to charge the Borrower's Revolving Loan account with the amount of all Fees,
Expenses and other payments to be paid hereunder, under the Fee Letter and under
the other Credit Documents as and when such payments become due. The Borrower
confirms that any charges which the Payments Administrator may so make to the
Borrower's Revolving Loan account as herein provided will be made as an
accommodation to the Borrower and solely at the Payments Administrator's
discretion.
4.10 Indemnification in Certain Events. (a) If after the Closing
Date, either (i) any change in or in the interpretation of any law or regulation
is introduced, including, without limitation, with respect to reserve
requirements, applicable to the Agent, any Issuing Bank or any of the Lenders
(or, in the case of a Lender which is not a banking institution, any Affiliate
of such Lender funding such Lender ("Funding Affiliate")), or (ii) the Agent,
any Issuing Bank, or any of the Lenders (or, in the case of a Lender which is
not a banking institution, any Funding Affiliate) complies with any future
guideline or request from any central bank or other Governmental Authority or
(iii) the Agent, any Issuing Bank, or any of the Lenders (or, in the case of a
Lender which is not a banking institution, any Funding Affiliate) 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 charged with the interpretation or administration thereof has or would
have the effect described below, or the Agent, any Issuing Bank, or any of the
Lenders (or, in the case of a Lender which is not a banking institution, any
Funding Affiliate) complies with any future request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, and in the case of any event set forth in
this clause (iii), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any of such Person's
(or any Funding Affiliate's) capital as a consequence of its obligations
hereunder to a level below that which such Person could have achieved but for
such adoption, change or compliance (taking into consideration such Person's (or
any Funding Affiliate's) policies with respect to capital adequacy) by an amount
deemed by such Person to be material, and any of the foregoing events described
in clauses (i), (ii) or (iii) increases the cost to the
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Agent, any Issuing Bank or any of the Lenders of (A) funding or maintaining its
Commitment or (B) issuing, making or maintaining any Letter of Credit or of
purchasing or maintaining any participation therein, or reduces the amount
receivable in respect thereof by the Agent, any Issuing Bank or any Lender, then
the Borrower shall within 10 days after demand by the Agent, pay to the Payments
Administrator, for the account of each applicable Lender or Issuing Bank, as the
case may be, additional amounts sufficient to indemnify the Agent, the Lenders
or Issuing Banks against such increase in cost or reduction in amount receivable
allocable to the Agent's, such Lenders' or Issuing Banks', as the case may be,
funding or maintaining its Commitment or issuing, making or maintaining any
Letter of Credit or purchasing or maintaining any participation therein. A
certificate as to the amount of such increased cost and setting forth in
reasonable detail the calculation thereof shall be submitted to the Borrower by
the Agent, or the applicable Lender or Issuing Bank, as the case may be, and
shall be conclusive absent manifest error.
(b) Each Lender, Issuing Bank or the Agent will notify the
Borrower and the Payments Administrator of any event occurring after the Closing
Date which will entitle such Lender, Issuing Bank or Agent to payment pursuant
to Section 4.10(a) as promptly as practicable after it obtains knowledge
thereof, specifying the event giving rise to such claim and setting out in
reasonable detail an estimate of the basis and computation of such claim. Upon
receipt of such notice, the Borrower shall compensate such Lender, Issuing Bank
or Agent in accordance with Section 4.10(a) from the date such costs are
incurred (including, without limitation, where such costs are retroactively
applied); provided, however, that the Borrower shall not be required to
compensate a Lender, Issuing Bank or Agent for costs incurred earlier than 150
days prior to the date of the notice required to be delivered to the Borrower
pursuant to this Section 4.10(b).
4.11 Calculations. All calculations of (i) interest hereunder and
(ii) Fees, including, without limitation, Unused Line Fees, Letter of Credit Fee
and Facing Fees, shall be made by the Payments Administrator, on the basis of a
year of 360 days, or, if such computation would cause the interest and Fees
chargeable hereunder to exceed the Highest Lawful Rate, 365/366 days, in each
case for the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such interest or Fees
are payable. Each determination by the Payments Administrator of an interest
rate or payment hereunder shall be conclusive and binding for all purposes,
absent manifest error.
4.12 Change of Applicable Lending Office. Each Lender agrees that
on the occurrence of any event giving rise to the operation of Sections 2.9 or
4.10 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Revolving Loans or Letters of Credit
affected by such event, provided that such designation is made on such terms
that such Lender and its lending office suffer no economic, legal or
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regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Sections. Nothing in this Section
4.12 shall affect or postpone any of the obligations of the Borrower or the
right of any Lender provided in Sections 2.9 or 4.10.
ARTICLE 5.
Conditions Precedent
5.1 Conditions to Initial Loans and Letters of Credit. The
obligation of each Lender to make Revolving Loans hereunder and the obligation
of any Issuing Bank to issue Letters of Credit, in each case constituting the
Initial Credit Event, is subject to the satisfaction of, or waiver of,
immediately prior to or concurrently with the making of such Revolving Loans or
the issuance of such Letters of Credit on the Closing Date, the following
conditions precedent:
(a) Execution of Agreement; Notes. On or prior to the Closing
Date, this Credit Agreement shall have become effective as provided in
Section 11.14 and there shall have been delivered to the Payments
Administrator for the account of each Lender the appropriate Revolving
Note in the amount, maturity and as otherwise provided herein.
(b) Officer's Certificate. On the Closing Date, the Agent shall
have received a certificate from each of the Borrower, Canadian Holdco
and U.S. Holdco dated such date signed by an appropriate officer of the
Borrower, Canadian Holdco or U.S. Holdco, as the case may be stating
that all of the applicable conditions set forth in Sections 5.1(i), (j),
(k), (l), (m), (n) and (o) and 5.2(a), (b), (c) and (d) exist as of such
date.
(c) Opinions of Counsel. On the Closing Date, the Agent shall
have received opinions, addressed to the Agent, the Collateral Agent and
each of the Lenders and dated the Closing Date, (i) from Eckert Seamans
Cherin & Mellott and Jones Day Reavis & Pogue, special counsels to the
Borrower, which opinions shall cover the matters contained in Exhibit
E-1 and such other matters incident to the transactions contemplated
herein as the Agent may reasonably request, (ii) from Fraser & Beatty,
special counsel to Consumers which opinion shall cover the matters
contained in Exhibit E-2 and such other matters incident to the
transactions contemplated herein as the Agent may reasonably request,
(iii) from White & Case, special counsel to the Lender, which opinion
shall cover the matters contained in Exhibit E-3 and (iv) from local
counsel reasonably satisfactory to the Agent, opinions each of which
shall be in form and substance reasonably satisfactory to the
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Agent and shall cover the perfection of the security interest granted
pursuant to the Security Agreement and such other matters incident to
the transaction contemplated herein as the Agent may reasonably request.
(d) Security Agreement. On the Closing Date, the Borrower shall
have duly authorized, executed and delivered a Security Agreement in the
form of Exhibit F (as modified, amended or supplemented from time to
time in accordance with the terms thereof and hereof, the "Security
Agreement") together with:
(A) executed copies of Financing Statements (Form UCC-1)
in appropriate form for filing under the UCC of each jurisdiction
as may be necessary to perfect the security interests purported
to be created by the Security Agreement;
(B) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, each of recent date listing
all effective financing statements that name the Borrower as
debtor and that are filed in the jurisdictions referred to in
clause (A), together with copies of such financing statements
(none of which shall cover the Collateral except those with
respect to which appropriate termination statements executed by
the secured lender thereunder have been delivered to the Agent);
(C) evidence of the completion of all other filings of, or
with respect to, the Security Agreement as may be necessary or,
in the opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security
Agreement; and
(D) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect
and protect the security interests purported to be created by the
Security Agreement have been taken.
(e) Collateral Access Agreements. On the Closing Date, the Agent
shall have received Collateral Access Agreements substantially in the
form of Exhibit G (as modified, amended, or supplemented from time to
time in accordance with the terms hereof and thereof, the "Collateral
Access Agreements" with respect to Inventory locations as may be
requested by the Agent or PNC, which Collateral Access Agreements shall
be in full force and effect.
(f) Collection Bank Agreements; Concentration Account Agreement.
On the Closing Date, the Agent shall have received fully executed copies
of the
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Collection Bank Agreements and the Concentration Account Agreement, each
of which shall be in Full Force and effect.
(g) Intercreditor Agreement. On the Closing Date, the Agent on
behalf of the Lenders, BTCo on behalf of the holders of Bridge Senior
Notes and the Borrower shall have entered into an Intercreditor
Agreement in the form of Exhibit H (as modified, amended or supplemented
from time to time in accordance with the terms thereof and hereof, the
"Intercreditor Agreement"), which shall be in full force and effect.
(h) Borrowing Base Certificate. On the Closing Date, the Borrower
shall have delivered to the Agent a Borrowing Base Certificate meeting
the requirements of Section 7.1(e) and which Borrowing Base shall
indicate (in a manner satisfactory to the Agent) that on such date and
after giving effect to the consummation of the Transaction, the Borrower
shall be able to incur additional Outstandings, after giving effect to
the Outstandings on the Closing Date, of $50,000,000 or more in
compliance with the Borrowing Base and Inventory Sublimits restrictions.
(i) Equity Issuances. The Borrower shall have (x) issued at least
$3.4 million of Common Stock to the Equity Investors (the "Common Stock
Financing") and (y) issued $140 million of Preferred Stock to the Equity
Investors, the "Preferred Stock Financing" together with the Common
Stock Financing, the "Equity Financing"), in each case, pursuant to
documentation (including without limitation the TD Loan Agreement) in
form and substance satisfactory to the Agent and the Required Lenders;
provided that the Borrower shall have received at least $85 million of
net cash proceeds from the Equity Financing, which shall be provided by
Consumers or its Affiliates. All terms and conditions of the Preferred
Stock issued in connection with the Preferred Financing and of the
Common Stock issued pursuant to the Common Stock Financing shall be
reasonably satisfactory to the Agent and the Required Lenders. The
Borrower shall have used all net cash proceeds received from the Equity
Financing to make payments owing in connection with the Transaction
prior to or concurrently with the utilization of the Revolving Loans for
such purpose.
(j) Issuance of Bridge Senior Notes. The Borrower shall have
received gross cash proceeds of $130 million from the issuance of a like
principal amount of Bridge Senior Notes. All terms and conditions of the
Bridge Senior Notes shall be reasonably satisfactory to the Agent and
PNC. The Borrower shall have used all net cash proceeds received from
the issuance of the Bridge Senior Notes to make payments owing in
connection with the Transaction prior to or concurrently with the
utilization of Revolving Loans for such purpose.
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(k) Acquisition Agreement; Indemnity Agreement; Plant Sales; etc.
(A) All terms of, and the documentation for the Acquisition and the
Plant Sales (including the Acquisition Agreement, the Indemnity
Agreement and all documentation relating thereto), shall be satisfactory
to the Agent and the Required Lenders. All conditions precedent to the
consummation of the Acquisition and the Plant Sales as set forth in the
documentation relating thereto (including all conditions precedent in
the Acquisition Agreement and the Indemnity Agreement) shall have been
satisfied, and not waived except with the consent (which will not be
unreasonably withheld) of the Agent and the Required Lenders, to the
reasonable satisfaction of the Agent and PNC. The Transaction shall have
been consummated in accordance with the documentation therefor, the
Orders, the Projections and all applicable laws.
(B) On the Closing Date, O-I shall have performed its
obligations under the Acquisition Agreement and consummated the
Plant Sales in accordance with the terms thereof. O-I and the
Borrower (as successor in interest to Consumers) shall be party
to that certain Technical Assistance and License Agreement,
relating to certain licensing matters, which shall be in full
force and effect.
(C) The Agent and Required Lenders shall be reasonably
satisfied through the execution and delivery of a Plan
Termination Agreement, dated as of the Closing Date and in form
and substance satisfactory to the Agent (the "Plan Termination
Agreement") that the PBGC is satisfied with the Borrower's
intention to pay certain pension obligations of Old Anchor Glass
which are part of the Acquired Business with $9.0 million of
Preferred Stock and $9.1 million of cash on the Closing Date, and
that no event or condition has occurred which may give rise to
liability under Title IV of ERISA, other than premiums under
Section 4006 of ERISA.
(D) The Agent shall have received reports, consents and
other information in form and substance reasonably satisfactory
to the Agent concerning the supply agreement with the Bacardi
Company.
(E) The order (the "Sale Order") which was entered by the
Bankruptcy Court on December 20, 1996 authorizing (x) Old Anchor
Glass to perform its obligations under the Acquisition Agreement
and related documents and (y) the transfer of the assets
contemplated thereunder to the Borrower free and clear of liens,
claims, and interests, shall (i) have been delivered to the Agent
and the Lenders, and (ii) not have been appealed or if appeal
shall have been taken therefrom, no stay pending appeal shall
have been issued and the Sale Order shall be in full force and
effect.
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(l) Existing Credit Agreement, etc. (i) On the Closing Date and
concurrently with the Initial Credit Event, the creditors under the
Existing Credit Agreement and the Existing Senior Secured Notes shall
have terminated and released all security interests in and Liens on the
assets owned by Old Anchor Glass and its respective Subsidiaries, and
the Agent shall have received all such releases as may have been
requested by the Agent, which releases shall be in form and substance
reasonably satisfactory to the Agent.
(ii) On the Closing Date and after giving effect to the
Transaction and the Revolving Loans incurred on the Closing Date,
neither the Borrower nor any of its Subsidiaries shall have any
preferred stock or Indebtedness outstanding except for (i) the
Revolving Loans, (ii) the Bridge Senior Notes, (iii) the Existing
Indebtedness and (iv) the Preferred Stock. On and as of the
Closing Date, all of the Existing Indebtedness shall remain
outstanding after giving effect to the Transaction and the other
transactions contemplated hereby without any default or events of
default existing there- under or arising as a result of the
Transaction and the other transactions contemplated hereby
(except to the extent amended or waived by the parties thereto on
terms and conditions satisfactory to the Agent and PNC), and
there shall not be any amendments or modifications to the
Existing Indebtedness Agreements other than as requested or
approved by the Agent or PNC. On and as of the Closing Date, the
Agent and PNC shall be satisfied with the amount of and the terms
and conditions of all Existing Indebtedness.
(m) Approvals. All necessary governmental (domestic and foreign)
and material third party approvals and/or consents (including the
Orders) in connection with the Transaction, the transactions
contemplated by the Transaction Documents and otherwise referred to
herein or therein shall have been obtained and remain in full force and
effect, and all applicable waiting periods shall have expired without
any action being taken by any competent authority which restrains,
prevents, or imposes materially adverse conditions upon, the
consummation of the Transaction, the making of any Revolving Loans or
the issuance of any Letters of Credit or the other transactions
contemplated hereby. There shall not have been any statute, rule
regulation, injunction or order applicable to the Transaction, or the
financing thereof, promulgated, enacted, entered or enforced by any
state or federal government or governmental or regulatory authority or
agency or by any federal or state court or tribunal, nor shall there be
pending any action or proceeding by or before any such authority, court
or tribunal, involving a substantial likelihood of an order, that would
prohibit, restrict, delay or otherwise materially adversely affect the
Transaction or the financing thereof.
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(n) Material Adverse Change, etc. Since December 2, 1996, nothing
shall have occurred (and neither the Agent nor the Lenders shall have
become aware of any facts or conditions not previously known) which the
Agent or PNC shall determine could be reasonably likely to have a
Material Adverse Effect.
(o) Litigation. On the Closing Date, there shall be no actions,
suits, investigations or proceedings pending or threatened (a) with
respect to this Credit Agreement or any other Credit Document or (b)
which the Agent or PNC shall determine is reasonably likely to have a
Material Adverse Effect.
(p) Corporate Proceedings. (i) On the Closing Date, the Agent
shall have received from each of the Borrower, Canadian Holdco and U.S.
Holdco a certificate, dated the Closing Date, signed by the secretary or
any assistant secretary of the Borrower, Canadian Holdco or U.S. Holdco,
as the case may be, in the form of Exhibit I with appropriate
insertions, together with copies of the Certificate of Incorporation and
By-Laws, or other organizational documents of the Borrower, Canadian
Holdco or U.S. Holdco, as the case may be, and the resolutions of the
Borrower, Canadian Holdco or U.S. Holdco, as the case may be, referred
to in such certificate and all of the foregoing (including each such
Certificate of Incorporation and By-Laws) shall be reasonably
satisfactory to the Agent.
(ii) On the Closing Date, all corporate and legal
proceedings and all instruments and agreements in connection with
the transactions contemplated by this Credit Agreement and the
other Transaction Documents shall be reasonably satisfactory in
form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates,
documents and papers, including good standing certificates and
any other records of corporate proceedings and governmental
approvals, if any, which the Agent reasonably may have requested
in connection therewith, such documents and papers, where
appropriate, to be certified by proper corporate or governmental
authorities.
(q) Plans; Collective Bargaining Agreements; Existing
Indebtedness Agreements; Shareholders' Agreements; Management
Agreements; Employment Agreements; Tax Sharing Agreements; Affiliate
Transaction Agreement. On or prior to the Closing Date, there shall have
been delivered to the Agent copies, certified as true and correct by an
appropriate officer of the Borrower making such delivery, of:
(i) all Plans (and for each Plan that is required to file
an annual report on Internal Revenue Service Form 5500-series, a
copy of the most recent such report (including, to the extent
required, the related financial
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and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for
each Plan that is a "single- employer plan," as defined in
Section 4001(a)(15) of ERISA, the most recently prepared
actuarial valuation therefor) and any other "employee benefit
plans," as defined in Section 3(3) of ERISA, and any other
material agreements, plans or arrangements, with or for the
benefit of current or former employees of the Company or any of
its Subsidiaries or any ERISA Affiliate (provided that the
foregoing shall apply in the case of any "multi-employer plan,"
as defined in 4001(a)(3) of ERISA, only to the extent that any
document described therein is in the possession of the Company or
any Subsidiary of the Company or any ERISA Affiliate or
reasonably available thereto from the sponsor or trustee of any
such plan), and any recent actuarial analysis prepared in
connection with any of the foregoing;
(ii) to the extent requested by the Agent prior to the
date of this Credit Agreement, any collective bargaining
agreements or any other similar agreement or arrangements
covering the employees of the Borrower (collectively, the
"Collective Bargaining Agreements");
(iii) all agreements evidencing or relating to the
Existing Indebtedness (collectively, the "Existing Indebtedness
Agreements");
(iv) all agreements entered into by Borrower or any
Subsidiary of Borrower (x) governing the terms and relative
rights of its capital stock or (y) with any shareholders relating
to such entity with respect to their capital stock (collectively,
the "Shareholders' Agreements");
(v) any material agreements (or the forms thereof) with
members of, or with respect to the, management of Borrower or any
Subsidiary of Borrower (collectively the "Management
Agreements");
(vi) any employment agreements (or the forms thereof
together with a list of employees who are parties to such
agreements) entered into by Borrower or any Subsidiary of
Borrower (collectively, the "Employment Agreements");
(vii) any tax sharing, tax allocation and other similar
agreement entered into by Borrower or any Subsidiary of Borrower
(collectively, the "Tax Sharing Agreements"); and
(viii) the Affiliate Transaction Agreement;
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all of which documents relating to the Plans, Collective Bargaining
Agreements, Existing Indebtedness Agreements, Shareholders' Agreements,
Management Agreements, Employment Agreements, Tax Sharing Agreements and
the Affiliate Transaction Agreement shall be in the form delivered to
counsel to the Agent on or prior to the date hereof or otherwise in form
and substance reasonably satisfactory to the Agent and PNC and shall be
in full force and effect on the Closing Date.
(r) Solvency Opinion. On the Closing Date, the Lenders shall have
received an opinion from American Appraisal Associates, Inc. in each
case, in form and substance reasonably satisfactory to the Agent stating
the conclusions that, after giving effect to the Transaction and the
incurrence of all the financing contemplated thereby, the Borrower is
not insolvent and will not be rendered insolvent by the indebtedness
incurred in connection therewith, and will not be left with unreasonably
small capital with which to engage in its business and it will not have
incurred debts beyond its ability to pay such debts as they mature.
(s) Projections; Plant Closures, etc. On the Closing Date, the
Lenders shall have received detailed annual five-year financial
projections (monthly for the first year, quarterly for the second year
and annually thereafter) (including details as to volume, price and cost
assumptions and corresponding balance sheets, statements of operations
and cash flow and changes in shareholders' equity), and one year
financial projections describing on a monthly basis plant-by-plant and
customer-by- customer grossage and sales of the Borrower after giving
effect to the Transaction in form and substance reasonably satisfactory
to the Agent and PNC and the Agent and PNC shall be reasonably satisfied
with the accounting practices and procedures to be utilized by the
Borrower following the Transaction (together with those projections
heretofore provided to the Lenders, the "Projections").
(t) Insurance Policies. On the Closing Date, the Agent shall have
received evidence (including, without limitation, certificates of
insurance; showing compliance with the requirements of Section 7.10 for
the business and properties of the Borrower and its Subsidiaries), in
form and substance reasonably satisfactory to the Agent.
(u) Consent Letter. On the Closing Date, the Agent shall have
received a letter from CT Corporation System, substantially in the form
of Exhibit J hereto, indicating its consent to its appointment by the
Borrower, Canadian Holdco and U.S. Holdco as its agent to receive
service of process as specified in Section 11.1 of this Credit
Agreement.
(v) Payment of Fees. On the Closing Date, all costs, fees and
expenses, and all other compensation contemplated by this Credit
Agreement or the PNC
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Expense Letter, due to the Agent, PNC or the Lenders (including, without
limitation, legal fees and expenses) that have been invoiced in
accordance with Section 4.5(a) hereof shall have been paid to the extent
due.
(w) Collateral Examination. On the Closing Date, the Lenders
shall have received a final pre-closing collateral examination report
concerning all accounts receivables and inventory of the Acquired
Business, the form and substance of which are not materially different
from the collateral examination report heretofore received by the
Lenders, all in form and substance reasonably satisfactory to the Agent
and PNC.
(x) Environmental Reports. On or prior to the Closing Date, the
Lenders shall have received final environmental reports from Environ
International Corporation, together with the Phase I report contemplated
therein, the results of which are reasonably satisfactory to the Agent
and PNC.
(y) Management. On the Closing Date, the identity of the initial
Board of Directors of the Borrower and the management of the Borrower
shall have been disclosed to the Lenders and they shall be satisfied
therewith.
(z) U.S. Holdco Guaranty. On the Closing Date, U.S. Holdco shall
have duly authorized, executed and delivered the U.S. Holdco Guaranty in
the form of Exhibit O (as modified, amended or supplemented from time to
time in accordance with the terms thereof and hereof, the "U.S. Holdco
Guaranty").
(aa) O-I Assurance Agreement. On the Closing Date, the Borrower
shall have duly authorized, executed and delivered a O-I Assurance
Agreement in the form of Exhibit P (as modified, amended or supplemented
from time to time in accordance with the terms thereof and hereof, the
"O-I Assurance Agreement").
(bb) Capital Call Agreement. On the Closing Date, (i) Consumers
shall have duly authorized, executed and delivered the Capital Call
Agreement in the form of Exhibit R (as modified, amended or supplemented
from time to time in accordance with the terms thereof and hereof, the
"Capital Call Agreement") and (ii) the Agent shall have received an
acknowledgment and agreement from Toronto-Dominion in form and substance
satisfactory to the Agent with respect to the Capital Call Agreement.
(cc) Assignment and Assumption Agreement. On the Closing Date,
Consumers shall have duly authorized, executed and delivered the
Assignment and Assumption dated the Closing Date between the Borrower
and Consumers.
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(dd) Pledge Agreement. On the Closing Date, U.S. Holdco shall
have duly authorized, executed and delivered a Pledge Agreement in the
form of Exhibit S (as modified, amended or supplemented from time to
time, the "Pledge Agreement") and shall have delivered all pledged
securities purported to be pledged thereunder to BTCo, as pledgee
thereunder for the benefit of the secured creditors described therein.
(ee) Closing Expenses. The Agent shall be satisfied, based on a
schedule provided to it on the Closing Date, that the total expenses for
the Transaction shall not exceed $21,000,000, and Consumers shall pay at
least $6,000,000 of such expenses.
5.2 Conditions to Each Revolving Loan and Letter of Credit. On
the date of the making of any Revolving Loan or the issuance of any Letter of
Credit, both immediately before and after giving effect thereto and to the
application of the proceeds therefrom, the following statements shall be true to
the satisfaction of the Agent (and each delivery or deemed delivery of each
Notice of Borrowing and a Letter of Credit Request, and the acceptance by the
Borrower of the proceeds of such Revolving Loans or issuance of such Letter of
Credit, shall constitute a representation and warranty by the Borrower that on
the date of such Revolving Loans or issuance of such Letter of Credit
immediately before and after giving effect thereto and to the application of the
proceeds therefrom, such statements are true):
(a) The representations and warranties contained in this Credit
Agreement and in each other Credit Document are true and correct in all
material respects on and as of the date of such Revolving Loans or
issuance of such Letter of Credit as though made on and as of such date,
except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier
date);
(b) No event has occurred and is continuing, or would result from
such Revolving Loans or the issuance of any Letter of Credit or the
application of the proceeds thereof, which would constitute a Default or
an Event of Default;
(c) No change or development which in any such case has had or is
reasonably expected to have a Material Adverse Effect, shall have
occurred and be continuing; and
(d) With respect to the issuance of any Letter of Credit, none of
the events set forth in Section 3.1 hereof has occurred and is
continuing or would result from the issuance of such Letter of Credit.
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The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by the Borrower to each of the Lenders
that all of the applicable conditions specified above exist as of the date of
such Credit Event. All of the certificates, legal opinions and other documents
and papers referred to in this Section 5, unless otherwise specified, shall be
delivered to the Agent at its address specified in Section 11.5 hereof for the
account of each of the Lenders and, except for the Revolving Notes, in
sufficient counterparts or copies for each of the Lenders and shall be in form
and substance as specified herein or otherwise satisfactory to the Agent.
ARTICLE 6.
Representations and Warranties
To induce the Lenders to enter into this Credit Agreement and to
make Revolving Loans and issue and/or participate in the Letters of Credit
provided for herein, the Borrower makes the following representations,
warranties and agreements, as to itself and as to each of its Subsidiaries, all
of which shall survive the execution and delivery of this Credit Agreement, the
making of the Revolving Loans and the issuance of the Letters of Credit (with
the occurrence of each Credit Event being deemed to constitute a representation
and warranty that the matters specified in this Article 6 are true and correct
in all material respects on and as of the date of each such Credit Event, unless
stated to relate to a specific earlier date, in which case they will be true and
correct as of such earlier date):
6.1 Corporate Status. The Borrower (i) is a duly organized and
validly existing corporation in good standing under the laws of the jurisdiction
of its organization and has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (ii) has duly qualified and is authorized to do
business and is in good standing in all jurisdictions where it is required to be
so qualified and where the failure to be so qualified would be reasonably likely
to have a Material Adverse Effect.
6.2 Corporate Power and Authority. The Borrower has the corporate
power and authority to execute, deliver and carry out the terms and provisions
of the Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents to which it is a party. The Borrower has duly executed and
delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting the rights and
remedies of creditors and
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(ii) federal securities or other laws or regulations or public policy insofar as
they may restrict the enforceability of rights to indemnification.
6.3 No Violation. Neither the execution, delivery and performance
by the Borrower of the Credit Documents to which it is a party nor compliance
with the terms and provisions thereof, nor the consummation of the transactions
contemplated therein (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict with or violate or result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or (other than pursuant to the Collateral Documents)
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
agreement or other instrument to which the Borrower or any of its Subsidiaries
is a party or by which it or any of its property or assets are bound or to which
it may be subject or (iii) will violate any provision of any Governing Document
of the Borrower or any of the Borrower's Subsidiaries, except, in the case of
clauses (i) and (ii) any immaterial contravention, conflict, inconsistency,
breach or default which are not reasonably likely to adversely affect any Lender
or to have a Material Adverse Effect.
6.4 Litigation. There are no actions, suits or proceedings
pending or threatened with respect to (i) any Credit Document or (ii) the
Borrower or any of the Borrower's Subsidiaries that, after giving effect to
expected insurance proceeds and indemnity payments, are reasonably likely to
have a Material Adverse Effect.
6.5 Use of Proceeds. (a) The proceeds of all Revolving Loans
shall be utilized to (i) effect the Transaction, (ii) to pay certain fees and
expenses relating thereto and (iii) for general corporate and working capital
purposes of the Borrower and its Subsidiaries; provided that proceeds of
Revolving Loans incurred on the Closing Date shall not exceed the lesser of (x)
$45 million and (y) the Borrowing Base on the Closing Date minus $50 million.
(b) No part of the proceeds of any Revolving Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Revolving
Loan nor the use of the proceeds thereof nor the occurrence of any other Credit
Event will violate or be inconsistent with the provisions of Regulations G, T,
U, or X of the Board of Governors of the Federal Reserve System.
6.6 Governmental Approvals. Except for the filing of financing
statements and continuation statements as required under the Collateral
Documents, and the entry of the Orders, no order, consent, approval, license,
authorization, or validation of, or filing,
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recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, is
required to authorize or is required in connection with (i) the execution,
delivery and performance by the Borrower of any Credit Document or (ii) the
legality, validity, binding effect or enforceability of any Credit Document as
against the Borrower.
6.7 Investment Company Act. Neither the Borrower nor any of the
Borrower's Subsidiaries is an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act of
1940, as amended.
6.8 Public Utility Holding Company Act. Neither the Borrower nor
any of the Borrower's Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.9 True and Complete Disclosure. (a) All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower in writing to the Agent or any Lender does not, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
the Borrower in writing to the Agent or any Lender will not, as of the date as
of which such information is dated or certified, contain any untrue statement of
a material fact or omit to state any material fact necessary to make such
information (taken as a whole) not misleading as of such time, in each case in
light of the circumstances under which such information was provided, it being
understood and agreed that for the purposes of this Section 6.9, such factual
information shall not include the Projections and pro forma financial
information.
(b) The Projections and pro forma financial information contained
in the factual information referred to in clause (a) above are based on good
faith estimates and assumptions believed by the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and necessarily were based upon numerous
assumptions with respect to industry performance, general business and economic
and competitive conditions and uncertainties, taxes and other matters which are
beyond the control of the Borrower and the Borrower's Subsidiaries, such that
there can be no assurance that such projections will be realized and actual
results may differ materially from the projected results.
6.10 Financial Condition; Financial Statements. (a) On and as of
the Closing Date on a pro forma basis after giving effect to the Transaction and
all Indebtedness incurred, and to be incurred, and Liens created and to be
created, by the Borrower in connection with this Credit Agreement and the Bridge
Senior Notes, (x) the
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sum of the assets, at a fair valuation, of the Borrower will exceed its debts,
(y) the Borrower will not have incurred nor intend to, or believe that it will,
incur debts beyond its ability to pay such debts as such debts mature and (z)
the Borrower does not have unreasonably small capital with which to conduct its
businesses. For purposes of this Section 6.10(a), "debt" means any reasonably
expected liability on a claim, and "claim" means (i) right to payment whether or
not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(b) The Borrower has furnished to the Lenders the following
financial statements, which have been prepared in accordance with GAAP (except
for the valuation of goodwill and, in the case of the unaudited financial
statements referred to below, for the omission of footnotes and ordinary year
end adjustments) consistently applied throughout the periods involved: (i) Old
Anchor's consolidated balance sheet as of, and statements of operations,
shareholder's equity and cash flows for the fiscal year ended, December 31,
1995, audited by independent certified public accountants, and accompanied by an
unqualified opinion thereof and (ii) an unaudited consolidated balance sheet of
Old Anchor as of, and unaudited statements of operations, shareholder's equity
and cash flows for (x) the nine-month period ending September 30, 1996 and (y)
the months of October and November 1996. Since September 30, 1996 nothing has
occurred which would be reasonably likely to result in a Material Adverse
Effect.
(c) The pro forma balance sheet of Old Anchor as of December 31,
1995 and September 30, 1996 and the related statement of operations of Old
Anchor for the year ended December 31, 1995 and the 9-month period ended
September 30, 1996, a copy of which has heretofore been furnished to the Agent,
fairly present the pro forma financial condition of Old Anchor assuming that the
Transactions had occurred as of January 1, 1995. The pro forma adjustments made
in such pro forma financial statements have been properly applied to the
historical amounts in the compilation thereof; the assumptions used in preparing
such pro forma financial statements provide a reasonable basis for presenting
the significant direct effects of the Transactions and such pro forma
adjustments give appropriate effect to those assumptions.
6.11 Locations of Offices, Records and Inventory. The address of
the principal place of business and chief executive office of the Borrower as of
the date hereof and as of the Closing Date is set forth on Schedule II. The
books and records of the Borrower, and all its chattel paper and records of
Accounts, are maintained exclusively at the locations listed on Schedule II. As
of the Closing Date, there is no jurisdiction in which the Borrower has any
chattel paper, records of Account and Inventory (except for Inventory
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in transit) other than those jurisdictions identified on Schedule II. Schedule
II also contains a complete list of the legal names and addresses of each
facility or warehouse at which Inventory is stored as of the date hereof and as
of the Closing Date. None of the receipts received by the Borrower from any
warehouseman states that the goods covered thereby are to be delivered to bearer
or to the order of a named person other than the Borrower or to a named person
and such named person's assigns.
6.12 Fictitious Business Names. Except as set forth in Schedule
III, the Borrower has not used any corporate or fictitious name since January 3,
1997, other than the corporate name shown on its Governing Documents.
6.13 Security Interests. On and after the Closing Date, each of
the Collateral Documents create, as security for the Obligations, a valid and
enforceable perfected security interest in and Lien on all of the Collateral,
superior to and prior to the rights of all third persons and subject to no other
Liens, other than as otherwise permitted under the Collateral Documents. At all
times on or after the Closing Date, the respective grantor under each Collateral
Document shall have good and marketable title to all the Collateral subject
thereto free and clear of all Liens other than Liens permitted under Section
8.2. No filings or recordings are required in order to perfect the security
interests created under any Collateral Document except for filings or recordings
required pursuant to the terms of any such Collateral Document.
6.14 Tax Returns and Payments. The Borrower and each of the
Borrower's Subsidiaries has timely filed or caused to be timely filed with the
appropriate taxing authority, all federal returns and all other material
returns, statements, forms and reports for taxes required to be filed by or with
respect to the income, properties or operations of the Borrower and/or any of
the Borrower's Subsidiaries. Such returns accurately reflect all liability for
taxes of the Borrower and the Borrower's Subsidiaries for the periods covered
thereby. The Borrower and each of the Borrower's Subsidiaries has paid all
material taxes payable by it other than taxes which are not established, and
other than those contested in good faith and for which adequate reserves have
been established in accordance with generally accepted accounting principles.
There is no material action, suit, proceeding, investigation, audit, or claim
now pending or, to the knowledge of the Borrower, threatened by any authority
regarding any taxes relating to the Borrower or any of the Borrower's
Subsidiaries. As of the Closing Date, neither the Borrower nor any of the
Borrower's Subsidiaries has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Borrower or
any of the Borrower's Subsidiaries, or is aware of any circumstances that would
cause the taxable years or other taxable periods of the Borrower or any of the
Borrower's Subsidiaries not to be subject to the normally applicable statute of
limitations. None of the Borrower or any of the Borrower's Subsidiaries have
provided, with respect to themselves or property held by them, any
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consent under Section 341 of the Code. Neither the Borrower nor any of the
Borrower's Subsidiaries has incurred, or will incur, any material tax liability
with respect to the Transaction and the other transactions contemplated hereby.
6.15 Compliance with ERISA. (i) Schedule IV identifies each Plan.
Except as set forth on Schedule IV; (A) each Plan (and each related trust,
insurance contract or fund) is in substantial compliance with its terms and with
all applicable laws, including, without limitation, ERISA and the Code; (B) each
Plan (and each related trust, if any) which is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Sections 401(a)
and 501(a) of the Code; (C) no Reportable Event has occurred; (D) no Plan which
is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is insolvent
or in reorganization; (E) no Plan has an Unfunded Current Liability which, when
added to the aggregate amount of Unfunded Current Liabilities with respect to
all other Plans, exceeds (1) in the case of all Plans of the Borrower and its
Subsidiaries $77,000,000, before giving effect to contributions contemplated by
Section 5.1(k)(C) and (2) in the case of ERISA Affiliates other than the
Borrower and its Subsidiaries $4,700,000; (F) no Plan which is subject to
Section 412 of the Code or Section 302 of ERISA has an accumulated funding
deficiency, within the meaning of such sections of the Code or ERISA, or has
applied for or received a waiver of an accumulated funding deficiency or an
extension of any amortization period, within the meaning of Section 412 of the
Code or Section 303 or 304 of ERISA; (G) all contributions required to be made
with respect to a Plan have been timely made; (H) neither the Borrower nor any
Subsidiary of the Borrower nor any ERISA Affiliate has incurred any material
liability (including any indirect, contingent or secondary liability) to or on
account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or expects to incur any such liability under any of the foregoing
sections with respect to any Plan; (I) no condition exists which presents a
material risk to the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate of incurring a liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code; (J) no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan which is
subject to Title IV of ERISA; (K) no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than routine claims for benefits) is pending, expected
or threatened; (L) using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates to all
Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the date of the most recent
Credit Event, would not exceed $360,000; (M) each group health plan (as defined
in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or
has covered employees or former employees of the Borrower, any Subsidiary of the
Borrower,
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or any ERISA Affiliate has at all times been operated in compliance with the
provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the
Code; (N) no lien imposed under the Code or ERISA on the assets of the Borrower
or any Subsidiary of the Borrower or any ERISA Affiliate exists or is likely to
arise on account of any Plan; and (O) the Borrower and its Subsidiaries do not
maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan
the obligations with respect to which could reasonably be expected to have a
material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement.
6.16 Subsidiaries. As of the Closing Date, the Borrower has no
Subsidiaries.
6.17 Patents, etc. Except as otherwise described in the Security
Agreement, the Borrower and each of the Borrower's Subsidiaries have obtained
all material patents, trademarks, servicemarks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are necessary
for the operation of their respective businesses as presently conducted and as
proposed to be conducted.
6.18 Compliance with Statutes, etc. (a) The Borrower and each of
the Borrower's Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such non- compliances as are
not likely to, in the aggregate, have a Material Adverse Effect.
(b) The Borrower and each of the Borrower's Subsidiaries is in
compliance with all applicable Environmental Laws governing its business for
which failure to comply is likely to have a Material Adverse Effect and neither
the Borrower nor any of the Borrower's Subsidiaries is liable for any material
penalties, fines or forfeitures for failure to comply with any of the foregoing
in the manner set forth above. All material licenses, permits, registrations or
approvals required for the business of the Borrower and each of the Borrower's
Subsidiaries, as conducted as of the Closing Date, under any Environmental Law
either (i) have been secured and the Borrower and each of the Borrower's
Subsidiaries is in material compliance therewith or (ii) appropriate filings
have been made to secure such licenses, permits, registrations and approvals and
the Borrower is not aware of any circumstance where (A) the same will not be
secured in due course or (B) the failure to secure the same prior to the Closing
Date will have a Material Adverse Effect. Neither the Borrower nor any of the
Borrower's Subsidiaries is in any respect in noncompliance with, breach of or
default under any applicable writ, order, judgment, injunction, or decree to
which the Borrower or such Subsidiary is a party and which would materially and
adversely affect the ability of the Borrower or such Subsidiary to operate its
business or other Real
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Property and no event has occurred and is continuing which, with the passage of
time or the giving of notice or both, would constitute noncompliance, breach of
or default thereunder. There are as of the Closing Date no Environmental Claims
pending or, to the best knowledge of the Borrower, threatened, which question
the validity, term or entitlement of the Borrower or any of the Borrower's
Subsidiaries for any permit, license, order or registration required for the
operation of any facility which the Borrower or any of the Borrower's
Subsidiaries currently operates and which could reasonably be expected to have a
Material Adverse Effect. There are no facts, circumstances, conditions or
occurrences in connection with the past or present operations of or business of
the Borrower or any of the Borrower's Subsidiaries on any Real Property of the
Borrower or any of the Borrower's Subsidiaries or on any property adjoining or
adjacent to any such Real Property, that (a) are reasonably expected (i) to form
the basis of an Environmental Claim against the Borrower any of the Borrower's
Subsidiaries or any Real Property of the Borrower or any of the Borrower's
Subsidiaries, or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law and (b) which could reasonably be expected
to have a Material Adverse Effect.
(c) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, by the Borrower or any of
the Borrower's Subsidiaries, any Real Property of the Borrower or any of the
Borrower's Subsidiaries, except Hazardous Materials generated, used, treated or
stored on, or transported to or from, any Real Property of the Borrower or any
of the Borrower's Subsidiaries in the ordinary course of business and either (A)
in compliance with Environmental Laws or (B) if not in compliance, where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect ("Permitted Materials") or (ii) released or disposed of (not including
the sale of inventory) on any such Real Property other than where such release
or disposals would not reasonably be expected to have a Material Adverse Effect.
(d) Schedule V sets forth all instances known to the Borrower of:
(i) noncompliance by the Borrower and each of its Subsidiaries with applicable
Environmental Laws; (ii) pending or threatened Environmental Claims which
question the validity, term or entitlement of the Borrower or any of its
Subsidiaries of or to any permit, license, order or registration required for
the operation of any facility which the Borrower or any of its Subsidiaries
currently operates; (iii) facts, circumstances, conditions or occurrences on any
Real Property of the Borrower or any of its Subsidiaries that are reasonably
expected to form the basis of an Environmental Claim against the Borrower or any
of its Subsidiaries or any Real Property of the Borrower or any of its
Subsidiaries, or to cause any Real Property of the Borrower or any of its
Subsidiaries to be subject to any restrictions on the ownership, occupancy, use
or transferability of such Real Property under any Environmental Law; and (iv)
the generation, use, treatment or storage of Hazardous Materials on, or
transportation of Hazardous Materials to or from, the Real Property of the
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Borrower or any of its Subsidiaries other than in the ordinary course of
business in material compliance with Environmental Laws, and the release or
disposal of Hazardous Materials on any Real Property of the Borrower or any of
its Subsidiaries. Schedule V is provided for informational purposes only. None
of the facts, circumstances, conditions or occurrences set forth on Schedule V,
individually or on the aggregate could reasonably be expected to have a Material
Adverse Affect.
6.19 Properties. Borrower and each of Borrower's Subsidiaries has
good title to all material properties owned by it free and clear of all Liens,
other than as permitted by Section 8.2. Schedule VI contains a true and complete
list of each Real Property owned, if any, and each Real Property leased by the
Borrower on the Closing Date and the type of interest therein held by the
Borrower.
6.20 Labor Relations; Collective Bargaining Agreements. (a) Set
forth on Schedule VII hereto is a list (including dates of termination) of all
collective bargaining or similar agreements between or applicable to the
Borrower or any of its Subsidiaries and any union, labor organization or other
bargaining agent in respect of the employees of the Borrower and/or any of its
Subsidiaries on the Closing Date.
(b) Neither the Borrower nor any of its Subsidiaries is engaged
in any unfair labor practice that is likely to have a Material Adverse Effect.
There is (i) no significant unfair labor practice complaint pending against the
Borrower or any of the Borrower's Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, before the National Labor Relations
Board, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is pending on the
Closing Date against the Borrower or any of the Borrower's Subsidiaries or, to
the best knowledge of the Borrower, threatened against any of them, (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against the
Borrower or any of the Borrower's Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of the Borrower's Subsidiaries,
except (with respect to any matter specified in clause (i) and (ii) above,
either individually or in the aggregate) such as is not reasonably likely to
have a Material Adverse Effect.
6.21 Restrictions on Subsidiaries. Except for restrictions
contained in the Credit Documents, the Senior Note Documents and in agreements
with respect to the Existing Indebtedness, as of the Closing Date there are no
contractual or consensual restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (i) the transfer of cash or
other assets (x) between the Borrower and any of its Subsidiaries or (y) between
any Subsidiaries of the Borrower or (ii) the ability of the Borrower or any of
its Subsidiaries to grant security interests to the Lenders in the Collateral.
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6.22 Status of Accounts. Each Account is based on an actual and
bona fide sale and delivery of goods or rendition of services to customers, made
by the Borrower or, to the knowledge of the Borrower, Old Anchor in the ordinary
course of its business; the goods and inventory being sold and the Accounts
created are its exclusive property and are not and shall not be subject to any
Lien, consignment arrangement, encumbrance, security interest or financing
statement whatsoever other than the Liens created pursuant to the Collateral
Documents and Permitted Liens, and, except as otherwise reported or reserved
against on the Borrower's or its Subsidiaries books and records, the Borrower's
customers have accepted the goods or services, owe and are obligated to pay the
full amounts stated in the invoices according to their terms, without any
dispute, offset, defense, or counterclaim.
6.23 Material Contracts. (a) Schedule VIII sets forth a true and
complete list of each Material Contract.
(b) Neither the Borrower nor any of its Subsidiaries is in breach
of or in default under any Material Contract.
6.24 Existing Indebtedness and Operating Leases. Schedule IX sets
forth a true and complete list of all Existing Indebtedness and Operating Leases
of the Borrower and its Subsidiaries as of the Closing Date, in each case
showing the aggregate principal amount thereof and the name of the respective
borrower and any other entity which directly or indirectly guaranteed such debt.
6.25 Tax Sharing Agreements. As of the Closing Date, the Borrower
is not party to any Tax Sharing Agreements.
ARTICLE 7.
Affirmative Covenants
The Borrower hereby covenants and agrees that on the Closing Date
and thereafter, for so long as this Credit Agreement is in effect and until the
Total Commitments have terminated, no Letters of Credit or Revolving Notes are
outstanding and the Revolving Loans and Letter of Credit Obligations, together
with interest, Fees, Expenses and all other Obligations (other than any
indemnities described in Section 11.8 hereof which are not then due and payable)
incurred hereunder, are paid in full:
7.1 Financial Information. The Borrower shall furnish to the
Lenders the following information within the following time periods, it being
understood that
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comparisons to prior periods shall only be required where Financial Statements
for such prior period have been prepared:
(a) as soon as available and in any event within 95 days after
the end of each fiscal year of the Borrower (other than the Management
Letter referred to in clause (B) below), (i) audited Financial
Statements as of the close of the fiscal year and for the fiscal year,
together with a comparison to the Financial Statements for the prior
year, in each case accompanied by (A) a report thereon of the Auditors
thereof unqualified as to scope, which report shall state that such
consolidated financial statements fairly present the consolidated
financial position of the Borrower and its consolidated Subsidiaries as
at the date indicated and the results of their operations and cash flows
for the periods indicated in conformity with GAAP (except as otherwise
stated therein) and that the examination by such Auditors has been made
in accordance with generally accepted auditing standards, (B) such
Auditors' "Management Letter" to the Borrower as soon as available, (C)
a written statement signed by such Auditors stating that in the course
of the annual audit of the business of the Borrower, which audit was
conducted by such Auditors in accordance with generally accepted
auditing standards, such Auditors (x) have not obtained any knowledge of
the existence of any Default or Event of Default under any provision of
Sections 8.4, 8.9, 8.10, 8.11, 8.12, 8.13 and 8.14 of this Credit
Agreement, or, if such Auditors shall have obtained from such
examination any such knowledge, they shall disclose in such written
statement the existence of the Default or Event of Default and the
nature thereof and (y) have examined information necessary to verify
compliance with Section 8.7 and the Affiliate Transactions Agreement (as
relating to the Borrower and its Subsdiaires), and that the Borrower and
its Subsidiaries are in compliance with the terms thereof, or if not so
in compliance, the Auditor shall disclose in such written statement the
scope and nature of such noncompliance, it being understood that such
Auditors shall not be required hereunder to perform any special audit
procedures and shall have no liability, directly or indirectly, to
anyone for failure to obtain knowledge of any such Default or Event of
Default and (ii) a compliance certificate substantially in the form of
Exhibit K along with a schedule in form satisfactory to the Agent of the
calculations used in determining, as of the end of such fiscal year,
whether the Borrower was in compliance with the covenants set forth in
Articles 7 and 8 of this Credit Agreement for such year. To the extent
that the Borrower's annual report on Form 10-K contains any of the
foregoing items, the Lenders will accept the Borrower's report on Form
10-K in lieu of such items;
(b) as soon as available and in any event within 45 days after
the end of each fiscal quarter of the Borrower (except the last fiscal
quarter of any fiscal year) (i) Financial Statements as at the end of
such period and for the fiscal year to date, together with a comparison
to the Financial Statements for the same periods in the
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prior year, all in reasonable detail and duly certified (subject to the
addition of footnotes and audit and normal year-end adjustments) by the
chief executive officer or chief financial officer of the Borrower as
having been prepared substantially in accordance with GAAP and (ii) a
compliance certificate substantially in the form of Exhibit K along with
a schedule in form satisfactory to the Agent of the calculations used in
determining, as of the end of such fiscal quarter, whether the Borrower
was in compliance with the covenants set forth in Articles 7 and 8 of
this Credit Agreement for such quarter. To the extent that the
Borrower's quarterly report on Form 10-Q contains any of the foregoing
items, the Lenders will accept the Borrower's report on Form 10-Q in
lieu of such items;
(c) as soon as available and in any event within 35 days after
the end of each month (except the last month of any fiscal quarter, with
respect to which such reports shall be delivered within 45 days after
the end of the month (other than the last quarter of the fiscal year
with respect to which such reports shall be delivered within 95 days
after the end of the month)), a consolidated and consolidating balance
sheet for the Borrower as at the end of such month and for the fiscal
year to date and consolidated statements of operations and cash flows
for such month and for the fiscal year to date, together with a
comparison to the balance sheet, statement of operations and statement
of cash flows for the same periods in the prior year, all in reasonable
detail and duly certified (subject to the addition of footnotes and
audit and normal year-end adjustments) by the chief executive officer or
chief financial officer of the Borrower as having been prepared
substantially in accordance with GAAP;
(d) not later than 30 days before the end of each fiscal year
commencing with the fiscal year ending December 31, 1997, monthly
projections including customer-by-customer and plant-by-plant grossage
and sales and plant-by-plant Capital Expenditures (in substantially the
same form as the Projections) for the Borrower and its Subsidiaries for
the following fiscal year and annual projections for each subsequent
fiscal year through and including the fiscal year in which the
Expiration Date occurs;
(e) upon request by the Agent at any time if a Default or Event
of Default shall exist and in any event not later than 12:00 Noon New
York time on the third Business Day of each week (or more frequently if
requested by the Agent in the exercise of its Permitted Discretion), and
within five Business Days after the last Business Day of each month, a
Borrowing Base certificate (the "Borrowing Base Certificate") in
substantially the form of Exhibit L, duly completed, as of Friday of the
immediately preceding week and as of the last day of such month, as
applicable (or such other date as the Agent may specify in such
request), and certified by the Borrower's chief executive officer, chief
financial officer or
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treasurer and subject only to adjustment upon completion of the normal
year-end audit and confirmation based upon cycle counting verification.
In addition, each Borrowing Base Certificate shall have attached to it
such additional schedules and/or other information, including monthly
aging reports, as the Agent may reasonably request;
(f) promptly and in any event within five Business Days after
becoming aware of the occurrence of a Default or Event of Default, a
certificate of the chief executive officer or chief financial officer of
the Borrower specifying the nature thereof and the Borrower's proposed
response thereto, each in reasonable detail;
(g) within 35 days after the end of each month (except the last
month of any fiscal quarter, with respect to which such reports shall be
delivered within 45 days after the end of the month (other than the last
quarter of the fiscal year with respect to which such reports shall be
delivered within 95 days after the end of the month)), a comparison of
consolidated actual results of operations, cash flow and capital
expenditures for the Borrower and the Borrower's Subsidiaries for such
month and for the period from the beginning of the current fiscal year
through the end of such month (i) with amounts projected for such month
and for the period from the beginning of the current fiscal year through
the end of such month pursuant to Section 7.1(d) above and (ii) with
actual results of operations, cash flow and capital expenditures for the
Borrower and the Borrower's Subsidiaries for the same periods of the
prior fiscal year, in each case, together with management discussion and
analysis relating to such results;
(h) promptly upon the earlier of the mailing or filing thereof,
copies of all 10-Ks, 10-Qs, 8-Ks, proxy statements, annual reports,
quarterly reports, registration statements and any other filings or
other communications made by the Borrower to holders of its publicly
traded securities or the Securities Exchange Commission from time to
time pursuant to the Securities Exchange Act of 1934, as amended, or the
Securities Act of 1933, as amended;
(i) promptly and in any event after becoming aware of the
occurrence of any of the following events:
(i) any Material Contract of the Borrower or any of its
Subsidiaries is terminated or amended or any new Material
Contract is entered into which is reasonably likely to have an
adverse effect on the Lenders (in which event the Borrower shall
provide the Agent with a copy of such Material Contract); or
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(ii) any of the material terms (other than price) upon
which material suppliers of the Borrower or any of its
Subsidiaries do business with the Borrower or such Subsidiary are
changed or amended the results of which are reasonably likely to
have an adverse effect on the Lenders; or
(iii) any order, judgment or decree in excess of $2,500,000
(after reasonably expected insurance and indemnity recovery)
shall have been entered against the Borrower or any of its
Subsidiaries or any of their respective properties or assets; or
(iv) any notification of violation of any Requirement of
Law shall have been received by the Borrower or any of its
Subsidiaries from any Governmental Authority the results of which
are likely to have a Material Adverse Effect; and
(j) from time to time, such further information, including
customer address list, regarding the Collateral, business affairs and
financial condition of the Borrower and/or each of the Borrower's
Subsidiaries as the Agent may reasonably request.
7.2 Inventory Reconciliation. The Borrower shall make available
when complete the results of any physical inventory count or reconciliation of
perpetual inventory to the general ledger.
7.3 Corporate Franchises. The Borrower will, and will cause each
of its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence, material rights and authority
to do business, provided that any transaction permitted by Section 8.1 will not
constitute a breach of this Section 7.3, and provided further that the Borrower
shall not be required to preserve, with respect to itself, any material right or
authority to do business and with respect to any of its Subsidiaries, any such
existence, material right or authority to do business if the Borrower shall
reasonably determine that such preservation is no longer desirable in the
ordinary course of business, and the loss thereof shall not be reasonably likely
to have a Material Adverse Effect.
7.4 Compliance with Statutes, etc. (a) The Borrower will, and
will cause each of the Borrower's Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable Environmental
Laws) other than those the non-compliance with which (individually or in the
aggregate) would not have a Material Adverse Effect. Neither Borrower nor any of
Borrower's Subsidiaries will generate, use, treat, store, release or
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dispose of, or permit the generation, use, treatment, storage, release or
disposal of Hazardous Materials on any of its Real Property, or transport or
permit the transportation of Hazardous Materials to or from any such Real
Property, except for quantities used or stored at, and transferred to or from,
such Real Properties in material compliance with all applicable Environmental
Laws and required in connection with the normal operation, use and maintenance
of such Real Property or the operation of the business of the Borrower and its
Subsidiaries. If required to do so under any applicable Environmental Law, the
Borrower agrees to undertake, and agrees to cause each of its Subsidiaries to
undertake, any cleanup, removal, remedial or other action necessary to remove
and clean up any Hazardous Materials from any Real Property in accordance with
the requirements of all such applicable Environmental Laws and in accordance
with orders and directives of all governmental authorities; provided that
neither Borrower nor any of Borrower's Subsidiaries shall be required to take
any such action where same is being contested by appropriate legal proceedings
in good faith by Borrower or such Subsidiary.
(b) At the request of the Agent or the Required Lenders at any
time and from time to time, but in any event no more frequently than once a
year, the Borrower will provide, at the Borrower's sole cost and expense, an
environmental site assessment report or update concerning any Real Property of
the Borrower or any Subsidiary, prepared by an environmental consulting firm
reasonably acceptable to by the Agent, indicating the presence or release of
Hazardous Materials and the potential cost of any removal or remedial action in
connection with any Hazardous Materials on such Real Property; provided,
however, no such request may be made unless the Agent or the Required Lenders
reasonably believe that (i) the Borrower or any of its Subsidiaries is in
material noncompliance with any Environmental Law with respect to such Real
Property and such noncompliance is reasonably likely to result in a liability of
the Borrower in excess of $2,500,000 (after expected insurance and indemnity
recovery) in the aggregate or (ii) an Event of Default is in existence. If the
Borrower fails to provide the same after sixty (60) days' written notice, the
Agent may order the same, and the Borrower shall grant and hereby grants to the
Agent and the Lenders and their agents access to such Real Property at all
reasonable times and without unreasonably interfering with the Borrower's
operations and specifically grants the Agent and the Lenders an irrevocable
nonexclusive license, subject to the rights of tenants, to undertake such an
assessment all at the Borrower's sole expense.
7.5 ERISA. As soon as possible and, in any event, within ten (10)
days after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following, the
Borrower will deliver to the Agent a certificate of the chief financial officer
of the Borrower setting forth the full details as to such occurrence and the
action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by the Borrower, the Subsidiary, the ERISA
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Affiliate, the PBGC, a Plan participant or the Plan administrator with respect
thereto: that a Reportable Event has occurred (except to the extent that the
Borrower has previously delivered to the Lenders a certificate and notices (if
any) concerning such event pursuant to the next clause hereof); that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof),
and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC
Regulation Section 4043 (other than to the extent to which the 30-day notice
period is waived pursuant to subsection .62, .63, .64 and .65, other than on
event referred to in subsection .65 which would be described in subsection
.32(c)(1) of such Regulation if it had already occurred) is reasonably expected
to occur with respect to such Plan within the following thirty (30) days; that
an accumulated funding deficiency, within the meaning of Section 412 of the Code
or Section 302 of ERISA, has been incurred after the Closing Date or an
application may be or has been made for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code or Section 303 or 304
of ERISA with respect to a Plan; that any contribution required to be made with
respect to a Plan has not been timely made; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability which, when added to the
aggregate amount of Unfunded Current Liabilities with respect to all other
Plans, exceeds the aggregate amount of such Unfunded Current Liabilities that
existed on the Closing Date by $81,700,000; that proceedings may be or have been
instituted to terminate or appoint a trustee to administer a Plan which is
subject to Title IV of ERISA; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Plan; that the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any material liability (including any indirect, contingent, or secondary
liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code; or that the Borrower or any Subsidiary of the
Borrower may incur, while any Obligation is outstanding, any material liability
not existing on the Closing Date pursuant to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) that provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any Plan. The Borrower will deliver to each of the Banks (i) a
complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service and (ii) copies of any records, documents or other
information that must be furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA. In addition to any certificates or notices delivered
to the Banks
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pursuant to the first sentence hereof, copies of annual reports and any records,
documents or other information required to be furnished to the PBGC, and any
material notices received by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate with respect to any Plan shall be delivered to the Banks no
later than ten (10) days after the date such annual report has been filed with
the Internal Revenue Service or such records, documents and/or information has
been furnished to the PBGC or such notice has been received by the Borrower,
such Subsidiary or the ERISA Affiliate, as applicable.
7.6 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, use commercially reasonable efforts to provide that its
material properties and equipment used or useful in its business in whomsoever's
possession they may be, are kept in good repair, working order and condition,
normal wear and tear excepted and, subject to Section 8.4, that from time to
time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner customary for companies in
similar businesses.
7.7 Books and Records. The Borrower agrees to maintain, and to
cause each of its Subsidiaries to maintain, books and records pertaining to the
Collateral in such detail, form and scope as is consistent with good business
practice, and agrees that such books and records will reflect the Lenders'
interest in its Accounts. The Borrower agrees that the Collateral Agent or its
agents may enter upon the premises of Borrower or any of Borrower's Subsidiaries
at any time and from time to time, during normal business hours and upon
reasonable notice under the circumstances, and at any time at all during the
continuance of an Event of Default, for the purposes of (i) inspecting the
Collateral, (ii) inspecting and/or copying (at the Borrower's expense) any and
all records pertaining thereto, (iii) discussing the affairs, finances and
business of the Borrower with any officers, employees and directors of the
Borrower or with Auditors (it being understood that the Borrower shall be
entitled to have a representative present at any such discussions) and (iv)
verifying Eligible Accounts Receivable and/or Eligible Inventory. The Borrower
shall give the Collateral Agent fifteen days prior written notice of any change
in the location of any facility owned or leased by the Borrower or any of its
Subsidiaries where Collateral is located or in the location of its chief
executive office or place of business from the locations specified in Schedule
II, and to execute in advance of such change, cause to be filed and/or delivered
to the Collateral Agent any financing statements, Collateral Access Agreements
or other documents required by the Agent, all in form and substance satisfactory
to the Agent. The Borrower agrees to advise the Agent promptly, in sufficient
detail, of any substantial change relating to the type, quantity or quality of
the Collateral, or any event (other than a change in price) which could have an
adverse effect on the value of the Collateral or on the security interests
granted to the Collateral Agent, on behalf of the Lenders therein.
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7.8 Collateral Records. The Borrower agrees to execute and
deliver, and to cause each of its Subsidiaries to execute and deliver, to the
Collateral Agent, from time to time, solely for the Agent's convenience in
maintaining a record of the Collateral, such written statements and schedules as
the Collateral Agent may reasonably require, including, without limitation,
those described in Section 7.1 of this Credit Agreement, designating,
identifying or describing the Collateral pledged or granted to the Lenders under
the Collateral Documents. The failure by the Borrower or any of its
Subsidiaries, however, to promptly give the Agent such statements or schedules
shall not affect, diminish, modify or otherwise limit the Lenders' security
interests in the Collateral.
7.9 Security Interests. The Borrower shall, and shall cause each
of its Subsidiaries to, defend the Collateral against all claims and demands of
all Persons at any time claiming the same or any interest therein. The Borrower
shall comply with the requirements of all state and federal laws in order to
grant to the Lenders valid and perfected first priority security interests in
the Collateral, subject to Existing Liens and to any other Permitted Liens
arising after the date hereof pursuant to operation of law and which pursuant to
operation of law are prior to the perfected security interests created
hereunder. The Collateral Agent is hereby authorized by the Borrower to file any
UCC financing statements covering the Collateral whether or not the signatures
of the Borrower appear thereon. The Borrower shall do whatever the Collateral
Agent may reasonably request, from time to time, to effect the purposes of this
Credit Agreement and the other Credit Documents, including, without limitation,
filing notices of liens, UCC financing statements and amendments, renewals and
continuations thereof; cooperating with the Collateral Agent's representatives;
keeping stock records; obtaining waivers from landlords and mortgagees and from
warehousemen and their landlords and mortgagees; and, paying claims which might,
if unpaid, become a Lien on the Collateral other than a Permitted Lien.
7.10 Insurance; Casualty Loss. Schedule X hereto sets forth a
true and complete listing of all insurance maintained by the Borrower and each
of its Subsidiaries as of the Closing Date. The Borrower agrees to maintain, and
to cause each of its Subsidiaries to maintain, public liability insurance, third
party property damage insurance and replacement value (or such higher coverage
as the Borrower may obtain) insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts and covering such
risks in at least such amounts and against at least such risks as are described
on Schedule X, or as are at all times satisfactory to the Agent in its
commercially reasonable judgment. All policies covering the Collateral are to
name the Collateral Agent as an additional insured and the Collateral Agent as
loss payee in case of loss, as its interests may appear, and are to contain such
other provisions as the Agent may reasonably require to fully protect the
Lenders' interest in the Collateral and to any payments to be made under such
policies. The Borrower shall provide written notice to the Agent of the
occurrence of any of the following events within ten Business Days after the
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occurrence of such event: any Collateral is (i) damaged or destroyed, or suffers
any other loss, or (ii) condemned, confiscated or otherwise taken, in whole or
in part, or the use thereof is otherwise diminished so as to render
impracticable or unreasonable the use of such Collateral or to materially
diminish its marketability, and in either case the amount of the damage,
destruction, loss or diminution in value is in excess of $2,000,000
(collectively, a "Casualty Loss"). The Borrower and/or the respective Subsidiary
shall diligently file and prosecute their claim or claims for any award or
payment in connection with a Casualty Loss. In the event of a Casualty Loss, the
Borrower shall pay to the Collateral Agent, promptly upon receipt thereof, any
and all net insurance proceeds and payments received by the Borrower or any
Subsidiary on account of damage, destruction, loss, condemnation or eminent
domain proceedings, whereupon the Collateral Agent shall, at the election of the
Required Lenders, in their sole discretion, either (a) apply the proceeds
realized from Casualty Losses to payment of accrued and unpaid interest or
outstanding principal under the Revolving Loans or (b) pay such proceeds to the
Borrower to be used to repair or replace the Collateral that was the subject of
the Casualty Loss. After the occurrence and during the continuance of an Event
of Default, (i) no settlement on account of any such Casualty Loss shall be made
without the consent of the Collateral Agent and (ii) the Collateral Agent may
participate in any such proceedings and the Borrower shall deliver to the
Collateral Agent such documents as may be requested by the Collateral Agent to
permit such participation and shall consult with the Collateral Agent, its
attorneys and agents in the making and prosecution of such claim or claims. The
Borrower hereby irrevocably authorizes and appoints the Collateral Agent its
attorney-in-fact, after the occurrence and during the continuance of an Event of
Default, to collect and receive for any such award or payment and to file and
prosecute such claim or claims, which power of attorney shall be irrevocable and
shall be deemed to be coupled with an interest, and the Borrower shall, upon
demand of the Collateral Agent, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to the Collateral Agent for the benefit of the Lenders,
free and clear of any encumbrances of any kind or nature whatsoever, other than
the right of the Borrower to any insurance proceeds remaining after application
thereof by the Collateral Agent as provided in this Section 7.10.
7.11 Taxes. Borrower will, and will cause each of Borrower's
Subsidiaries to, pay and discharge all federal income and other material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, or payable by it
pursuant to the Tax Sharing Agreements, in each case on a timely basis, and all
lawful claims which, if unpaid, might become a Lien or charge upon any
properties of Borrower or of any of Borrower's Subsidiaries; provided, that
neither Borrower nor any of Borrower's Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings if it has maintained adequate reserves (in the
good faith judgment of the management of such Person) with respect thereto in
accordance with GAAP.
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7.12 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31.
7.13 Further Assurances. The Borrower shall take, and shall cause
each of the Borrower's Subsidiaries to take, all such further actions and
execute all such further documents and instruments as the Collateral Agent may
at any time reasonably determine to be necessary or desirable to further carry
out and consummate the transactions contemplated by the Credit Documents, to
cause the execution, delivery and performance of the Credit Documents to be duly
authorized and to perfect or protect the Liens (and the priority status thereof)
of the Collateral Agent on the Collateral. Furthermore, the Borrower shall cause
to be delivered to the Collateral Agent such opinions of counsel, title
insurance and other related documents as may be reasonably requested by the
Collateral Agent to assure itself that this Section 7.13 has been complied with.
7.14 Maintenance of Corporate Separateness. The Borrower will,
and will cause each of the Borrower's Subsidiaries to, satisfy customary
corporate formalities, including the holding of regular board of directors' and
shareholders' meetings and the maintenance of corporate offices and records, and
will not permit its financial information to be provided to creditors of
Consumers or its other Affiliates without indicating that the assets and
financial performance of the Borrower and its Subsidiaries are separate from
Consumers and its other Affiliates and will not provide financial support or
assurances to such creditors.
7.15 Interest Rate Agreement. On the date which is 180 days after
the Closing Date if the Bridge Senior Notes are outstanding, the Borrower will
enter into an Interest Rate Agreement mutually satisfactory to the Agent and the
Borrower capping the maximum rate of interest with respect to a portion of the
Revolving Loans, such portion to be determined by, at a rate to be determined
by, and on terms and conditions satisfactory to, the Agent.
7.16 Releases and Terminations. (a) On or prior to the 45th day
following the Closing Date, the Borrower shall have caused Old Anchor to execute
and file releases and terminations of any and all Liens, other than Existing
Liens, encumbering all assets purchased by the Borrower pursuant to the
Acquisition Documents necessary to satisfy paragraph 31 of the Sale Order.
(b) On or prior to the 60th day following the Closing Date, the
Borrower shall deliver to the Agent (at the Borrower's own cost) copies of
Request for Information or Copies (form UCC-11), or equivalent reports verifying
that all the releases and terminations described in Section 7.16(a) shall have
been properly recorded and filed.
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7.17 Perfection of Intellectual Property Security Interests. On
or prior to the 60th day following the Closing Date, the Borrower shall have
executed and delivered Assignments of Security Interests in Trademarks, Patents
and Copyrights (as such terms are defined in the Security Agreement) covering
all right, title and interest in each United States Mark, Patent and Copyright
(as such terms are defined in the Security Agreement) of the Borrower (other
than right, title and interest retained by O-I pursuant to by the Technical
Assistance and License Agreement).
7.18 Payment of Certain Plan Obligations. (a) The Borrower shall
make timely contributions to the Anchor Glass Container Corporation Service
Retirement Plan, the Anchor Glass Container Corporation Retirement Plan for
Salaried Employees and the Retirement Plan for Hourly Employees of Latchford
Glass Company and Associated Companies which are required to be made (x)
pursuant to the Plan Termination Agreement and (y) for fiscal years 1997, 1998
and 1999 pursuant to Sections 412 and 302 of ERISA and which, for fiscal year
1997, in the aggregate are estimated as of the Closing Date to be $29,300,000.
(b) Any payments required to be made to "top-up" the value of
Series A Preferred Stock received on the Closing Date in respect of the Plans
described above shall be made in the form of (x) no more than $250,000 in cash
and (y) additional shares of Series A Preferred Stock.
7.19 Name Change. On or prior to the fifth day following the
Closing Date, the Borrower shall have changed its name to Anchor Glass Container
Corporation and shall have notified the Agent of the same.
ARTICLE 8.
Negative Covenants
The Borrower hereby covenants and agrees that as of the Closing
Date, and thereafter, for so long as this Credit Agreement is in effect and
until the Total Commitments have terminated, no Letter of Credit or Revolving
Notes are outstanding and the Revolving Loans and Letter of Credit Obligations,
together with interest, Fees, Expenses and all other Obligations (other than any
indemnities described in Section 11.8 hereof which are not then due and payable)
incurred hereunder, are paid in full:
8.1 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrower will not, and will not permit any of the Borrower's Subsidiaries to,
wind up, liquidate or dissolve its affairs, or enter into any transaction of
merger or consolidation, sell or otherwise dispose of all or any part of its
property or assets (other than inventory, obsolete
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equipment, excess equipment no longer needed in the conduct of business or
equipment being replaced with other equipment, in each case in the ordinary
course of business) or purchase, lease or otherwise acquire (in one transaction
or a series of related transactions) all or any part of the property or assets
of any Person (other than (i) to replace obsolete property or assets disposed of
in compliance with this Section and (ii) purchases, leases or other acquisitions
of goods, inventory and equipment, operating leases of property, in each case,
in the ordinary course of business) or agree to do any of the foregoing at any
future time, except that the following shall also be permitted:
(a) Capital Expenditures to the extent within the limitations set
forth in Section 8.4;
(b) the investments, acquisitions and transfers or dispositions
of properties permitted pursuant to Section 8.5;
(c) any Subsidiary of the Borrower may be merged or consolidated
with or into, or be liquidated into, the Borrower or any other
Subsidiary of the Borrower (so long as the Borrower or any other
Subsidiary of the Borrower is the surviving corporation), or all or any
part of the business, properties and assets of any Subsidiary may be
conveyed, leased, sold or transferred to the Borrower or any other
Subsidiary of the Borrower;
(d) Designated Property Sales; and
(e) the Borrower and its Subsidiaries may sell or otherwise
dispose of assets the Net Sale Proceeds of which do not exceed in the
aggregate $3,000,000 in any fiscal year of the Borrower.
To the extent the Required Lenders waive the provisions of this Section 8.1 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 8.1, such Collateral in each case shall be sold free and clear of
the Liens in favor of the Collateral Agent created by the Collateral Documents
and the Collateral Agent shall take such actions as it deems appropriate in
connection therewith or may be reasonably requested by the Borrower to evidence
such Lien release, in each case at the Borrower's expense.
8.2 Liens. Borrower will not, and will not permit any of
Borrower's Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets of any kind (real or personal,
tangible or intangible) of the Borrower or any of its Subsidiaries, whether now
owned or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of Borrower's Subsidiaries) or assign any right to receive
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income, or file or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute
(other than precautionary filings covering leases of equipment), except Liens
described below (herein referred to as "Permitted Liens"):
(a) Liens for taxes not yet due and payable or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(b) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law or which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens, statutory landlord's Liens, Liens in favor of customs
and revenue authorities to secure payment of customs duties in
connection with the importation of goods, and other similar Liens
arising in the ordinary course of business, and (x) which, if any such
property or asset is material, do not in the aggregate materially
detract from the value of such property or assets or materially impair
the use thereof in the operation of the business of the Borrower or such
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Credit Agreement or the
other Credit Documents;
(d) Liens securing the Senior Notes pursuant to the Senior Note
Documents;
(e) Liens existing on the Closing Date and listed on Schedule XI
hereto without giving effect to any subsequent extensions, renewals or
replacements thereof ("Existing Liens");
(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (x) in connection with
liability insurance, workers' compensation, unemployment insurance and
other types of social security, or (y) to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business, in an
aggregate amount (in the case of this clause (y)) not to exceed
$2,500,000 (exclusive of obligations (i) in respect of borrowed money or
(ii) in respect of which a Letter of Credit has been issued);
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(g) leases or subleases granted to third Persons not interfering
with the ordinary course of business of Borrower or any of its
Subsidiaries;
(h) Capital Leases to the extent permitted under Section 8.3(b);
(i) Liens (x) arising pursuant to purchase money mortgages
securing Indebtedness representing the purchase price (or financing of
the purchase price within 180 days after the respective purchase) of
property or other assets acquired by the Borrower, provided that (i) any
such Liens attach only to the assets so purchased, (ii) the Indebtedness
secured by any such Lien does not exceed 100% of the purchase price of
the assets being purchased and (iii) the Indebtedness secured thereby or
any refinancing thereof is permitted by Section 8.3(b); or (y) existing
on specific tangible assets at the time acquired by the Borrower or on
assets of a Person at the time such Person first becomes a Subsidiary;
provided, that (i) any such Liens were not created at the time of or in
contemplation of the acquisition of such assets or Person by the
Borrower, (ii) in the case of any such acquisition of a Person, any such
Lien attaches only to specific tangible assets of such Person and not
assets of such Person generally and (iii) the Indebtedness secured
thereby or any refinancing thereof is permitted by Section 8.3(b);
(j) easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering in any material respect with the
business of the Borrower and its Subsidiaries;
(k) Liens created under ERISA and under Environmental Laws that
are being contested in good faith and as to which adequate reserves have
been established to the extent required by GAAP and secure obligations
not in excess of $2,500,000 in the aggregate; and
(l) Liens not encumbering Collateral other than those described
in the preceding clauses (a) through (k) with respect to obligations not
in excess of $5,000,000 in the aggregate.
8.3 Indebtedness. Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Credit Agreement and
the other Credit Documents;
(b) Capitalized Lease Obligations and Indebtedness of the
Borrower secured by Liens permitted by Section 8.2(i) in an aggregate
amount not to exceed $10,000,000 in any fiscal year;
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(c) Existing Indebtedness;
(d) Indebtedness of the Borrower evidenced by (x) the Bridge
Senior Notes in aggregate principal amount not to exceed $130,000,000
(less the amount of principal repayments thereof effected after the
Closing Date, except as provided in clause (y) below and plus the amount
of additional Bridge Senior Notes issued as pay-in-kind interest in lieu
of cash interest) and (y) the Permanent Senior Notes in an aggregate
principal amount not to exceed $150,000,000, so long as (i) the proceeds
thereof are used to repay in full the Bridge Senior Notes and (ii) the
holders thereof are subject to the Intercreditor Agreement (or any
Intercreditor Agreement substantially similar thereto and satisfactory
to the Agent);
(e) Indebtedness of the Borrower or any of its Wholly-Owned
Subsidiaries owing to the Borrower or any of its Wholly-Owned
Subsidiaries, in each case to the extent making such loan was permitted
in Section 8.5;
(f) Indebtedness of the Borrower or any of the Borrower's
Subsidiaries evidenced by guarantees, performance bonds and surety bonds
incurred in the ordinary course of business for purposes of insuring the
performance of the Borrower or such Subsidiary;
(g) Indebtedness under Interest Rate Agreements entered into in
accordance with Section 7.15;
(h) Indebtedness under Commodity Hedge Agreements entered into by
the Borrower or any Subsidiary in the ordinary course of business in
connection with operational needs and not for speculative purposes;
(i) Indebtedness of the Borrower or any of the Borrower's
Subsidiaries, in addition to other Indebtedness permitted under clauses
(a) through (g) above, in an aggregate principal amount not to exceed
$10,000,000 at any time outstanding.
(j) Indebtedness of the Borrower or any of the Borrower's
Subsidiaries incurred to refinance any Indebtedness described in
Sections 8.3(b) through 8.3(h).
8.4 Capital Expenditures. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
during any fiscal year set forth below, the Borrower and its Subsidiaries may
make Capital Expenditures, so long as the aggregate amount of such Capital
Expenditures (other than with proceeds of Indebtedness received by the Borrower
and its Subsidiaries pursuant to Section 8.3(b)) does not exceed in any fiscal
year set forth below the amount set forth opposite such fiscal year below:
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<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
December 31, 1997 $37,000,000
December 31, 1998 $32,400,000
December 31, 1999 $29,800,000
December 31, 2000 $33,000,000
December 31, 2001 $34,000,000
</TABLE>
(b) Notwithstanding the foregoing, in the event that the amount
of Capital Expenditures permitted to be made by the Borrower and its
Subsidiaries pursuant to clause (a) above in any fiscal year (before giving
effect to any increase in such permitted expenditure amount pursuant to this
clause (b)) is greater than the amount of such Capital Expenditures made by the
Borrower and its Subsidiaries during such fiscal year, such excess (the "CapEx
Rollover Amount") may be carried forward and utilized to make Capital
Expenditures in the immediately succeeding fiscal year, provided that in no
event shall the CapEx Rollover Amount in any fiscal year exceed 25% of the
amount of Capital Expenditures set forth opposite such fiscal year in the table
above.
(c) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with the
proceeds of Indebtedness received by the Borrower or any of its Subsidiaries
pursuant to Section 8.3(b) so long as after giving effect thereto, the total
amount of Capital Expenditures (including amounts expended pursuant to clause
(a) of this Section 8.4) does not exceed in any fiscal year set forth below the
amount set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
December 31, 1997 $43,000,000
December 31, 1998 $37,400,000
December 31, 1999 $34,800,000
December 31, 2000 $38,000,000
December 31, 2001 $39,000,000
</TABLE>
(d) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) (i) with the
insurance proceeds received by the Borrower or any of its Subsidiaries from any
Casualty Loss so long as such Capital Expenditures are to replace or restore any
properties or assets in respect of which such proceeds were paid in accordance
with Section 7.10 and (ii) to the extent permitted by Section 6.4(iii) of the
Senior Credit Agreement.
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8.5 Investments. Borrower will not, and will not permit any of
Borrower's Subsidiaries to, lend money or credit or make advances to any Person,
or purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to (collectively, "Investments")
any other Person, except:
(a) the Borrower or any of Borrower's Subsidiaries may acquire
and hold receivables owing to it, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with the
customary trade terms of the Borrower or its applicable Subsidiary, as
the case may be;
(b) loans and advances to employees, officers and directors in
the ordinary course of business in an aggregate principal amount not to
exceed $1,000,000 at any time outstanding shall be permitted;
(c) any Investment by any Subsidiary of the Borrower in the
Borrower (so long as any loan made by a Subsidiary of the Borrower to
the Borrower is subordinated to the Obligations on terms satisfactory to
the Agent) or in another Wholly-Owned Subsidiary of the Borrower;
(d) subject to Section 8.19, Investments in Cash Equivalents
shall be permitted;
(e) Investments by the Borrower and Borrower's Subsidiaries
permitted under Section 8.1 and Capital Expenditures permitted under
Section 8.4 shall be permitted;
(f) Investments existing on the Closing Date and listed on
Schedule XII hereto, without giving effect to any additions thereto or
replacements thereof, shall be permitted;
(g) Investments which may be deemed to exist as a result of the
entering into of Interest Rate Agreements to the extent permitted by
Section 8.3(g);
(h) the Borrower or any Subsidiary may enter into Commodity Hedge
Agreements in the ordinary course of business in connection with
operational needs and not for speculative purposes; and
(i) the Borrower may make the Stroh's Payments; and
(j) any Investments in addition to those contemplated by the
foregoing clauses (a) through (g), provided that all Investments made
pursuant to this clause
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(h) shall be permitted by the Senior Note Documents and shall not exceed
$5,000,000 at any time outstanding.
8.6 Dividends, etc. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in capital stock of the Borrower) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration (other than
consideration in the form of capital stock of the Borrower), any shares of any
class of its capital stock now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of such shares), or set
aside any funds for any of the foregoing purposes and the Borrower will not
permit any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock of the Borrower now
or hereafter outstanding (or any warrants for or options or stock appreciation
rights issued by such Person in respect of any such shares) (all of the
foregoing "Dividends"), except that (i) any Subsidiary of the Borrower may pay
Dividends to the Borrower; (ii) so long as (w) the Permanent Senior Note
Documents, if any, permit the payment of such Dividends, (x) the Bridge Senior
Notes are not outstanding, (y) the Interest Coverage Ratio for the most recently
completed period of four consecutive fiscal quarters (or, if shorter, the period
beginning on the Closing Date and ending on the last day of the most recently
completed fiscal quarter of the Borrower) after giving effect to such payment is
more than the ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
----------------- ------
<S> <C>
March 31, 1997 2.20:1
June 30, 1997 2.20:1
September 30, 1997 2.30:1
December 31, 1997 2.30:1
March 31, 1998 2.40:1
June 30, 1998 2.50:1
September 30, 1998 2.60:1
December 31, 1998 2.75:1
March 31, 1999 2.75:1
June 30, 1999 2.75:1
September 30, 1999 2.85:1
December 31, 1999 3.00:1
March 31, 2000 3.00:1
June 30, 2000 3.25:1
September 30, 2000 3.25:1
December 31, 2000 3.25:1
</TABLE>
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<PAGE> 105
<TABLE>
<S> <C>
March 31, 2001 3.25:1
June 30, 2001 3.25:1
September 30, 2001 3.25:1
December 31, 2001 3.25:1;
</TABLE>
provided that if the Borrower shall have received proceeds of $150,000,000 or
more from the issuance of Permanent Senior Notes, the ratios for the periods
prior to December 31, 2000 shall be reduced by an amount equal to 0.10, and (z)
no Default or Event of Default then exists or would arise therefrom, the
Borrower may pay cash Dividends on the Series A Preferred Stock at the rate set
forth therein; (iii) so long as (w) the Permanent Senior Note Documents permit
the payment of such Dividends, (x) the Bridge Senior Notes are not outstanding
(y) the Interest Coverage Ratio for the most recently completed period of four
consecutive fiscal quarters (or, if shorter, the period beginning on the Closing
Date and ending on the last day of the most recently completed fiscal quarter of
the Borrower) after giving effect to such payment is more than the ratio set
forth below opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
------------------ --------
<S> <C>
March 31, 1997 2.20:1
June 30, 1997 2.20:1
September 30, 1997 2.30:1
December 31, 1997 2.30:1
March 31, 1998 2.40:1
June 30, 1998 2.50:1
September 30, 1998 2.60:1
December 31, 1998 2.75:1
March 31, 1999 2.75:1
June 30, 1999 2.75:1
September 30, 1999 2.85:1
December 31, 1999 3.00:1
March 31, 2000 3.00:1
June 30, 2000 3.25:1
September 30, 2000 3.25:1
December 31, 2000 3.25:1
March 31, 2001 3.25:1
June 30, 2001 3.25:1
September 30, 2001 3.25:1
December 31, 2001 3.25:1;
</TABLE>
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<PAGE> 106
provided that if the Borrower shall have received proceeds of $150,000,000 or
more from the issuance of Permanent Senior Notes, the ratios for the periods
prior to December 31, 2000 shall be reduced by an amount equal to 0.10, and (z)
no Default or Event of Default then exists or would arise therefrom, at any time
after the earlier of (A) January 1, 2000 and (B) the date on which the Bridge
Senior Notes are no longer outstanding, the Borrower may pay cash Dividends on
the Series B Preferred Stock, at the rate set forth therein; and (iv) the
Borrower may pay Dividends on either series of Preferred Stock through
additional pay-in-kind shares of such series of Preferred Stock.
8.7 Transactions with Affiliates. (a) The Borrower shall not, and
shall not cause or permit any of its Subsidiaries to, directly or indirectly,
conduct any business or enter into or permit to exist any transaction or series
of related transactions (including, but not limited to, the purchase, sale,
conveyance, transfer, disposition, exchange or lease of property or assets, the
making of any Investment, the giving of any guarantee or the rendering of
services) with, or for the benefit of, any Affiliate of the Borrower or any
Subsidiary (each an "Affiliate Transaction"), except in the ordinary course of
business and under an agreement set forth in writing which is on terms that are
no less favorable to the Borrower or such Subsidiary, as the case may be, than
those that could not have been obtained in a comparable transaction on an
arms'-length basis from a Person not an Affiliate of the Borrower or such
Subsidiary. With respect to all Affiliate Transactions involving aggregate
payments equal to or in excess of $100,000 and less than $1,000,000, the
Borrower or such Subsidiary, as the case may be, shall have delivered an
officers' certificate to the Agent certifying that such transaction or series of
transactions complies with clause (y) above. All Affiliate Transactions (and
each series of related Affiliate Transactions which are similar or part of a
common plan) involving aggregate payments or other property with a fair market
value in excess of $1,000,000 and less than $2,500,000 shall be approved by a
majority vote of the independent members of the Board of Directors of the
Borrower or such Subsidiary, as the case may be, such approval to be evidenced
by a Board Resolution stating that such Board of Directors has determined that
such transaction complies with the foregoing provisions. If the Borrower or any
Subsidiary of the Borrower enters into an Affiliate Transaction (or a series of
related Affiliate Transactions related to a common plan) that involves an
aggregate fair market value of more than $2,500,000, the Borrower or such
Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain
a favorable opinion as to the fairness of such transaction or series of related
transactions to the Borrower or the relevant Subsidiary, as the case may be,
from a financial point of view, from an Independent Financial Advisor and file
the same with the Agent. Notwithstanding anything to the contrary contained in
this Section 8.7(a), if the Borrower or any Subsidiary of the Borrower enters
into an Affiliate Transaction (or a series of related to Affiliate Transactions
relating to common plan) that involves the sale or disposition of machinery or
equipment in an aggregate fair market value of more than $1,000,000, the
Borrower or such Subsidiary as, as the case may be, shall, prior to the
consummation thereof, obtained a favorable opinion as to the fairness of such
transaction
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<PAGE> 107
or series of related transactions to the Borrower or the relevant Subsidiary, as
the case may be, from a financial point of view, from an Independent Financial
Advisor and filed the same with the Agent. Notwithstanding anything to the
contrary contained in this Section 8.7(a), no Affiliate Transaction (or series
or related Affiliate Transactions relating to a common plan) (A) that involves
an aggregate fair market value (with fair market value of sales commissions paid
to be calculated on a net basis against sales commissions received) of more than
$5,000,0000 shall be permitted or (B) that involves an aggregate fair market
value, when added to the aggregate fair market value (with fair market value of
sales commissions paid to be calculated on a net basis against sales commissions
received) of all other Affiliate Transactions for any fiscal year of the
Borrower, of more than $7,500,000 shall be permitted.
(b) The foregoing restriction shall not apply to the following
transactions: (i) any transaction exclusively between the Company and any of its
Wholly-Owned Subsidiaries or exclusively between any of the Company's
Wholly-Owned Subsidiaries, (ii) reasonable and customary fees paid to members of
the board of directors of the Company and of its Subsidiaries, (iii) advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business and (iv) reasonable and
customary fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any of its Subsidiaries, as
determined by the Board of Directors of the Company or any such Subsidiary or
the senior management thereof in good faith, including, without limitation,
issuances of stock, payment of bonuses and other transactions pursuant to
employment or compensation agreements, stock option agreements, indemnification
agreements and other arrangements in effect on the Closing Date or substantially
similar thereto.
Notwithstanding the foregoing, the Borrower shall not, and shall
not permit its Subsidiaries to, (x) enter into any agreements with any
Affiliates thereof (or any officers or management of such Affiliates), or any
other person providing for management services (other than the Management
Agreements) or (y) make any payment on or with respect to (i) commissions,
consulting fees or any similar fees or compensation for management consulting
services or similar services provided by Affiliates to the Borrower or its
Subsidiaries and (ii) the Management Agreement between the Borrower and G&G
Investments, Inc., a Delaware corporation, (other than payments not to exceed
$1,500,000 in any fiscal year of the Borrower) provided such payments in excess
of $1,500,000 may be made if (u) the Senior Note Documents permit such payments,
(v) the Bridge Senior Notes are no longer outstanding, (w) the Interest Coverage
Ratio for the most recently completed period of four consecutive fiscal quarters
(or, if shorter, the period beginning on the Closing Date and ending on the last
day of the most recently completed fiscal quarter of the Borrower) both before
and after giving effect to such payment is more than the ratio set forth below
opposite such date:
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<PAGE> 108
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
------------------- -------
<S> <C>
March 31, 1997 2.20:1
June 30, 1997 2.20:1
September 30, 1997 2.30:1
December 31, 1997 2.30:1
March 31, 1998 2.40:1
June 30, 1998 2.50:1
September 30, 1998 2.60:1
December 31, 1998 2.75:1
March 31, 1999 2.75:1
June 30, 1999 2.75:1
September 30, 1999 2.85:1
December 31, 1999 3.00:1
March 31, 2000 3.00:1
June 30, 2000 3.25:1
September 30, 2000 3.25:1
December 31, 2000 3.25:1
March 31, 2001 3.25:1
June 30, 2001 3.25:1
September 30, 2001 3.25:1
December 31, 2001 3.25:1;
</TABLE>
provided that if the Borrower shall have received proceeds of $150,000,000 or
more from the issuance of Permanent Senior Notes, the ratios for the periods
prior to December 31, 2000 shall be reduced by an amount equal to 0.10, (x) the
Available Borrowing Amount less the Outstandings at such time (both before and
after giving effect to any such payment) is more than $20,000,000, (y) such
payments do not exceed $3,000,000 in the aggregate in any fiscal year of the
Borrower and (z) no Default or Event of Default exists or would arise therefrom.
8.8 Changes in Business. The Borrower will not, and will not
permit its Subsidiaries to, alter the character of the business of the Borrower
and its Subsidiaries from that conducted by the Acquired Business on the Closing
Date.
8.9 Consolidated Net Worth. The Borrower shall at all times
maintain a Consolidated Net Worth at any time during any period set forth below
of not less than the amount set forth opposite such period set forth below
(increased for each such calculation by the net cash proceeds of any issuance of
Capital Stock by the Borrower after the Closing Date):
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<PAGE> 109
<TABLE>
<CAPTION>
Minimum
Consolidated
Period Net Worth
----------- --------------
<S> <C>
Closing Date to March 31, 1997 $120,000,000
April 1, 1997 to June 30, 1997 $120,000,000
July 1, 1997 to September 30, 1997 $120,000,000
October 1, 1997 to December 31, 1997 $120,000,000
January 1, 1998 to March 31, 1998 $120,000,000
April 1, 1998 to June 30, 1998 $120,000,000
July 1, 1998 to September 30, 1998 $120,000,000
October 1, 1998 to December 31, 1998 $120,000,000
January 1, 1999 to March 31, 1999 $120,000,000
April 1, 1999 to June 30, 1999 $120,000,000
July 1, 1999 to September 30, 1999 $122,500,000
October 1, 1999 to December 31, 1999 $125,000,000
January 1, 2000 to March 31, 2000 $125,000,000
April 1, 2000 to June 30, 2000 $125,000,000
July 1, 2000 to September 30, 2000 $125,000,000
October 1, 2000 to December 31, 2000 $127,500,000
January 1, 2001 to March 31, 2001 $130,000,000
April 1, 2001 to June 30, 2001 $130,000,000
July 1, 2001 to September 30, 2001 $132,500,000
October 1, 2001 to December 31, 2001 $135,000,000;
</TABLE>
provided that if the Borrower shall have received proceeds of $150,000,000 or
more from the issuance of Permanent Senior Notes, the amounts set forth above
shall be reduced by that amount equal to the incremental difference in interest
expense between an issuance of $130,000,000 in aggregate principal amount of
Permanent Senior Notes and the amount of Permanent Senior Notes actually issued
for such period.
8.10 Working Capital Ratio. The Borrower shall not permit its
Working Capital Ratio at any time to be less than (x) prior to December 31,
1999, 0.95:1.00 and (y) on December 31, 1999 and thereafter, 1.00:1.00.
8.11 Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio for any period of four consecutive fiscal quarters (or,
if shorter, the period beginning on the Closing Date and ending on the last day
of each fiscal quarter of the Borrower specified below), in each case taken as
one accounting period, ended on a date set forth below to be less than the ratio
set forth opposite such date:
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<PAGE> 110
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
------------------ ------
<S> <C>
June 30, 1997 2.00:1
September 30, 1997 2.00:1
December 31, 1997 2.00:1
March 31, 1998 2.10:1
June 30, 1998 2.20:1
September 30, 1998 2.30:1
December 31, 1998 2.40:1
March 31, 1999 2.40:1
June 30, 1999 2.50:1
September 30, 1999 2.60:1
December 31, 1999 2.65:1
March 31, 2000 2.70:1
June 30, 2000 2.75:1
September 30, 2000 2.75:1
December 31, 2000 2.75:1
March 31, 2001 2.75:1
June 30, 2001 2.75:1
September 30, 2001 2.75:1
December 31, 2001 2.75:1;
</TABLE>
provided that if the Borrower shall have received proceeds of $150,000,000 or
more from the issuance of Permanent Senior Notes, the ratios for the periods
prior to December 31, 2000 shall be reduced by an amount equal to 0.10.
8.12 Pay-in-Kind Interest. The Borrower shall pay interest on the
Bridge Senior Notes through the issuance of additional Bridge Senior Notes (and
not in cash) to the maximum extent permitted by the Senior Credit Agreement.
8.13 Creation of Subsidiaries. The Borrower will not create or
acquire any Subsidiaries without the consent of the Required Lenders (it being
understood that in connection with such consent, additional security agreements,
guaranties and related agreements may need to be entered into).
8.14 Additional Negative Pledges. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective, or permit any of its
Subsidiaries to create or otherwise cause or suffer to exist or become
effective, directly or indirectly, (i) any prohibition or restriction (including
any agreement to provide equal and ratable security to any other Person in the
event a Lien is granted to or for the benefit of the Agent and the Lenders) on
the
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<PAGE> 111
creation or existence of any Lien upon the assets of the Borrower or its
Subsidiaries, other than the restrictions contained in (i) the Transaction
Documents, (ii) any agreement relating to a Lien permitted pursuant to Section
8.2 as relating to the property encumbered thereby or (iii) restrictions
described in Section 8.17.
8.15 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Governing Documents, Preferred Stock and Certain
Other Agreements; etc. Borrower will not, and will not permit any of Borrower's
Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value
of (including, without limitation, by way of depositing with the trustee
with respect thereto or any other Person money or securities before due
for the purpose of paying when due) exchange (except through the
issuance of Bridge Senior Notes which are "Term Notes" as contemplated
by the Bridge Senior Note Documents) or purchase, redeem or acquire for
value (whether as a result of a Change of Control, the consummation of
asset sales or otherwise) any Existing Indebtedness or Senior Notes,
except that (i) Bridge Senior Notes may be repaid with the proceeds of
the events described in Sections 2.5(f), (g) and (h), (ii) Bridge Senior
Notes may be repaid with the proceeds of Permanent Senior Notes in
compliance with Sections 2.5(f) and 8.3(d)(y) and (iii) Permanent Senior
Notes may be repaid or redeemed in compliance with the final sentence of
Section 2.5(k);
(ii) amend or modify, or permit the amendment or modification of,
any provision of any Existing Indebtedness Agreement or any Senior Note
Document;
(iii) amend, modify or change in any way adverse to the interests
of the Lenders, any Tax Sharing Agreement, the O-I Assurance Agreement,
the Technical Assistance and License Agreement, the Equity Financing
Documents (other than the Preferred Stock) any Management Agreement
(except as prohibited in clause (iv) below), any Acquisition Document,
its Certificate of Incorporation (including, without limitation, by the
filing or modification of any certificate of designation) or By-Laws, or
any agreement entered into by it, with respect to its capital stock
(including any Shareholders' Agreement), or enter into any new Tax
Sharing Agreement, Management Agreement or agreement with respect to its
capital stock which could in any way be adverse to the interests of the
Lenders;
(iv) amend, modify or change in any way any Preferred Stock (or
any Certificates of Designation relating thereto) or the Management
Agreement between the Borrower and G&G Investments, Inc., including in
connection with any extension of the original term thereof; and
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<PAGE> 112
(v) without the consent of the Agent, amend the Affiliate
Transaction Agreement.
8.16 Issuance of Stock. (a) The Borrower shall not issue any
shares of capital stock after the Closing Date, other than (i) shares of Common
Stock to the extent not creating a Change of Control and (ii) shares of
Preferred Stock paid as pay-in-kind Dividends or the Preferred Stock issued on
the Closing Date and (b) the Borrower will not permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge or otherwise encumber or
dispose of any shares of its capital stock or other equity securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary to any Person other than the Borrower or another Wholly-Owned
Subsidiary, except, (i) to the extent permitted by Sections 8.1(c) and 8.5 and
(ii) for the issuance of directors' qualifying shares to the extent required by
applicable law.
8.17 Limitation on Restrictions Affecting Subsidiaries. The
Borrower will not, and will not permit any Subsidiary of the Borrower to,
directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of the Borrower to (a) pay dividends or make other distributions or
pay any Indebtedness owed to the Borrower or any Subsidiary of the Borrower, (b)
make loans or advances to the Borrower or any Subsidiary of the Borrower, (c)
transfer any of its properties or assets to the Borrower or any Subsidiary of
the Borrower or (d) create, incur, assume or suffer to exist any lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than encumbrances and restrictions arising under (i) applicable law, (ii)
this Credit Agreement and the other Transaction Documents, (iii) Indebtedness
permitted pursuant to Sections 8.3(c) and (d), (iv) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Borrower or any of its Subsidiaries, (v) customary restrictions on
dispositions of real property interests found in reciprocal easement agreements
of the Borrower or any of its Subsidiaries, (vi) any agreement relating to
permitted Indebtedness incurred by a Subsidiary of the Borrower prior to the
date on which such Subsidiary was acquired by the Borrower or any other
Subsidiary of the Borrower and outstanding on such acquisition date, (vii) the
extension or continuation of contractual obligations in existence on the date
hereof, provided that any such encumbrances or restrictions contained in such
continuation are no less favorable to the Lenders than those encumbrances and
restrictions under or pursuant to the contractual obligations continued hereby,
and (viii) restrictions imposed under the agreements relating to Indebtedness
permitted under Section 8.3(b), provided that such restrictions apply only to
the property giving rise to such Indebtedness.
8.18 No Additional Bank Accounts. The Borrower will not, and will
not permit any of its Subsidiaries within the United States to, directly or
indirectly, open, maintain or otherwise have any checking, savings or other
deposit accounts at any bank or other financial institution where money is or
may be deposited or maintained with any
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<PAGE> 113
Person, other than (i) the Concentration Account, the Sub-Collection Accounts,
the Collection Accounts, the Disbursement Account, the accounts created pursuant
to the Senior Note Documents and the accounts set forth on Schedule XII and (ii)
local accounts for petty cash deposit in the ordinary course of business and in
compliance with Section 8.19.
8.19 No Excess Cash. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, maintain in the aggregate in
all of the checking, savings or other accounts (other than the Disbursement
Accounts, the Sub-Collection Accounts, the Collection Accounts, the
Concentration Account, the accounts created pursuant to the Senior Note
Documents and the payroll accounts) of the Borrower and its Subsidiaries total
cash balances and investments (including Investments in Cash Equivalents) in
excess of $500,000 at any time during which any Revolving Loans are outstanding
hereunder.
8.20 Operating Leases. The Borrower will not, and will not permit
any of its Subsidiaries to, make aggregate Operating Lease Payments in any
fiscal year in excess of $20,000,000.
8.21 Plant Closing Expenses. (a) The Borrower will not, and will
not permit any of its Subsidiaries to, make cash expenditures in connection with
the Plant Closures, in excess of the amount set forth opposite such fiscal year
below:
<TABLE>
<CAPTION>
Fiscal Year
Ending Amount
----------------- -----------
<S> <C>
December 31, 1997 $26,400,000
December 31, 1998 $21,000,000
December 31, 1999 $16,000,000
December 31, 2000 $11,000,000
December 31, 2001 $3,000,000
</TABLE>
(b) Notwithstanding the foregoing, in the event that the amount
of cash expenditures permitted to be made by the Borrower and its Subsidiaries
pursuant to Plant Closures in any fiscal year (before giving effect to any
increase in such permitted expenditure amount pursuant to this clause (b)) is
greater than the amount of such cash expenditures made by the Borrower and its
Subsidiaries during such fiscal year, such excess (the "Plant Closures Rollover
Amount") may be carried forward and utilized to make cash expenditures pursuant
to Plant Closures in the immediately succeeding fiscal year, provided that in no
event shall the Plant Closures Rollover Amount in any fiscal year exceed 25% of
the amount of cash expenditures set forth opposite such fiscal year in the table
above.
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<PAGE> 114
8.22 Minimum Availability. The Available Borrowing Amount less
the Outstandings shall not be less than $20,000,000.
8.23 Headquarters Lease. (a) The Borrower shall not, and shall
not permit any Subsidiary, to (i) incur any Indebtedness relating to the
Headquarters Lease (as defined in the Acquisition Agreement) as in effect on the
Closing Date or the real property leased pursuant thereto (the "Headquarters
Property"), (ii) make any payments to acquire all or any portion of the
Headquarters Property (or any part thereof), or make any Investment in any
Person holding an ownership interest in the Headquarters Property (or any part
thereof), (iii) make any payments in respect of the obligations of the Borrower
with respect to the Headquarters Lease and the Headquarters Property (other than
for rental payments) or (iv) except as provided in clause (b) below, lease all
or any portion of the Headquarters Property except on terms at least as
favorable as those contained in the Headquarters Lease as in effect on the
Closing Date.
(b) (i) The Lease Reserve Amount shall be increased by $2,500,000
on September 15, 1997 unless on or prior to such date, the Borrower
shall have delivered to the Agent a written bona fide offer to purchase
the Headquarters Property (which offer may, but need not be, subject to
a financing contingency) on terms and conditions, and from parties,
reasonably satisfactory to the Agent (provided that acceptability of the
purchase price shall be determined based on an appraisal delivered to
the Agent by the Borrower from appraisers, and in form and substance,
satisfactory to the Agent) (an offer meeting the foregoing requirements,
a "Qualified Offer"). Additionally, the Lease Reserve Amount shall be
increased by $2,500,000 if at any time after September 15, 1997, a
Qualified Offer previously delivered fails to remain in full force and
effect.
(ii) The Lease Reserve Amount shall be increased by $2,500,000 on
November 15, 1997 unless on or before such date the Agent shall have
received a Qualified Offer which either (x) is not subject to a
financing contingency, in which case the Agent shall need to be
satisfied with the financial ability of the parties to the Qualified
Offer to consummate the sale of the Headquarters Property pursuant
thereto or (y) is accompanied by a bona fide financing commitment for
the Qualified Offer from parties, and on terms and conditions,
reasonably satisfactory to the Agent. Additionally, the Lease Reserve
Amount shall be increased by $2,500,000 if at any time after November
15, 1997 a financing commitment with respect to a Qualified Offer fails
to remain in full force and effect.
(iii) On or prior to January 2, 1998, the Borrower shall have
effected a sale or other disposition of the Headquarters Property, or
effect another transaction with respect thereto such that giving effect
to such sale, disposition or other transaction, neither U.S. Holdco, the
Borrower nor any Subsidiaries thereof shall
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<PAGE> 115
have any obligations or liabilities (contingent or otherwise, including
without limitation, guaranties, indemnities or purchase obligations)
with respect to the Headquarters Property other than the payment of rent
(if the Borrower is the occupant thereof and related customary
obligations not to exceed the lesser of (x), the market rent for the
Headquarters Property and (y) $150,000 per month.
(iv) The Lease Reserve Amount shall be reduced to zero if (x) the
Borrower is required to make escrow payments on February 1, 1998 in
respect of the Headquarters Lease if no Default or Event of Default then
exists or would arise therefrom or (y) the Borrower is released from all
obligations in respect of the Headquarters Lease and the Headquarters
Properties.
8.24 Account Terms. The Borrower shall, and shall cause each of
its Subsidiaries to, promptly pay when due, or in conformity with customary
trade terms consistent with past practices, all of their trade accounts payable,
except for late payment in the ordinary course of business, the lateness of
which payment, singly or in the aggregate, could not reasonably be expected to
(i) have a Material Adverse Effect or (ii) materially change the Borrower's
ability to comply with Section 8.22.
ARTICLE 9.
Events of Default and Remedies
9.1 Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payments. The Borrower shall (i) default in the payment when
due of any principal of the Revolving Loans or (ii) default, and such default
shall continue for three or more days, in the payment when due of, any interest
on the Revolving Loans or any drawings under Letters of Credit which have not
been reimbursed by the Borrower (including through the incurrence of Revolving
Loans), or (iii) default, and such default shall continue for three or more days
after written demand therefor by the Agent, in the payment when due of any Fees,
Expense or any other amounts owing hereunder or under any other Credit Document;
or
(b) Representations, etc. Any representation, warranty or
statement made by U.S. Holdco, the Borrower or any of its Subsidiaries herein or
in any other Credit Document or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
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<PAGE> 116
(c) Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.12, 7.13, 7.17, 7.18 or 7.19, or Article 8, or (ii) default in the
due performance or observance by it of any term, covenant or agreement (other
than those referred to in Section 9.1(a), 9.1(b) or clause (i) of this Section
9.1(c)) contained in this Credit Agreement or the other Credit Documents and
such default shall continue unremedied for a period of at least 15 days after
notice to the defaulting party by the Agent or the Required Lenders; or
(d) Default Under Other Agreements. (I) The Borrower or any of
Borrower's Subsidiaries shall (i) default in any payment in respect of any
Indebtedness (other than the Obligations) in excess of $5,000,000 beyond the
period of grace, if any, provided in the agreement or instrument under which
such Indebtedness was issued or (ii) default in the observance or performance of
any agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required to so cause),
any such Indebtedness to become due prior to its stated maturity or (iii) any
such Indebtedness of the Borrower or any such Subsidiary shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment or as a mandatory prepayment, prior to the stated maturity
thereof; or (II) at any time prior to the payment in full of the Bridge Senior
Notes and the Anchor Bridge Loan (as defined in the TD Loan Agreement),
Consumers or any of Consumer's Subsidiaries (other than the Borrower and its
Subsidiaries) shall (i) default in any payment in respect of any Indebtedness
(other than the Obligations) in excess of $5,000,000 beyond the period of grace,
if any, provided in the agreement or instrument under which such Indebtedness
was issued or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist and the effect of which default or other event or
condition is to (A) permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required to so cause but after giving
effect to any grace period with respect thereto), any such Indebtedness to
become due prior to its stated maturity and such default, event or condition
remains unremedial or unwaived for 15 days or (B) cause such Indebtedness to
become due prior to its stated maturity thereof or (iii) any such Indebtedness
of Consumers or any such Subsidiary shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment
or as a mandatory prepayment, prior to the stated maturity; or
(e) Bankruptcy, etc. The Borrower or any of its Subsidiaries,
Canadian Holdco, U.S. Holdco or Consumers, shall commence a voluntary case
concerning itself
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under Title 11 of the United States Code entitled "Bankruptcy", as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the Borrower or any of its Subsidiaries,
Canadian Holdco, U.S. Holdco or Consumers, and the petition is not controverted
within 30 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Borrower or any
of its Subsidiaries, Canadian Holdco, U.S. Holdco or Consumers; or the Borrower
or any of its Subsidiaries, Canadian Holdco, U.S. Holdco or Consumers, commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or such
Subsidiary; or there is commenced against the Borrower or any of its
Subsidiaries, Canadian Holdco, U.S. Holdco or Consumers, any such proceeding
which remains undismissed for a period of 60 days; or the Borrower or any of its
Subsidiaries, Canadian Holdco, U.S. Holdco or Consumers, is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Borrower or any of its Subsidiaries,
Canadian Holdco, U.S. Holdco or Consumers, suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower or any of its
Subsidiaries, Canadian Holdco, U.S. Holdco or Consumers, makes a general
assignment for the benefit of creditors; or any corporate action is taken by the
Borrower or any of its Subsidiaries, Canadian Holdco, U.S. Holdco or Consumers,
for the purpose of effecting any of the foregoing; or
(f) ERISA. (i) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof after the Closing Date under
Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or Section 303 or 304 of ERISA, a Reportable Event shall have occurred,
a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan has not
been timely made, the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate has incurred or is likely to incur any liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account
of a group health plan (as
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defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code, or the Borrower or any Subsidiary of the Borrower has
incurred or is likely to incur liabilities pursuant to one or more employee
welfare benefit plans (as defined in Section 3(1) of ERISA) that provide
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or Plans; (ii) there shall result from any such event
or events the imposition of a lien, the granting of a security interest, or a
liability or a material risk of incurring a liability; and (iii) such lien,
security interest or liability, individually, and/or in the aggregate, in the
opinion of the Required Lenders, has had, or could reasonably be expected to
have, a Material Adverse Effect; or
(g) Collateral Documents. Any Collateral Document shall cease to
be in full force and effect, or shall cease to give the Collateral Agent on
behalf of the Lenders the Liens, rights, powers and privileges purported to be
created thereby in favor of the Collateral Agent, U.S. Holdco or the Borrower,
as the case may be, shall default in any material respect in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Collateral Document and such default shall
continue unremedied for a period of at least 15 days after notice to the
Borrower by the Agent or the Required Lenders; or
(h) Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of Borrower's Subsidiaries involving a liability of
$5,000,000 or more in the case of any one such judgment or decree (to the extent
not paid or covered by insurance provided by a carrier that has acknowledged
coverage) and all such judgments or decrees shall not have been vacated,
discharged or stayed pending appeal within 60 days from the entry thereof; or
(i) Change of Control. A Change of Control shall occur;
(j) U.S. Holdco Guaranty. The U.S. Holdco Guaranty shall cease to
be in full force and effect, or U.S. Holdco shall default in any material
respect in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant thereto or U.S. Holdco shall
deny or disaffirm any of its obligations thereunder and such default, denial or
disaffirmation shall continue unremedied for a period of at least 15 days after
notice to the Borrower by the Agent or the Required Lenders; or
(k) Technical Assistance and License Agreement. The Technical
Assistance and License Agreement shall terminate or O-I shall deliver a notice
of termination in respect thereof or the Company or any of its Subsidiaries
shall not be, or shall cease to be, a Licensee Group Member (as defined therein)
entitled to the benefits thereunder; or
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(l) Canadian Holdco. Any creditors of Canadian Holdco or its
Subsidiaries shall take any action in connection with the realization or
foreclosure on the capital stock of U.S. Holdco;
(m) Affiliate Transactions Agreement. The Affiliate Transactions
Agreement shall cease to be in full force and effect, or any party thereto shall
default in any material respect in due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant thereto
or any party thereto shall deny or disaffirm any of its obligations thereunder
and such default, denial, or disaffirmation shall continue unremedied for a
period of at least fifteen days after notice to the Borrower by the Agent or the
Required Lenders; or
(n) Capital Call Agreement. The Capital Call Agreement shall
cease to be in full force and effect, or Consumers shall default in any material
respect in due performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant thereto or any party thereto shall
deny or disaffirm any of its obligations thereunder;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Lender to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Credit Agreement (provided that, if an Event of Default
specified in Section 9.1(e) shall occur with respect to the Borrower, the result
which would occur upon the giving of written notice by the Agent as specified in
clauses (i) and (ii) below shall occur automatically without the giving of any
such notice): (i) declare the Total Commitments terminated, whereupon the
Commitment of each Lender shall forthwith terminate immediately and any Unused
Line Fee accrued and unpaid shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Revolving Loans and all Obligations owing hereunder to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; (iii) direct the Collateral Agent to enforce any or all of the
Liens and security interests created pursuant to the Collateral Documents; (iv)
terminate any Letter of Credit which may be terminated in accordance with its
terms; and/or (v) direct the Borrower to pay (and the Borrower hereby agrees
upon receipt of such notice, or upon the occurrence of any Event of Default
specified in Section 9.1(e) in respect of the Borrower, it will pay) to the
Payments Administrator at its Payment Office such additional amounts of cash, to
be held as security for the Borrower's reimbursement obligations in respect of
Letter of Credit then outstanding equal to the aggregate of all Letters of
Credit Obligations.
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ARTICLE 10.
The Agent
10.1 Appointment. (a) Each Lender hereby designates BTCC as Agent
(for purposes of this Section 10, the term "Agent" shall include BTCC as
Payments Administrator and as Collateral Agent under the Collateral Documents,
to act as herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Revolving Note or participation in any Letter of Credit by the
acceptance of a Revolving Note or participation shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the provisions of
this Credit Agreement and the Revolving Notes and any other instruments and
agreements referred to herein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Collateral Agent shall hold all Collateral
and the Payments Administrator shall hold all payments of principal, interest,
Fees, charges and Expenses received pursuant to this Credit Agreement or any
other Credit Document for the benefit of the Lenders to be distributed as
provided herein. The Agent may perform any of its duties hereunder by or through
its agents or employees.
(b) The provisions of this Article 10 are solely for the benefit
of the Agent and the Lenders, and neither the Borrower nor any of the Borrower's
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof (other than Sections 10.9 and 10.10(c)). In performing its
functions and duties under this Credit Agreement, the Agent shall act solely as
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for the
Borrower or any of the Borrower's Subsidiaries.
10.2 Nature of Duties of Agent. The Agent shall not have duties
or responsibilities except those expressly set forth in this Credit Agreement
and the other Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
this Credit Agreement or the other Credit Documents a fiduciary relationship in
respect of any Lender; and nothing in this Credit Agreement or the other Credit
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Credit Agreement or the
other Credit Documents except as expressly set forth herein or therein.
10.3 Lack of Reliance on Agent. (a) Independently and without
reliance upon the Agent, each Lender, to the extent it deems appropriate, has
made and shall con-
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tinue to make (i) its own independent investigation of the financial or other
condition and affairs of the Borrower and its Subsidiaries in connection with
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of the Borrower and its Subsidiaries, and,
except as expressly provided in this Credit Agreement, the Agent shall not have
any duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans or at any time
or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Credit Agreement or the other
Credit Documents or the financial or other condition of the Borrower or any of
its Subsidiaries. The Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Credit Agreement or the other Credit Documents, or the
financial condition of the Borrower or any of Borrower's Subsidiaries, or the
existence or possible existence of any Default or Event of Default, unless
specifically requested to do so in writing by any Lender.
10.4 Certain Rights of the Agent. The Agent shall have the right
to request instructions from the Required Lenders at any time. If the Agent
shall request instructions from the Required Lenders with respect to any act or
action (including the failure to act) in connection with this Credit Agreement
or the other Credit Documents, the Agent shall be entitled to refrain from such
act or taking such action unless and until the Agent shall have received
instructions from the Required Lenders, and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders.
10.5 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. The Agent may consult with legal counsel (including
counsel for the Borrower with respect to matters concerning the Borrower and its
Subsidiaries), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
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10.6 Indemnification of Agent. To the extent the Agent is not
reimbursed and indemnified by the Borrower, each Lender will reimburse and
indemnify the Agent, in proportion to its respective Commitment, for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever (including all Expenses) which
may be imposed on, incurred by or asserted against the Agent in performing its
duties hereunder, in any way relating to or arising out of this Credit
Agreement; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. The agreements contained in this Section shall survive any
termination of this Credit Agreement and the other Credit Documents and the
payment in full of the Obligations.
10.7 The Agent in its Individual Capacity. With respect to its
obligation to lend under this Credit Agreement, the Loans made by it and the
Revolving Notes issued to it, and its participation in Letters of Credit issued
hereunder, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Revolving Note or participation interests and may
exercise the same as though it was not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," "holders of Revolving Notes," or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with Borrower or any
Affiliate of Borrower as if it were not performing the duties specified herein,
and may accept fees and other consideration from Borrower for services in
connection with this Credit Agreement and otherwise without having to account
for the same to the Lenders.
10.8 Holders of Notes. The Agent may deem and treat the payee of
any Revolving Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the holder of any
Revolving Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Revolving Note or of any Revolving Note or
Revolving Notes issued in exchange therefor.
10.9 Successor Agent. (a) The Agent may, upon five (5) Business
Days' notice to the Lenders and the Borrower, resign at any time (effective upon
the appointment of a successor Agent pursuant to the provisions of this Section
10.9) by giving written notice thereof to the Lenders and the Borrower. Such
resignation of the Agent shall also operate as a resignation as an Issuing Bank
and as Payments Administrator. Upon any such resignation, and if PNC Bank is a
Lender at the time of such resignation, PNC Bank shall be appointed as the
successor Agent. If PNC Bank shall not accept such appointment, is
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not a Lender, or is the resigning Agent, the Required Lenders shall have the
right, upon five (5) days' notice and approval by the Borrower (which approval
shall not be unreasonably withheld), to appoint a successor Agent which shall
also serve as a successor Issuing Bank. If no successor Agent (i) shall have
been so appointed by the Required Lenders, and (ii) shall have accepted such
appointment, within thirty (30) days after the retiring Agent's giving of notice
of resignation, then, upon five (5) days' notice, the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall also serve as a
successor Issuing Bank. In the event that no successor Agent is appointed
pursuant to the foregoing provisions, the Agent's resignation shall become
effective on the date which is forty-five (45) days after the retiring Agent's
giving of notice of resignation, and the Required Lenders shall perform the
duties of the Agent hereunder.
(b) Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
10.10 Collateral Matters. (a) Each Lender authorizes and directs
the Collateral Agent to enter into the Collateral Documents for the benefit of
the Lenders. Each Lender hereby agrees, and each holder of any Revolving Note or
participant in Letters of Credit by the acceptance thereof will be deemed to
agree, that, except as otherwise set forth herein, any action taken by the
Required Lenders in accordance with the provisions of this Credit Agreement or
the Collateral Documents, and the exercise by the Required Lenders of the powers
set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the Lenders. The
Collateral Agent is hereby authorized on behalf of all of the Lenders, without
the necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any
Collateral or Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Collateral Agent, at its
option and in its discretion, upon the direction of the Agent to release any
Lien granted to or held by the Collateral Agent upon any Collateral (i) upon
termination of the Commitments and payment and satisfaction of all of the
Obligations at any time arising under or in respect of this Credit Agreement or
the Credit Documents or the transactions contemplated hereby or thereby, (ii)
constituting property being sold or disposed of upon receipt of the proceeds of
such sale by the Collateral Agent if the Borrower certifies to the Collateral
Agent that the sale or disposition is made in compliance with Section 8.1 hereof
(and the Agent may
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rely conclusively on any such certificate, without further inquiry) or (iii) if
approved, authorized or ratified in writing by the Required Lenders, unless such
release is required to be approved by all of the Lenders hereunder. Upon request
by the Agent at any time, the Lenders will confirm in writing the Collateral
Agent's authority to release particular types or items of Collateral pursuant to
this Section 10.10.
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to in
writing by the Required Lenders or all of the Lenders, as applicable, and upon
at least five (5) Business Days' prior written request by the Borrower, the
Collateral Agent shall (and is hereby irrevocably authorized by the Lenders to)
execute such documents as may be necessary to evidence the release of the Liens
granted to the Collateral Agent for the benefit of the Lenders herein or
pursuant hereto upon the Collateral that was sold or transferred; provided, that
(i) the Collateral Agent shall not be required to execute any such document on
terms which, in the Collateral Agent's opinion, would expose the Collateral
Agent to liability or create any obligation or entail any consequence other than
the release of such Liens without recourse, representation or warranty and (ii)
such release shall not in any manner discharge, affect or impair the Obligations
or any Liens upon (or obligations of the Borrower or any of its Subsidiaries in
respect of) all interests retained by the Borrower or any of its Subsidiaries,
including, without limitation, the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
Collateral, the Collateral Agent shall be authorized to deduct all of the
Expenses reasonably incurred by the Collateral Agent from the proceeds of any
such sale, transfer or foreclosure.
(d) The Collateral Agent shall have no obligation whatsoever to
the Lenders or to any other Person to assure that the Collateral exists or is
owned by the Borrower or any of its Subsidiaries or is cared for, protected or
insured or that the Liens granted to the Collateral Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
or to continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted or
available to the Collateral Agent in this Section 10.10 or in any of the
Collateral Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Collateral Agent
may act in any manner it may deem appropriate, in its sole discretion, given the
Collateral Agent's own interest in the Collateral as one of the Lenders and that
the Collateral Agent shall have no duty or liability whatsoever to the Lenders,
except for its gross negligence or willful misconduct.
10.11 Actions with Respect to Defaults. In addition to the
Agent's right to take actions on its own accord as permitted under this Credit
Agreement, the Agent shall take such action with respect to an Event of Default
as shall be directed by the Required
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Lenders; provided, that until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default as it shall deem
advisable and in the best interests of the Lenders.
10.12 Delivery of Information. The Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by the Agent from the
Borrower, any Subsidiary, the Required Lenders, any Lender or any other Person
under or in connection with this Credit Agreement or any other Credit Document
except (i) as specifically provided in this Credit Agreement or any other Credit
Document and (ii) as specifically requested from time to time in writing by any
Lender with respect to a specific document, instrument, notice or other written
communication received by and in the possession of the Agent at the time of
receipt of such request and then only in accordance with such specific request.
10.13 Co-Syndication Agents. Neither Syndication Agent shall have
any duties or responsibilities hereunder in its capacity as such.
ARTICLE 11.
Miscellaneous
11.1 Submission to Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) Submits for itself and its property in any legal action or
proceeding relating to this Credit Agreement and the other Credit
Documents to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York located in New York
City, the Courts of the United States of America for the Southern
District of New York and appellate courts from any thereof;
(b) Consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) Designates, appoints and empowers CT Corporation as its
designee, appointee and agent to receive, accept and acknowledge for and
on its behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served in any
such action or proceeding. If for any
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reason such designee, appointee and agent shall cease to be available to
act as such, the Borrower agrees to designate a new designee, appointee
and agent in New York City on the terms and for the purposes of this
provision satisfactory to the Agent under this Credit Agreement and the
other Credit Documents.
(d) Agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in Section 11.5 or at
such other address of which the Agent shall have been notified pursuant
thereto;
(e) Agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction;
(f) To the extent permitted by law, waives the right to assert
any setoff, counterclaim or cross-claim in respect of, and all statutes
of limitations which may be relevant to, such action or proceeding
(other than compulsory counterclaims), provided that nothing in this
clause (f) shall preclude a separate action asserting any such claims;
and
(g) Waives due diligence, demand, presentment and protest and any
notices thereof as well as notice of nonpayment.
11.2 Waiver of Jury Trial. THE BORROWER, THE AGENT, THE
SYNDICATION AGENTS, THE ISSUING BANKS AND THE LENDERS EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS CREDIT
AGREEMENT, THE CREDIT DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED
HERETO OR THERETO.
11.3 Governing Law. The validity, interpretation and enforcement
of this Credit Agreement shall be governed by the laws of the State of New York.
11.4 Delays: Partial Exercise of Remedies. No delay or omission
of the Agent, any Issuing Bank or the Lenders to exercise any right or remedy
hereunder, whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default. No single or partial exercise by the Agent, any Issuing
Bank or the Lenders of any right or remedy shall preclude any other or further
exercise thereof, or preclude any other right or remedy.
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11.5 Notices. Except as otherwise provided herein, all notices
and correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent, or any of the Lenders, then to BTCC,
14 Wall Street, New York, New York 10005, Attention: Basil Palmeri, and if to
the Borrower, One Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, Florida 33634,
Attention John J. Ghaznavi, Chairman and Chief Executive Officer, or by
facsimile transmission, promptly confirmed in writing sent by first class mail,
if to the Agent, or any of the Lenders, at (212) 618-2640, and if to the
Borrower at (813) 882-7820. All such notices and correspondence shall be deemed
given when received by the party to whom sent.
11.6 Benefit of Agreement. (a) This Credit Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that the Borrower may not
assign or transfer any of its interests hereunder, without the prior written
consent of the Lenders and provided further that the rights of each Lender to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth below in this Section 11.6, provided
that nothing in this Section 11.6 shall prevent or prohibit any Lender from
pledging its rights under this Credit Agreement and/or its Revolving Loans
and/or Revolving Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
(b) Each Lender shall have the right to transfer, assign or grant
participations in all or any part of its remaining rights and obligations
hereunder on the basis set forth below in this clause (b).
(A) Assignments. Each Lender may assign pursuant to an Assignment
and Assumption Agreement all or a portion of its rights and obligations
hereunder pursuant to this clause (b)(A) to (x) one or more Lenders or
(y) one or more other Eligible Transferees, provided that (i) any such
assignment pursuant to clause (y) above shall be in the aggregate amount
of at least $5,000,000, and (ii) any assignment pursuant to clause (y)
shall require the consents of the Agent and PNC, so long as PNC is an
Issuing Bank, and the Borrower, which consents shall not be unreasonably
withheld. Any assignment to another Lender pursuant to this clause
(b)(A) will become effective upon the payment to the Payments
Administrator by either the assigning or the assignee Lender of a
nonrefundable assignment fee of $5,000 and the recording by the Payments
Administrator of such assignment, and the resultant effects thereof on
the Revolving Loans and Commitments of the assigning Lender and the
assignee Lender, in a register maintained by the Payments Administrator
(the "Register"), the Payments Administrator hereby agreeing to effect
such recordation no later than five Business Days after its receipt of a
written notification by the assigning Lender and the assignee Lender of
the proposed
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assignment. Assignments pursuant to clause (b)(A) (y) will only be
effective if the Payments Administrator shall have received a written
notice in the form of Exhibit M-2 hereto from the assigning Lender and
the assignee and payment of a nonrefundable assignment fee of $5,000 to
the Payments Administrator by either the assigning Lender or the
assignee. No later than five Business Days after its receipt of such
written notice, the Payments Administrator will record such assignment,
and the resultant effects thereof on the Revolving Loans and Commitment
of the assigning Lender, in the Register, at which time such assignment
shall become effective. Notwithstanding the foregoing, the Payments
Administrator shall not be required to, and shall not, record any
assignment in the Register on or after the date on which any proposed
amendment, modification or supplement in respect of this Credit
Agreement has been circulated to the Banks for approval until the
earlier of (x) the effectiveness of such amendment, modification or
supplement in accordance with Section 11.10 or (y) 30 days following the
date on which such proposed amendment, modification or supplement was
circulated to the Lenders. Upon the effectiveness of any assignment
pursuant to clause (b)(A)(y), (x) the assignee will become a "Lender"
for all purposes of this Credit Agreement and the other Credit Documents
with Revolving Loans and a Commitment as so recorded by the Payments
Administrator in the Register, and to the extent of such assignment, the
assigning Lender shall be relieved of its obligations hereunder with
respect to the portion of its Commitment being assigned and (y) if such
assignment occurs after the Closing Date, the Borrower shall issue new
Revolving Notes (in exchange for the Revolving Note or Revolving Notes
of the assigning Lender) to the assigning Lender (to the extent such
Lender's Commitment is not reduced to zero as a result of such
assignment) and to the assignee Lender, in each case to the extent
requested by the assigning Lender or assignee Lender, as the case may
be, to the extent needed to reflect the revised Commitments of such
Lenders. The Payments Administrator will (x) notify each Issuing Bank
with respect to outstanding Letters of Credit within 5 Business Days of
the effectiveness of any assignment hereunder and (y) prepare on the
last Business Day of each calendar quarter during which an assignment
has become effective pursuant to this clause (b)(A) a new Schedule I
giving effect to all such assignments effected during such quarter and
will promptly provide same to the Borrower and each of the Lenders.
(B) Participations. Each Lender may transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder pursuant to this clause (b)(B) to any Eligible
Transferee, provided that (i) such Lender shall remain a "Lender" for
all purposes of this Credit Agreement and the transferee of such
participation shall not constitute a Lender hereunder and (ii) no
participant under any such participation shall have rights to approve
any amendment to or waiver of this Credit Agreement or any other Credit
Document except to the extent such amendment or waiver would (x) extend
the final scheduled maturity of
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any of the Revolving Loans or the Commitment in which such participant
is participating (it being understood that a waiver of a mandatory
reduction in the Total Commitments or the waiver of the application of
any prepayment to the Revolving Loans shall not constitute the extension
of the final scheduled maturity of any Revolving Loan or Commitment),
(y) reduce the interest rate (other than as a result of waiving the
applicability of any post-default increases in interest rates) or Fees
applicable to any of the Revolving Loans, Commitments or Letters of
Credit or postpone the payment or reduce the amount thereof or (z)
release all or substantially all of the Collateral (except as expressly
provided in the Credit Documents). In the case of any such
participation, the participant shall not have any rights under this
Credit Agreement or any of the other Credit Documents (the participant's
rights against the granting Lender in respect of such participation to
be those set forth in the agreement with such Lender creating such
participation) and all amounts payable by the Borrower hereunder shall
be determined as if such Lender had not sold such participation,
provided that such participant shall be entitled to receive additional
amounts under Sections 2.9, 2.10, 4.5 and 4.10 on the same basis as if
it were a Lender. In addition, each agreement creating any participation
must include an agreement by the participant to be bound by the
provisions of Section 11.7 of this Credit Agreement and such participant
shall have executed a confidentiality agreement in the form of Exhibit N
hereto.
(c) Notwithstanding any other provisions of this Section 11.6, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) If any Lender becomes a Defaulting Lender, or upon the
occurrence of any event giving rise to the operation of Section 2.9, 4.3(c)(ii)
or 4.10 with respect to such Lender (and not other Lenders generally), the
Borrower shall have the right, if no Default or Event of Default then exists, to
replace such Lender (the "Replaced Lender") with one or more Eligible
Transferees (collectively, the "Replacement Lender"), provided that (i) at the
time of any replacement pursuant to this Section 11.6(d), the Replacement Lender
shall enter into one or more Assignment and Assumption Agreements pursuant to
Section 11.6(b)(A) (and with all fees payable pursuant to said Section
11.6(b)(A) to be paid by the Replacement Lender) pursuant to which the
Replacement Lender shall acquire all of the Commitments and outstanding
Revolving Loans of, and participations in Letters of Credit by, the Replaced
Lender and, in connection therewith, shall pay to (x) the Replaced Lender in
respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Revolving Loans of
the Replaced Lender, (B) an amount equal to all drawings under Letters of Credit
that have been funded by (and not reimbursed to) such Replaced Lender, together
with all then unpaid interest
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with respect thereto at such time, (C) an amount equal to the increased costs
incurred by the Borrower and owing to the Replaced Lender pursuant to Sections
2.9 and 4.10 and (D) an amount equal to all accrued, but theretofore unpaid,
Fees owing to the Replaced Lender pursuant to Article 4 and (y) any Issuing Bank
the amount of all unreimbursed drawings under Letters of Credit attributable to
such Replaced Lender and (ii) all obligations of the Borrower owing to the
Replaced Lender (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full by the Borrower to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
Assignment and Assumption Agreements the payment of amounts referred to in
clauses (i) and (ii) above the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder,
except with respect to indemnification provisions under this Credit Agreement,
which shall survive as to such Replaced Lender.
(e) Each Lender initially party to this Credit Agreement hereby
represents, and each Person that becomes a Lender pursuant to an assignment
permitted by the preceding clause (b)(A) will upon its becoming party to this
Credit Agreement represent, that it is an Eligible Transferee which makes loans
in the ordinary course of its business and that it will make or acquire
Revolving Loans for its own account in the ordinary course of such business,
provided that subject to the preceding clauses (a) through (d), the disposition
of any promissory notes or other evidences of or interests in Indebtedness held
by such Lender shall at all times be within its exclusive control.
11.7 Confidentiality. Each Lender agrees that it will use its
reasonable best efforts not to disclose without the prior consent of the
Borrower (other than to its affiliates, employees, auditors, or counsel, or to
another Lender if the disclosing Lender or such disclosing Lender's holding or
parent company in its sole discretion determines that any such party should have
access to such information) any information with respect to the Borrower or any
of the Borrower's Subsidiaries, which is furnished pursuant to the Credit
Documents and which is designated by the Borrower to the Lenders in writing as
confidential; provided, that any Lender may disclose any such information (a) as
has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender, (c) as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation, (d) in order to comply with any Requirement of
Law, and (e) to any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the
Revolving Notes or Commitments or any interest therein by such Lender which
prospective transferee or participant shall have agreed in writing to be subject
to the confidentiality provisions of this Section 11.7; provided, however, that
in the case of any disclosure pursuant to the foregoing clauses (c) or (d), such
Lender will use its reasonable efforts to notify the Borrower, to the extent
permitted as advised by counsel, in advance (or, in the case of
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clause (d), promptly thereafter) of such disclosure so as to afford the Borrower
the opportunity to protect the confidentiality of the information proposed to be
so disclosed.
11.8 Indemnification. (a) The Borrower shall and hereby agrees to
indemnify, defend and hold harmless the Agent, each Syndication Agent, each
Issuing Bank and each of the Lenders and their respective directors, officers,
agents and employees (the "Indemnitee") from and against (x) any and all losses,
claims, damages, liabilities, deficiencies, judgments or expenses incurred by
any of them (except to the extent that it is finally judicially determined to
have resulted from their own gross negligence or willful misconduct) arising out
of or by reason of any litigations, investigations, claims or proceedings which
arise out of or are in any way related to (i) this Credit Agreement, the other
Credit Documents or the transactions contemplated thereby, (ii) the issuance of
the Letters of Credit, (iii) the failure of an Issuing Bank to honor a drawing
under any Letter of Credit, as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or
Governmental Authority, (iv) any actual or proposed use by the Borrower of the
proceeds of the Revolving Loans or (v) the Agent's, each Syndication Agent's or
the Lenders' entering into this Credit Agreement, the other Credit Documents or
any other agreements and documents relating hereto, including, without
limitation, amounts paid in any settlement agreed to by the Borrower, court
costs and the reasonable fees and disbursements of counsel incurred in
connection with any such litigation, investigation, claim or proceeding or any
advice rendered in connection with any of the foregoing (whether or not such
lender is a party thereto) and (y) any such losses, claims (including
Environmental Claims), damages, liabilities, deficiencies, judgments, fees and
disbursements (including attorneys' and consultants' fees and disbursements) or
expenses incurred in connection with any removal, remedial or other action taken
by Borrower or any of the Lenders in connection with compliance by Borrower or
any of Borrower's Subsidiaries, or any of their respective properties, with any
Environmental Laws or the actual or alleged presence of Hazardous Materials on
any property of the Borrower.
(b) If and to the extent that the Obligations of the Borrower
under this Section 11.8 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of such
Obligations which is permissible under applicable law. The Borrower's
Obligations hereunder shall survive any termination of this Credit Agreement and
the other Credit Documents and the payment in full of the Obligations, and are
in addition to, and not in substitution of, any other of their Obligations set
forth in this Credit Agreement.
(c) In addition, the Borrower shall, upon demand, pay to the
Agent and any Lender all costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by the Agent
or such Lender in (i) enforcing or defending its rights under or in respect of
this Credit Agreement, the other Credit
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Documents or any other document or instrument now or hereafter executed and
delivered in connection herewith, (ii) in collecting the Revolving Loans, (iii)
in foreclosing or otherwise collecting upon the Collateral or any part thereof
and (iv) obtaining any legal, accounting or other advice in connection with any
of the foregoing.
11.9 Entire Agreement; Successors and Assigns. This Credit
Agreement and the other Credit Documents constitute the entire agreement among
the Borrower, the Agent and the Lenders, supersedes any prior agreements among
them, and shall bind and benefit the Borrower, the Agent and the Lenders and
their respective successors and permitted assigns.
11.10 Amendment or Waiver Neither this Credit Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Lenders, provided that no
such change, waiver, discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender) affected thereby, (i) extend the final
scheduled maturity of any Revolving Loan or Revolving Note (it being understood
that any waiver of the application of any prepayment or the method of
application of any prepayment to the Revolving Loans or any mandatory reduction
to the Total Commitments shall not constitute an extension of the final maturity
date of such Revolving Loans), or reduce the rate (other than as a result of
waiving the applicability of any post-default increases in interest rates) or
extend the time of payment of interest or Fees thereon, or reduce the amount
thereof, or increase the Commitment of any Lender over the amount thereof then
in effect (it being understood that a waiver of any Default or Event of Default
or of a mandatory reduction in the Total Commitments, or mandatory prepayment,
shall not constitute a change in the terms of any Commitment of any Lender),
(ii) release all or substantially all of the Collateral (except as expressly
provided in the Credit Documents), (iii) amend, modify or waive any provision of
this Section 11.10, (iv) reduce the percentage specified in the definition of
Required Lenders or change the percentage of holders of Commitments or the
aggregate unpaid principal amount of the Revolving Loans which shall be required
for the Lenders for any of them to take action under this Agreement or (v)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under any Credit Document. No provision of Article 3 or 10 may be
amended without the consent of each Issuing Bank or the Agent, respectively.
11.11 Nonliability of Agent and Lenders. The relationship between
the Borrower and the Borrower's Subsidiaries, on the one hand, and the Lenders
and the Agent and each Syndication Agent, on the other hand, shall be solely
that of debtors and creditors. None of the Agent, the Syndication Agents or any
Lender shall have any fiduciary responsibilities to the Borrower, or any of the
Borrower's Subsidiaries. None of the Agent, the Syndication Agents or any Lender
undertakes any responsibility to the Borrower, or any
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of the Borrower's Subsidiaries to review or inform the Borrower, or any of the
Borrower's Subsidiaries of any matter in connection with any phase of the
business or operations of the Borrower, or any of the Borrower's Subsidiaries.
11.12 Independent Nature of Lenders' Rights. The amounts payable
at any time hereunder to each Lender under such Lender's Revolving Note or Notes
shall be a separate and independent debt.
11.13 Counterparts. This Credit Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
11.14 Effectiveness. This Credit Agreement shall become effective
on the date on which all of the parties hereto shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent pursuant to Section 11.5 or, in the case of the Lenders, shall have given
to the Agent written, telecopied or telex notice (actually received) at such
office that the same has been signed and mailed to it.
11.15 Headings Descriptive. The headings of the several sections
and subsections of this Credit Agreement, and the Table of Contents, are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.
11.16 Maximum Rate. Notwithstanding anything to the contrary
contained elsewhere in this Credit Agreement or in any other Credit Document,
the Borrower, the Agent and the Lenders hereby agree that all agreements among
them under this Credit Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to the Agent or any Lender for the use, forbearance, or detention of
the money loaned to the Borrower and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance and
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then
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outstanding Obligations, such excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the Agent or any Lender for the use, forbearance,
or detention of the Obligations and other Indebtedness of the Borrower to the
Agent or any Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Indebtedness until payment in full so that the actual rate of interest on
account of all such Indebtedness does not exceed the Highest Lawful Rate
throughout the entire term of such Indebtedness. The terms and provisions of
this Section 11.16 shall control every other provision of this Credit Agreement
and all agreements among the Borrower, the Agent and the Lenders.
11.17 Right of Setoff. In addition to and not in limitation of
all rights of offset that any Lender or any Issuing Bank may have under
applicable law, each Lender and each Issuing Bank shall, upon the occurrence of
any Event of Default and whether or not such Lender or such Issuing Bank has
made any demand or the Obligations of the Borrower are matured, have the right,
upon prior notice to the Borrower, to appropriate and apply to the payment of
the Obligations of Borrower or any of its Subsidiaries all deposits (general or
special, time or demand, provisional or final) then or thereafter held by and
other Indebtedness or property then or thereafter owing by such Lender or such
Issuing Bank, including, without limitation, any and all amounts in any
Depositary Account, the Concentration Account or the Disbursement Account. Each
Lender or each Issuing Bank exercising such rights shall notify the Agent
thereof and any amount received as a result of the exercise of such rights shall
be reallocated among the Lenders and the Issuing Banks as set forth in Section
2.10 hereof provided, however, that failure of the Borrower to receive such
notice shall not impair any Lender's or Issuing Bank's rights hereunder.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
One Anchor Plaza ANCHOR GLASS ACQUISITION
4343 Anchor Plaza Parkway CORPORATION
Tampa, Florida 33634
Tel: (813) 884-0000
Fax: (813) 882-7820 By /s/ M. William Lightner, Jr.
Attention: John J. Ghaznavi -----------------------------
Name: William Lightner
Title: Vice President and
Chief Financial Officer
14 Wall Street BT COMMERCIAL CORPORATION,
3rd Floor Individually, as Agent and as
New York, New York 10005 Co-Syndication Agent
Tel: (212) 618-2628
Fax: (212) 618-2640
Attention: Basil Palmeri
By /s/ Rita Dagdelen-Keskinyan
-----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Managing Director
620 Liberty Avenue PNC BANK, NATIONAL ASSOCIATION,
Pittsburgh, PA 15265 as Co-Syndication Agent and
Tel: (412) 762-6036 Issuing Bank
Fax: (412) 762-7353
Attention: Enrico Della Corna
By /s/ Enrico A. Della Corna
------------------------------
Name: Enrico A. Della Corna
Title: Vice President
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 as Issuing Bank
Tel: (212) 250-2500
Fax: (212) 250-7200
Attention: Tim Morris By /s/ Timothy Morris
------------------------------
Name: Timothy Morris
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Title: Vice President
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EXHIBIT 10.2
FIRST AMENDMENT
FIRST AMENDMENT (this "Amendment"), dated as of March 11, 1997, among
ANCHOR GLASS CONTAINER CORPORATION, f/k/a Anchor Glass Acquisition Corporation,
a Delaware Corporation (the "Borrower"), the financial institutions party to the
Credit Agreement referred to below (the "Lenders"), BANKERS TRUST COMPANY, as an
Issuing Bank (an "Issuing Bank"), BT COMMERCIAL CORPORATION, acting as
Co-Syndication Agent and Agent (the "Agent"), and PNC BANK, NATIONAL
ASSOCIATION, as Co-Syndication Agent and as an Issuing Bank (an "Issuing Bank").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the Agent
are parties to a Credit Agreement, dated as of February 5, 1997 (as amended,
modified or supplemented through the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
1. Section 2.2 of the Credit Agreement is hereby amended by (i)
re-lettering clause (ii)(D) as clause (ii)(E), (ii) inserting the following new
clause (ii)(D) in lieu thereof:
"(D) the Borrower's exposure (as determined by the Agent) under
any Interest Rate Agreements entered into in connection with
Section 7.15(b), and minus";
and (iii) deleting the reference to "clause (ii)(A), (B) and (C)" in the
sentence following clause (ii)(D) and inserting "clause (ii)(A), (B), (C) and
(D)" in lieu thereof.
2. Section 2.6 of the Credit Agreement is hereby amended by (i)
deleting the "and," appearing after the phrase "to the ratable payment of
interest due on the Revolving Loans" in subsection (d) and (ii) inserting the
following new phrase immediately before the period appearing at the end of the
first sentence in subsection (d):
"; and, sixth, to the ratable payment of any then due and
owing Obligations arising under any Interest Rate Agreement
entered into by the Borrower in connection with Section 7.15"
<PAGE> 2
3. Section 7.15 of the Credit Agreement is hereby amended by (i)
inserting "(a)" immediately following the section heading and (ii) inserting the
following new subsection (b):
"(b) From time to time the Borrower may enter into
other Interest Rate Agreements with respect to Indebtedness in a
manner satisfactory to the Agent, provided that the outstanding
exposure in connection therewith shall not exceed $7,500,000."
4. In order to induce the Lenders to enter into this Amendment, the
Borrower hereby represents and warrants that (i) the representations, warranties
and agreements contained in Article 6 of the Credit Agreement are true and
correct in all material respects on and as of the First Amendment Effective Date
(as defined in Section 8 of this Amendment) (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date) and (ii) there exists no Default or Event of Default on the
First Amendment Effective Date, in each case both before and after giving effect
to this Amendment.
5. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
6. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower, the Agent and each Lender.
7. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
8. This Amendment shall become effective on the date (the "First
Amendment Effective Date") when the Borrower and the Required Lenders shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Agent at its address for notice provided for in the Credit Agreement.
9. From and after the First Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.
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<PAGE> 3
* * *
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<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
ANCHOR GLASS CONTAINER
CORPORATION
By /s/ David Jack
-----------------------------
Name: David Jack
Title: Treasurer
BT COMMERCIAL CORPORATION,
Individually, as Agent and as
Co-Syndication Agent
By /s/ Rita Dagdelen-Keskinyan
-----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication Agent and
Issuing Bank
By /s/ Enrico A. Della Corna
-----------------------------
Name: Enrico A. Della Corna
Title: Vice President
BANKERS TRUST COMPANY,
as Issuing Bank
By /s/ Rita Dagdelen-Keskinyan
-----------------------------
Name: Rita Dagdelen-Keskinyan
Title: Managing Director
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT
SECOND AMENDMENT (this "Amendment"), dated as of April 9, 1997, among
ANCHOR GLASS CONTAINER CORPORATION, f/k/a Anchor Glass Acquisition Corporation,
a Delaware Corporation (the "Borrower"), the financial institutions party to the
Credit Agreement referred to below (the "Lenders"), BANKERS TRUST COMPANY, as an
Issuing Bank (an "Issuing Bank"), BT COMMERCIAL CORPORATION, acting as
Co-Syndication Agent and Agent (the "Agent"), and PNC BANK, NATIONAL
ASSOCIATION, as Co-Syndication Agent and as an Issuing Bank (an "Issuing Bank").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the Agent
are parties to a Credit Agreement, dated as of February 5, 1997 (as amended,
modified or supplemented through the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
1. Section 1.1 of the Credit Agreement is hereby amended by (i)
deleting the definition "Affiliate Transaction Agreement" in its entirety, (ii)
inserting the following new definitions in lieu thereof:
"Affiliate Transaction Agreement shall mean the Affiliate
Transaction Agreement dated as of the Closing Date, between Consumers,
G&G Investments, Inc., Glenshaw Glass Company, Hillsboro Glass
Company, Canadian Holdco, U.S. Holdco, I.M.T.E.C. Enterprises Inc., an
Oklahoma corporation, the Borrower and the Agent; provided, however,
that upon the execution of the Intercompany Agreement, the Affiliate
Transaction Agreement shall be replaced with such Intercompany
Agreement and shall thereafter mean the Intercompany Agreement.
Intercompany Agreement shall mean the Intercompany Agreement
dated as of April 17, 1997, in the form of Exhibit 17 to the First
Mortgage Notes Indenture, dated as of April 17, 1997, between Anchor
Glass
<PAGE> 2
Container Corporation (f/k/a Anchor Glass Acquisition Corporation),
U.S. Holdco and The Bank of New York, as Trustee, and in form and
substance satisfactory to the Agent.",
(iii) deleting the reference to "Schedule XV" in the definition of "Designated
Properties", (iv) inserting "Schedule XVI" in lieu thereof, (v) deleting the
reference to "clause (f)" in clause (g) of the definition of "Eligible Accounts
Receivable" and (vi) inserting "clause (g)" in lieu thereof.
2. Section 7.17 of the Credit Agreement is hereby amended by (i)
deleting the word "60th" appearing therein and (ii) inserting the word "120th"
in lieu thereof.
3. Section 8.1 of the Credit Agreement is hereby amended by (i)
deleting the word "Property" appearing in subsection (d) thereof and (ii)
inserting the word "Asset" in lieu thereof.
4. Section 8.4 of the Credit Agreement is hereby amended by (i)
deleting the amounts corresponding to the fiscal quarters listed under the
heading "Amount" in clause (a) thereof, (ii) inserting the following new amounts
in lieu thereof:
"$40,000,000
$35,000,000
$35,000,000
$40,000,000
$40,000,000",
(iii) deleting the amounts corresponding to the fiscal quarters listed under the
heading "Amount" in clause (c) thereof and (iv) inserting the following new
amounts in lieu thereof:
"$45,000,000
$45,000,000
$45,000,000
$45,000,000
$45,000,000".
5. Section 8.21 of the Credit Agreement is hereby amended by (i)
deleting the amounts corresponding to the fiscal years listed under the heading
"Fiscal Year Ending" in clause (a) thereof and (ii) inserting the following new
amounts in lieu thereof:
"$27,000,000
$19,300,000
$8,000,000
-2-
<PAGE> 3
$5,000,000
$1,000,000".
6. Article 8 of the Credit Agreement is hereby amended by inserting as
a new Section 8.25 the following new paragraph:
"8.25 Intercompany Agreement. Notwithstanding anything to
the contrary contained in the Intercompany Agreement, in no case (A)
shall the aggregate commissions paid by the Members of the Anchor
Group (as defined in the Intercompany Agreement) in any twelve-month
period exceed the sum of (i) the aggregate commissions received by the
Members of the Anchor Group pursuant to Section 6 of the Intercompany
Agreement and (ii) U.S. $2.5 million or (B) shall the aggregate
commissions paid to the Members of the Anchor Group by the Members of
the Consumers Group (as defined in the Intercompany Agreement) in any
twelve-month period exceed the sum of (i) the aggregate commissions
received by the Members of the Consumers Group pursuant to Section 6
of the Intercompany Agreement and (ii) U.S. $2.5 million, provided,
however, the limitations contained in this Section 8.25 shall not
apply to (and the calculations made pursuant to this Section 8.25
shall not include) commissions paid by or to the Members of the Anchor
Group if the manufacturing is being done by an Affiliated Glass
Manufacturer (as defined in the Intercompany Agreement) not a Member
of the Anchor Group or a Member of the Anchor Group, as the case may
be, as a result of furnace repairs, strikes or events of force
majeure, in each case temporary in nature, affecting the operation by
such Affiliated Glass Manufacturer or Member of the Anchor Group, as
the case may be, of one or more of its plants."
7. In order to induce the Lenders to enter into this Amendment, the
Borrower hereby represents and warrants that (i) the representations, warranties
and agreements contained in Article 6 of the Credit Agreement are true and
correct in all material respects on and as of the Second Amendment Effective
Date (as defined in Section 11 of this Amendment) (it being understood and
agreed that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material respects
only as of such specified date) and (ii) there exists no Default (after giving
effect to Section 2 of this Amendment) or Event of Default on the Second
Amendment Effective Date, in each case both before (except with respect to
Section 2 of this Amendment) and after giving effect to this Amendment.
8. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
-3-
<PAGE> 4
9. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower, the Agent and each Lender.
10. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
11. This Amendment shall become effective on the date (the "Second
Amendment Effective Date") when the Borrower and the Required Lenders shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Agent at its address for notice provided for in the Credit Agreement.
12. From and after the Second Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.
* * *
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<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
ANCHOR GLASS CONTAINER
CORPORATION
By /s/ M. William Lightner, Jr.
-----------------------------
Name: M. William Lightner, Jr.
Title: Vice President and Chief
Financial Officer
BT COMMERCIAL CORPORATION,
Individually, as Agent and as
Co-Syndication Agent
By /s/ Joseph F. Romano
-----------------------------
Name: Joseph F. Romano
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication Agent and
Issuing Bank
By /s/ Enrico A. Della Corna
-----------------------------
Name: Enrico A. Della Corna
Title: Vice President
BANKERS TRUST COMPANY,
as Issuing Bank
By /s/ Joseph F. Romano
-----------------------------
Name: Joseph F. Romano
Title: Vice President
<PAGE> 1
EXHIBIT 10.4
THIRD AMENDMENT AND WAIVER
THIRD AMENDMENT AND WAIVER (this "Amendment"), dated as of May 23,
1997, among ANCHOR GLASS CONTAINER CORPORATION, f/k/a Anchor Glass Acquisition
Corporation, a Delaware Corporation (the "Borrower"), the financial institutions
party to the Credit Agreement referred to below (the "Lenders"), BANKERS TRUST
COMPANY, as an Issuing Bank (an "Issuing Bank"), BT COMMERCIAL CORPORATION,
acting as Co-Syndication Agent and Agent (the "Agent"), and PNC BANK, NATIONAL
ASSOCIATION, as Co-Syndication Agent and as an Issuing Bank (an "Issuing Bank").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the Agent
are parties to a Credit Agreement, dated as of February 5, 1997 (as amended,
modified or supplemented through the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
1. Section 8.6 is waived to the extent necessary to permit the
Borrower to declare a cash dividend for the fiscal quarter ended March 31, 1997.
2. Section 8.6 of the Credit Agreement is hereby amended by (i)
deleting the text ", declare or" in the second line therein and (ii) deleting
the text "at the rate set forth therein" appearing at the end of subclause (z)
of clause (ii) and inserting the following text in lieu thereof:
"either (A) at the rate and on the dates set forth in the Series A
Certificate of Designation or (B) in the event the Borrower has
declared, but has been prohibited from paying, Dividends and accrued
but unpaid Dividends then remain outstanding, an amount not to exceed
the amount declared at the rate set forth in the Series A Certificate
of Designation for the most recent date of declaration (and not
including any declared, accrued and unpaid amounts prior to such most
recent declaration)".
<PAGE> 2
3. In order to induce the Lenders to enter into this Amendment, the
Borrower hereby represents and warrants that (i) the representations, warranties
and agreements contained in Article 6 of the Credit Agreement are true and
correct in all material respects on and as of the Third Amendment Effective Date
(as defined in Section 7 of this Amendment) (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date) and (ii) there exists no Default (after giving effect to
Section 2 of this Amendment) or Event of Default on the Third Amendment
Effective Date, in each case both before (except with respect to Section 2 of
this Amendment) and after giving effect to this Amendment.
4. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
5. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower, the Agent and each Lender.
6. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
7. This Amendment shall become effective on the date (the "Third
Amendment Effective Date") when the Borrower and the Required Lenders shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Agent at its address for notice provided for in the Credit Agreement.
8. From and after the Third Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.
* * *
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<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
ANCHOR GLASS CONTAINER
CORPORATION
By /s/ M. William Lightner, Jr.
-----------------------------
Name: M. William Lightner, Jr.
Title: Vice President and CFO
BT COMMERCIAL CORPORATION,
Individually, as Agent and as
Co-Syndication Agent
By /s/ Basil Palmeri
-----------------------------
Name: Basil Palmeri
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication Agent and
Issuing Bank
By /s/ Enrico A. Della Corna
-----------------------------
Name: Enrico A. Della Corna
Title: Vice President
BANKERS TRUST COMPANY,
as Issuing Bank
By /s/ Basil Palmeri
-----------------------------
Name: Basil Palmeri
Title: Vice President
<PAGE> 4
BTM CAPITAL CORPORATION
By /s/ Illegible
______________________________
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ Edward A. Jessen
______________________________
Name: Edward A. Jessen
Title: Vice President
CORESTATES BANK, N.A.
By /s/ John T. Havrin
______________________________
Name: John T. Havrin
Title: Vice President
FLEET BANK
By /s/ Edward F. McKenney
______________________________
Name: Edward F. McKenney
Title: Vice President
KEYBANK
By /s/ John R. Koludey
______________________________
Name: John R. Koludey
Title: Assistant Vice President
<PAGE> 5
MELLON BANK, N.A.
By /s/ Norman R. Smith
-----------------------------
Name: Norman R. Smith
Title: Vice President
NATIONAL BANK OF CANADA
By /s/ Donald P. Haddad
-----------------------------
Name: Donald P. Haddad
Title: Vice President
By /s/ Gregory A. Steve
-----------------------------
Name: Gregory A. Steve
Title: Vice President
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By /s/ John P. Dunn
-----------------------------
Name: John P. Dunn
Title: Vice President
SUMMIT COMMERCIAL/
GIBRALTAR CORP.
By /s/ Harvey Friedman
-----------------------------
Name: Harvey Friedman
Title: Executive Vice President
<PAGE> 1
EXHIBIT 10.6
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, ANCHOR GLASS ACQUISITION CORPORATION, a Delaware
corporation (the "Assignor") with principal offices at 4343 Anchor Plaza
Parkway, Tampa, Florida, 33634-7513, hereby assigns and grants to BT COMMERCIAL
CORPORATION, as Collateral Agent, with principal offices at 14 Wall Street, New
York, New York 10005 (the "Assignee"), a security interest in (i) all of the
Assignor's right, title and interest in and to the United States trademarks,
trademark registrations and trademark applications (the "Marks") set forth on
Schedule A attached hereto, (ii) all of the Assignor's rights, title and
interest in and to the United States patents and pending patent applications
(the "Patents") set forth on Schedule B attached hereto, in each case together
with (iii) all Proceeds (as such term is defined in the Security Agreement
referred to below) and products of the Marks and Patents, (iv) the goodwill of
the businesses with which the Marks are associated and (v) all causes of action
arising prior to or after the date hereof for infringement of any of the Marks
and Patents or unfair competition regarding the same.
THIS ASSIGNMENT OF SECURITY INTEREST is made to secure the
satisfactory performance and payment of all the Obligations of the Assignor, as
such term is defined in the Security Agreement between the Assignor and the
Assignee, dated as of February 5, 1997 (as amended from time to time, the
"Security Agreement"). After the termination of the Total Commitments, no
Revolving Note or Letter of Credit is outstanding (or if any Letters of Credit
are outstanding, a Cash Collateral Account or backup Letter of
<PAGE> 2
Credit in an amount and with terms satisfactory to the Assignee is established
in amounts equal to such Letters of Credit) and all Loans and other Obligations
have been paid in full, the Assignee shall, upon such satisfaction, execute,
acknowledge, and deliver to the Assignor an instrument in writing releasing the
security interest in the Marks and Patents acquired under this Assignment of
Security Interest.
This Assignment of Security Interest has been granted in
conjunction with the security interest granted to the Assignee under the
Security Agreement. The rights and remedies of the Assignee with respect to the
security interest granted herein are without prejudice to, and are in addition
to those set forth in the Security Agreement, all terms and provisions of which
are incorporated herein by reference. In the event that any provisions of this
Assignment of Security Interest are deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall govern.
* * *
-2-
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed this Assignment of
Security Interest as of the 5th day of February, 1997.
ANCHOR GLASS ACQUISITION
CORPORATION,
as Assignor
By /s/ M. William Lightner, Jr.
_____________________________________
Name: M. William Lightner, Jr.
Title: Vice President and Chief
Financial Officer
BT COMMERCIAL CORPORATION,
as Collateral Agent, Assignee
By /s/ Rita Dagdelen-Keskinyan
_____________________________________
Name: Rita Dagdelen-Keskinyan
Title: Senior Vice President
-3-
<PAGE> 4
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 4th day of February, 1997, before me personally came
M. William Lightner, Jr. who, being by me duly sworn, did state as follows:
that [s]he is Vice President and Chief Financial Officer of Anchor Glass
Acquisition Corporation, that [s]he is authorized to execute the foregoing
Assignment of Security Interest on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
/s/ Dana L. Eagle
-------------------------------
Notary Public
<PAGE> 5
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 5th day of February, 1997, before me personally came
Rita Dagdelen-Keskinyan who, being by me duly sworn, did state as follows:
that [s]he is Senior Vice President of BT Commercial Corporation that [s]he is
authorized to execute the foregoing Assignment of Security Interest on behalf of
said company and that [s]he did so by authority of the Board of Directors of
said company.
/s/ Richard Yglesias
-------------------------------------
Notary Public
-1-
<PAGE> 6
SCHEDULE A
MARK REG. NO. REG. DATE
- ---- -------- ---------
<PAGE> 7
SCHEDULE B
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
<PAGE> 1
EXHIBIT 10.7
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, ANCHOR GLASS ACQUISITION CORPORATION, a Delaware corporation
(the "Assignor"), having its chief executive office at 4343 Anchor Plaza
Parkway, Tampa, Florida, 33634-7513, is the owner of all right, title and
interest in and to the United States copyrights and associated United States
copyright registrations and applications for registration set forth in Schedule
A attached hereto;
WHEREAS, BT COMMERCIAL CORPORATION, as Collateral Agent, having its
principal offices at 14 Wall Street, New York, New York 10005 (the "Assignee"),
desires to acquire a security interest in, and lien upon, all of Assignor's
right, title and interest in and to Assignor's copyrights and copyright
registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign and grant to the Assignee a
security interest in, and lien upon, the copyrights and copyright registrations
and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, and subject to the terms and
conditions of the Security Agreement, dated as of February 5, 1997, between the
Assignor and the Assignee (as amended from time to time, the "Security
Agreement"), the Assignor hereby assigns and grants to the Assignee a security
interest in, and lien upon, all of Assignor's right, title and interest in and
to Assignor's copyrights and copyright registrations and
<PAGE> 2
applications therefor set forth in Schedule A attached hereto (the
"Copyrights"), together with (i) all Proceeds (as such term is defined in the
Security Agreement referred to below) of the Copyrights, and (ii) all causes of
action arising prior to or after the date hereof for infringement of any
Copyright.
This Assignment of Security Interest is made to secure the
satisfactory performance and payment of all Obligations (as such term is defined
in the Security Agreement) of the Assignor and shall be effective as of the date
of the Security Agreement. After the termination of the Total Commitments, no
Note or Letter of Credit is outstanding (or if any Letters of Credit are
outstanding, a Cash Collateral Account or backup Letter of Credit in an amount
and with terms satisfactory to the Assignee is established in amounts equal to
such Letters of Credit) and all Loans and other Obligations have been paid in
full, the Assignee shall, upon such satisfaction, execute, acknowledge, and
deliver to Assignor an instrument in writing releasing the security interest in
the Copyrights acquired under this Assignment of Security Interest.
This Assignment of Security Interest has been granted in conjunction
with the security interest granted to the Assignee under the Security Agreement.
The rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment are
deemed to conflict with the Security Agreement, the provisions of the Security
Agreement shall govern.
-2-
<PAGE> 3
* * *
-3-
<PAGE> 4
IN WITNESS WHEREOF, the undersigned have executed this Assignment of
Security Interest at New York, New York as of the 5th day of February, 1997.
ANCHOR GLASS ACQUISITION
CORPORATION,
as Assignor
By /s/ M. William Lightner, Jr.
___________________________________
Name: M. William Lightner, Jr.
Title: Vice President and Chief
Financial Officer
BT COMMERCIAL CORPORATION,
as Collateral Agent, Assignee
By /s/ Rita Dagdelen-Keskinyan
___________________________________
Name: Rita Dagdelen-Keskinyan
Title: Senior Vice President
-4-
<PAGE> 5
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 4th day of February, 1997 before me personally came
M. William Lightner, Jr., who being duly sworn, did depose and say that [s]he is
Vice President and Chief Financial Officer of Anchor Glass Acquisition
Corporation, that [s]he is authorized to execute the foregoing Assignment of
Security Interest on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
/s/ Dana L. Eagle
-------------------------------------
Notary Public
<PAGE> 6
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 5th day of February, 1997 before me personally came
Rita Dagdelen-Keskinyan, who being duly sworn, did depose and say that [s]he
is Senior Vice President of BT Commercial Corporation, that [s]he is authorized
to execute the foregoing Assignment of Security Interest on behalf of said
company and that [s]he did so by authority of the Board of Directors of said
company.
/s/ Richard Yglesias
---------------------------------------
Notary Public
<PAGE> 7
SCHEDULE A
COPYRIGHTS
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
------- ----------- ---------------
<PAGE> 1
EXHIBIT 10.8
U.S. HOLDCO GUARANTY
U.S. HOLDCO GUARANTY, dated as of February 5, 1997 (as amended,
modified or supplemented from time to time, this "Guaranty"), made by CONSUMERS
U.S., INC., a Delaware Corporation (the "Guarantor"). Except as otherwise
defined herein, capitalized terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Anchor Glass Acquisition Corporation (the
"Borrower"), various lenders party thereto from time to time (the "Lenders"),
Bankers Trust Company, as an Issuing Bank (an "Issuing Bank"), BT Commercial
Corporation, as Co-Syndication Agent and Agent (a "Co-Syndication Agent" and the
"Agent"), and PNC Bank, National Association, as Co-Syndication Agent and an
Issuing Bank (a "Co-Syndication Agent" and an "Issuing Bank") have entered into
a Credit Agreement, dated as of February 5, 1997, providing for the making of
Revolving Loans to the Borrower and the issuance of the Letters of Credits for
the account of the Borrower and as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended or supplemented from
time to time), providing for the making of Revolving Loans to the Borrower and
the issuance of, and participation in, Letters of Credit for the account of the
Borrower, all as contemplated therein (the Lenders, the Issuing Banks, the
Co-Syndication Agents and the Agent being called herein the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into
one or more Interest Rate Agreements or Commodity Hedge Agreements with one or
more Lenders or any affiliate thereof (each such Lender or affiliate, even if
the respective Lender subsequently ceases to be a Lender under the Credit
Agreement for any reason, together with such Lender's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Lender Creditors, the "Creditors");
<PAGE> 2
WHEREAS, it is a condition to the making of the Revolving Loans and
the issuance of Letters of Credit under the Credit Agreement that the Guarantor
shall have executed and delivered this Guaranty; and
WHEREAS, the Guarantor desires to execute this Guaranty in order to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantor, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with the Creditors
as follows:
1. The Guarantor irrevocably and unconditionally guarantees: (i) to
the Lender Creditors the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of and interest on
the Revolving Notes issued by, and the Revolving Loans made to, the Borrower
under the Credit Agreement (including all interest accruing subsequent to any
bankruptcy, insolvency or other similar proceeding, whether or not such interest
is an allowed claim against the Borrower in any such proceeding) and (y) all
indemnity and expense obligations and liabilities owing by the Borrower to the
Creditors under the Credit Agreement (including, but not limited to, amounts
owing pursuant to Sections 2.9, 4.5, 4.6, 4.7, 4.8 and 11.8 of the Credit
Agreement) in each case whether now existing or hereafter incurred under,
arising out of or in connection with the Credit Agreement, the Revolving Notes
and the due performance and compliance by the Borrower with all of the terms,
conditions and agreements contained in such Credit Documents (all such
principal, interest, liabilities and obligations under this clause (i), except
to the extent consisting of obligations or liabilities with respect to the
Interest Rate Agreements and Commodity Hedge Agreements, being herein
collectively called the "Credit Document Obligations); and (ii) to the Other
Creditors the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities owing by the Borrower to one or more Other Creditors
under any Interest Rate Agreements or Commodity Hedge Agreements, whether now in
existence or hereafter arising, and the due performance and compliance by the
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<PAGE> 3
Borrower with all terms, conditions and agreements contained therein (all such
obligations and liabilities together with the Credit Document Obligations being
herein collectively called the "Guaranteed Obligations"). The Guarantor
understands, agrees and confirms that the Creditors may enforce this Guaranty up
to the full amount of the Guaranteed Obligations against the Guarantor without
proceeding against the Borrower, against any security for the Guaranteed
Obligations, or under any other guaranty covering all or a portion of the
Guaranteed Obligations.
2. Additionally, the Guarantor, unconditionally and irrevocably,
guarantees the payment of any and all Guaranteed Obligations to the Creditors
whether or not due or payable by the Borrower upon the occurrence in respect of
the Borrower of any of the events specified in Section 9.1(e) of the Credit
Agreement, and unconditionally and irrevocably promises to pay such Guaranteed
Obligations to the Creditors, or order, on demand, in lawful money of the United
States. This Guaranty shall constitute a guaranty of payment, and not of
collection.
3. The liability of the Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Borrower whether executed by the Guarantor, any other guarantor of the
Guaranteed Obligations or by any other party, and the liability of the Guarantor
hereunder shall not be affected or impaired by any circumstance or occurrence
whatsoever, including, without limitation: (a) any direction as to application
of payment by the Borrower or by any other party, (b) any other continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the Guaranteed Obligations, (c) any payment on or in reduction of
any such other guaranty or undertaking, (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, (e) any payment made
to the Creditors on the indebtedness which the Creditors repays the Borrower
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Guarantor waives any right
to the deferral or modification of its obligations hereunder by reason of any
such proceeding, (f) any action or inaction by the Creditors as contemplated in
Section 6 hereof, or (g) any invalidity, irregularity or unenforceability of all
or part of the Guaranteed Obligations or of any security therefor.
4. The obligations of the Guarantor hereunder are independent of the
obligations of any other guarantor of the
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Guaranteed Obligations or the Borrower, and a separate action or actions may be
brought and prosecuted against the Guarantor whether or not action is brought
against any such other guarantor or the Borrower and whether or not any such
other guarantor or Borrower be joined in any such action or actions. The
Guarantor expressly acknowledges and agrees that any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to the Guarantor.
5. The Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, present- ment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by the
Creditors against, and any other notice to, any party liable thereon (including
any other guarantor of the Guaranteed Obligations or the Borrower).
6. The Creditors may at any time and from time to time without the
consent of, or notice to, the Guarantor, without incurring responsibility to the
Guarantor, without impairing or releasing the obligations of the Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
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(c) exercise or refrain from exercising any rights against
the Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower to
creditors of the Borrower other than the Creditors;
(f) apply any sums by whomsoever paid or howsoever realized
to any liability or liabilities of the Borrower to the Creditors
regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission
or default under, any of the Credit Documents or any of the
instruments or agreements referred to therein, or otherwise amend,
modify or supplement any of the Credit Documents or any of such other
instruments or agreements; and/or
(h) act or fail to act in any manner which may deprive the
Guarantor of its right to subrogation against the Borrower to recover
full indemnity for any payments made pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full in cash of the
Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of the Creditors in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single
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<PAGE> 6
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly specified are cumulative and
not exclusive of any rights or remedies which the Creditors would otherwise
have. No notice to or demand on the Guarantor in any case shall entitle the
Guarantor to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Creditors to any other
or further action in any circumstances without notice or demand. It is not
necessary for the Creditors to inquire into the capacity or powers of the
Borrower or the officers, directors, partners or agents acting or purporting to
act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
9. Any indebtedness or other liabilities of the Borrower now or
hereafter held by or owing to the Guarantor (whether secured or unsecured) is
hereby subordinated to the indebtedness and other liabilities of the Borrower to
the Creditors, and such indebtedness and other liabilities of the Borrower to
the Guarantor, if the Creditors, after an Event of Default has occurred, so
requests, shall be collected, enforced and received by the Guarantor as trustee
for the Creditors and be paid over to the Creditors on account of the
indebtedness and other liabilities of the Borrower to the Creditors, but without
affecting or impairing in any manner the liability of the Guarantor under the
other provisions of this Guaranty. Prior to the transfer by the Guarantor of any
note or negotiable instrument evidencing any indebtedness or other liabilities
of the Borrower to the Guarantor, such Guarantor shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, the Guarantor
hereby agrees with the Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under applicable law or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash.
10. (a) The Guarantor waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Creditors to: (i)
proceed against the Borrower, any other guarantor of the Guaranteed Obligations
or any other party; (ii) proceed against or exhaust any security held from the
Borrower, any other guarantor of the Guaranteed Obligations or any other party;
or (iii) pursue
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<PAGE> 7
any other remedy in the Guarantor's power whatsoever. The Guarantor waives any
defense based on or arising out of any defense of the Borrower, any other
guarantor of the Guaranteed Obligations or any other party other than payment in
full of the Guaranteed Obligations, including, without limitation, any defense
based on or arising out of the disability of the Borrower, any other guarantor
of the Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Creditors may, at their election, foreclose on any
security held by the Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. The Guarantor waives any defense arising out of any such election
by the Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of the Guarantor
against the Borrower or any other party or any security.
(b) The Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. The Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which the Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise the Guarantor of information known to it regarding such circumstances
or risks.
11. In order to induce the Creditors to enter into the Credit
Agreement and to make the Revolving Loans and issue Letters of Credit pursuant
to the Credit Agreement as provided therein, the Guarantor makes the following
representations, warranties and agreements to and for the benefit of the
Creditors, all of which shall survive the execution and delivery of this
Guaranty and the Revolving Notes and the
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<PAGE> 8
making of the Revolving Loans, with the occurrence of the Closing Date and the
incurrence of each Revolving Loan and the issuance of each Letter of Credit on
or after the Closing Date being deemed to constitute a representation and
warranty that the matters specified in this Section 11 are true and correct on
and as of the Closing Date and on the date of each such Credit Event.
(a) Corporate Status. Each of the Guarantor and each of its
Subsidiaries (i) is a duly organized and validly existing corporation
in good standing under the laws of the jurisdiction of its organization
and has the corporate power and authority to own its property and
assets and to transact the business in which it is engaged and
presently proposes to engage and (ii) has duly qualified and is
authorized to do business and is in good standing in all jurisdictions
where it is required to be so qualified and where the failure to be so
qualified would be reasonably likely to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Guarantor or of the
Guarantor and its Subsidiaries taken as a whole (a "Material Adverse
Effect").
(b) Corporate Power and Authority. The Guarantor has the
corporate power and authority to execute, deliver and carry out the
terms and provisions of this Guaranty and has taken all necessary
corporate action to authorize the execution, delivery and performance
by it of this Guaranty. The Guarantor has duly executed and delivered
this Guaranty, and this Guaranty constitutes the legal, valid and
binding obligation of the Guarantor, enforceable in accordance with its
terms, except that such enforceability hereof may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting the rights
and remedies of creditors and (ii) federal securities or other laws or
regulations or public policy insofar as they may restrict the
enforceability of rights to indemnification.
(c) No Violation. Neither the execution, delivery or
performance by the Guarantor of this Guaranty, nor compliance by it
with the terms and provisions hereof, nor the consummation of the
transactions contemplated herein (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ,
injunc-
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<PAGE> 9
tion or decree of any court or governmental instrumentality, (ii) will
conflict with, violate or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the
Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to
which the Guarantor or any of its Subsidiaries is a party or by which
it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the articles of
incorporation or by-laws of the Guarantor, except, in the case of
clauses (i) and (ii) any immaterial contravention, conflict,
inconsistency, breach or default which are not reasonably likely to
adversely affect any Lender or to have a Material Adverse Effect.
(d) Investment Company Act. Neither the Guarantor nor any of
its Subsidiaries is an "investment company" or a company "controlled"
by an "invest- ment company," within the meaning of the Investment
Company Act of 1940, as amended.
(e) Public Utility Holding Company Act. Neither the
Guarantor nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(f) True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on
behalf of the Guarantor and any of its Subsidiaries in writing to the
Agent or any Lender does not, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the
Guarantor and any of its Subsidiaries in writing to the Agent or any
Lender will not, as of the date as of which such information is dated
or certified, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information (taken
as a whole) not misleading as of such time, in each case in light of
the circumstances under which such information was provided.
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<PAGE> 10
(g) Financial Condition. On and as of the Closing Date on a
pro forma basis after giving effect to the Transaction and all
Indebtedness incurred, and to be incurred by the Guarantor in
connection with this Guaranty, (x) the sum of the assets, at a fair
valuation, of the Guarantor will exceed its debts, (y) the Guarantor
will not have incurred nor intend to, or believe that it will, incur
debts beyond its ability to pay such debts as such debts mature and
(z) the Guarantor does not have unreasonably small capital with which
to conduct its businesses. For purposes of this Section 11(i), "debt"
means any reasonably expected liability on a claim, and "claim" means
(i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or
unsecured.
(h) Assets. The Guarantor does not own any assets (including
Real Property) other than capital stock of the Borrower (the "Pledged
Stock").
(i) Indebtedness and Operating Leases. The Guarantor has no
Indebtedness (other than any Indebtedness incurred in connection with
(i) this Guaranty and (ii) any guaranty executed by the Guarantor
under the Senior Note Documents) (all references to "the Borrower" in
the definition of Indebtedness shall mean and be a reference to "the
Guarantor" herein) and no Operating Leases.
(j) Special Purpose Corporation. The Guarantor is a special
purpose corporation established for the sole purposes of (i) holding
the Pledged Stock, (ii) guaranteeing the obligations of the Borrower
under (a) the Credit Agreement and the other Credit Documents and (b)
the Senior Credit Agreement and the other Senior Note Documents (the
"Senior Note Obligations") and (iii) pledging the Pledged Stock to
secure its guarantee of the Senior Note Obligations (the "Senior Note
Pledge").
12. The Guarantor hereby covenants and agrees that on and
after the Closing Date and until all Letters of Credit have terminated and the
Revolving Notes, the Revolving Loans
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<PAGE> 11
and the Letter of Credit Obligations,
together with interest, Fees and all other Guaranteed Obligations, are paid in
full, the Guarantor:
(a) will not, and will not permit any of its Subsidiaries
(other than the Borrower) to, wind up, liquidate or dissolve its
affairs, or enter into any transaction of merger or consolidation, sell
or otherwise dispose of all or any part of its property or assets, or
purchase, lease or otherwise acquire (in one transaction or a series of
related transactions) all or any part of the property or assets of any
Person or agree to do any of the foregoing at any future time;
(b) will not, and will not permit any of its Subsidiaries
(other than the Borrower) to, create, incur, assume or suffer to exist
any Lien upon or with respect to (i) the Pledged Stock (other than the
Senior Note Pledge and the Guarantor's guarantee of the Borrower's
obligations under the Senior Note Documents) and (ii) any of its
property or assets of any kind (real or personal, tangible or
intangible), whether now owned or hereafter acquired, or sell any such
property or assets or assign any right to receive income, or file or
permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute;
and
(c) will not, and will not permit any of its Subsidiaries
(other than the Borrower) to, contract, create, incur, assume or suffer
to exist any Indebtedness (other than any Indebtedness incurred in
connection with (i) this Guaranty and (ii) any guaranty executed by the
Guarantor under the Senior Note Documents) or enter into any Capital
Leases or Operating Leases.
13. Any of the following specified events shall be an "Event of
Default":
(a) Representations, etc. Any representation, warranty or
statement made by the Guarantor herein or in any certificate delivered
pursuant hereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
(b) Covenants. The other Guarantor shall (i) default in the
due performance or observance
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<PAGE> 12
by it of any term, covenant or agreement contained in paragraph 12 or
(ii) default in the due performance or observance by it of any other
term, covenant or agreement contained herein and such default shall
continue unremedied for a period of 15 days after written notice to
the Guarantor by the Creditors; or
(c) Bankruptcy, etc. The Guarantor or any of its
Subsidiaries shall commence a voluntary case concerning itself under
Title 11 of the United States entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code");
or an involuntary case is commenced against the Guarantor or any of
its Subsidiaries, and the petition is not controverted within 30 days,
or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the
Guarantor or any of its Subsidiaries, or the Guarantor or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to the Guarantor or any of its
Subsidiaries; or there is commenced against the Guarantor or any of
its Subsidiaries any such proceeding which remains undismissed for a
period of 60 days; or the Guarantor or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered against the
Guarantor or any of its Subsidiaries; or the Guarantor or any of its
Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Guarantor or any of its
Subsidiaries makes a general assignment for the benefit of creditors;
or any corporate action is taken by the Guarantor or any of its
Subsidiaries for the purpose of effecting any of the foregoing.
14. The Guarantor hereby agrees to pay all out-of-pocket costs and
expenses of the Creditors in connection with the preparation of this Guaranty
and any amendment, waiver or
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<PAGE> 13
consent relating hereto and of the Creditors in connection with any enforcement
of this Guaranty (including in each case, without limitation, the fees and
disbursements of counsel and consultants employed by the Creditors). The
Guarantor further agrees to indemnify the Creditors, and each of its officers,
directors, employees, representatives, affiliates and agents from and hold each
of them harmless against any and all liabilities, obligations (including removal
or remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed against
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not the
Creditors is a party thereto and whether or not brought by or on behalf of, or
against, the Creditors) related to the entering into and/or performance of this
Guaranty or any other Document or the use of any Letter of Credit or the
proceeds of the Revolving Loans or the consummation of any transactions
contemplated herein or the exercise of any of the Creditors' rights or remedies
provided herein or in the other Credit Documents, including in each case,
without limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the undertaking
to indemnify, pay or hold harmless the Creditors set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Guarantor shall make the maximum contribution to the payment and
satisfaction of each of the indemnified liabilities which is permissible under
applicable law.
15. This Guaranty shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and its
successors and assigns, provided that the Guarantor may not assign its rights or
obligations under this Guaranty without the prior written consent of the
Required Lenders (as described in the Credit Agreement).
16. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of the
Guarantor and the Required Lenders.
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<PAGE> 14
17. The Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents has been made available to its principal executive
officers and such officers are familiar with the contents thereof.
18. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default,
the Creditors is hereby authorized at any time or from time to time, without
notice to the Guarantor or to any other Person, any such notice being expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by the Creditors
to or for the credit or the account of the Guarantor, against and on account of
the obligations and liabilities of the Guarantor to the Creditors under this
Guaranty, irrespective of whether or not the Creditors shall have made any
demand hereunder and although said obligations, liabilities, deposits or claims,
or any of them, shall be contingent or unmatured.
19. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of the Creditors, as provided in the Credit Agreement and (ii)
in the case of the Guarantor, at its address set forth opposite its signature
below; or in any case at such other address as any of the Persons listed above
may hereafter notify the others in writing.
20. If claim is ever made upon the Creditors for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in the event the
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon the Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and the Guarantor
shall be and remain liable to the aforesaid payees hereunder
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<PAGE> 15
for the amount so repaid or recovered to the same extent as if such amount had
never originally been received by any such payee.
21. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE CREDITORS
AND OF THE GUARANTOR HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE GUARANTOR HEREBY
FURTHER IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM,
WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS
ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON
ITS BEHALF, IN THE RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION
OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE
TO BE AVAILABLE TO ACT AS SUCH THE GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS
PROVISION SATISFACTORY TO THE CREDITORS UNDER THIS GUARANTY. THE GUARANTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE GUARANTOR AT
ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE CREDITORS UNDER THIS AGREEMENT, THE CREDITORS TO SERVICE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION.
(b) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) THE GUARANTOR AND THE CREDITORS HEREBY IRREVOCABLY WAIVE ALL
RIGHTS TO A TRIAL BY JURY IN ANY
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<PAGE> 16
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
22. It is the desire and intent of the Guarantor and the Creditors
that this Guaranty shall be enforced against the Guarantor to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If, however, and to the extent that, the
obligations of the Guarantor under this Guaranty shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of the Guarantor shall
be deemed to be reduced and the Guarantor shall pay the maximum amount of the
Guaranteed Obligations which would be permissible under applicable law.
23. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts shall be lodged
with the Guarantor and the Creditors.
24. All payments made by the Guarantor hereunder will be made without
setoff, counterclaim or other defense and on the same basis as payments are made
by the Borrower under Sections 2.6 and 3.5 of the Credit Agreement.
* * *
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
ADDRESSES
c/o Consumers Packaging Inc. CONSUMERS U.S., INC.,
401 The West Mall as Guarantor
Suite 900
Etobicoke, Ontario M9C 5J7
Canada By /s/ John J. Ghaznavi
_______________________________
_______________________________ Name: John J. Ghaznavi
Tel: (416) 232-3209 Title: Chairman and Chief
Fax: (416) 232-3635 Executive Officer
Attn: John J. Ghaznavi
Acknowledged and Agreed to:
BT COMMERCIAL CORPORATION,
as Agent
By /s/ Rita Dagdelen-Keskinyan
_______________________________________________
Name: Rita Dagdelen-Keskinyan
Title: Senior Vice President
-17-
'
<PAGE> 1
Exhibit 10.9
PLAN TERMINATION AGREEMENT
THIS PLAN TERMINATION AGREEMENT, (this "Agreement") is made this 3rd
day of February, 1997 by and between Consumers Packaging Inc., a corporation
organized under the federal laws of Canada ("Consumers"), Anchor Glass
Acquisition Corp., a Delaware corporation and subsidiary of Consumers ("New
Anchor"), and the Pension Benefit Guaranty Corporation, a wholly-owned United
States Government corporation (the "PBGC") established pursuant to Title IV of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
WITNESSETH:
WHEREAS, Anchor Glass Container Corporation, a Delaware corporation
("Old Anchor"), and its subsidiaries conduct a business which manufactures,
sells and distributes various types of glass containers (the "Business");
WHEREAS, Old Anchor is the sponsor of the Anchor Glass Container
Corporation Service Retirement Plan, the Anchor Glass Container Corporation
Retirement Plan for Salaried Employees and the Retirement Plan for Hourly
Employees of Latchford Glass Company and Associated Companies (individually, a
"Plan" and, collectively, the "Plans");
WHEREAS, on September 13, 1996, Old Anchor filed a voluntary
petition for reorganization relief pursuant to Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), and such case is presently pending under Case
No. 96-1434 PJW (the "Bankruptcy Case");
WHEREAS, on December 2, 1996, Consumers and Owens-Brockway Glass
Container Inc. ("OI") submitted a bid together with supporting data to the
Bankruptcy Court pursuant to which Consumers proposed to purchase substantially
all of the assets of the Business and OI proposed to purchase certain other
assets of the Business (the "Proposal");
WHEREAS, Old Anchor, Consumers and OI subsequently entered into an
Asset Purchase Agreement dated as of December 18, 1996 (together with the
Proposal, the "Asset Purchase Agreement", pursuant to which, among other things,
Consumers agreed to purchase substantially all of the assets of the Business, to
assume certain liabilities with respect to the Plans and to assign its interest
and obligations under such Asset Purchase Agreement to New Anchor and OI agreed
to purchase certain other assets of the Business and assume certain other
liabilities;
<PAGE> 2
WHEREAS, the obligation of Consumers to consummate the transactions
contemplated under the Asset Purchase Agreement is subject, among other things,
to the condition that Consumers or New Anchor shall have received written
assurance from the PBGC that the PBGC will not terminate the Plans after the
closing date under such Asset Purchase Agreement (the "Closing Date") solely by
reason of the assumption of such Plans by New Anchor nor by reason of the
transactions contemplated by the Asset Purchase Agreement;
WHEREAS, on January 9, 1997, the PBGC issued a Notice of
Determination to Old Anchor stating that the PBGC intended to proceed to have
the Plans terminated and to have itself appointed as statutory trustee of the
Plans, both pursuant to section 4042 of ERISA;
WHEREAS, the PBGC and Vitro, Sociedad Anonima, the corporate parent
of Old Anchor, have entered into a Term Sheet, a copy of which has been
submitted to New Anchor.
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements set forth herein, Consumers, New Anchor and the PBGC
agree as follows:
1. Subject to the terms and conditions of the Asset Purchase
Agreement, Consumers shall cause New Anchor to timely satisfy, and New Anchor
shall so satisfy, all of the obligations that New Anchor assumes with respect to
the Plans under such Asset Purchase Agreement.
2. The PBGC shall not terminate the Plans after the Closing Date
solely by reason of the assumption of such Plans by New Anchor nor by reason of
the transactions contemplated by the Asset Purchase Agreement.
3. Upon the contribution of $18,056,100 to the Plans in cash and in
shares of qualifying employer securities (within the meaning of section
407(d)(5) of ERISA) (the "Closing Contribution") and the assumption of such
Plans by New Anchor ("the Closing"), the PBGC shall not seek to perfect or
enforce a lien under section 412(n) of the Code or section 302(f) of ERISA
against New Anchor or any member of New Anchor's controlled group with respect
to any failure to make a payment to a Plan that is described in section
412(n)(l) of the Code or section 302(f)(l) of ERISA and that occurred on or
before the Closing. At least $9,056,100 of the Closing Contribution shall be in
cash. Nothing herein shall limit or otherwise affect the PBGC's statutory right
to seek to perfect or enforce such a lien against any contributing sponsor of
any Plan or any member of such contributing sponsor's controlled group with
respect to any failure to make a payment to a Plan that is described in section
412(n)(l) of the Code or section 302(f)(l) of ERISA and that occurs after the
Closing.
2
<PAGE> 3
4. The value of any qualifying employer securities contributed to
the Plans as part of the Closing Contribution will be determined as of the date
contributed in accordance with section 3(18) of ERISA and based upon a valuation
to be performed no later than February 28, 1997 by an independent appraiser
selected by a fiduciary of the Plans and approved by the PBGC, which approval
shall not be unreasonably withheld. If, based upon such valuation, New Anchor
determines that the value of the Closing Contribution was less than $18,056,100,
New Anchor will contribute to the Plans no later than March 31, 1997, an amount
in cash and/or in shares of qualifying employer securities equal in value to the
difference between $18,056,100 and the value of the Closing Contribution (the
"Top-up Contribution.")
5. New Anchor shall cause the Plans to retain an Investment manager
(as that term is defined in section 3(38) of ERISA) reasonably satisfactory to
the PBGC that shall have exclusive control over the shares of qualifying
employer securities contributed to the Plans as part of the Closing Contribution
and Top-up Contribution.
6. New Anchor or Consumers shall provide PBGC with copies of
(a) at the same time they are made available to its lenders,
(i) all notices that must be provided to the lenders
pursuant to section 7.1(f) of that revolving credit agreement to be dated
February 4, 1997, by and among New Anchor, Consumers and Bankers Trust
Company (the "Revolving Credit Agreement"); and
(ii) any notice from the lenders to New Anchor or
Consumers of default or changes in the Revolving Credit Agreement; and
(b) within ten (10) days after filing, copies of the Form
5500s (with all attachments and schedules) for each of the Plans; and
(c) within ten (10) days after receipt by New Anchor, copies
of the annual actuarial valuation report for each of the Plans.
7. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns; provided, however, that
no party may transfer or assign its obligations under this Agreement unless such
transfer or assignment is agreed to in writing and executed by each other's
party.
8. Each party represents and warrants that it is fully authorized
and empowered to enter into this Agreement and
3
<PAGE> 4
that the performance of its obligations under such Agreement will not violate
any other duty, obligation or agreement.
9. This Agreement supersedes any other oral or written agreements
between the parties and contains the entire agreement between the parties
regarding the subject matter hereof.
10. No provision of this Agreement may be amended unless such
amendment is agreed to in writing and executed by authorized representatives of
each party. No waiver by any party of a breach of any provision of this
Agreement by any other party shall be construed as a continuing waiver or as a
waiver of any other breach of another provision of this Agreement.
11. This Agreement shall be governed by the laws of the State of New
York, without regard to conflict of laws principles.
12. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument. The parties agree to accept faxed
signatures for this purpose.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
Consumers Packaging Inc.
By: /s/ John J. Ghaznavi
-----------------------------------
John J. Ghaznavi
Anchor Glass Acquisition Corp.
By: /s/ John J. Ghaznavi
-----------------------------------
John J. Ghaznavi
Pension Benefit Guaranty Corporation
By: /s/ Ellen A. Hennessy
-----------------------------------
Ellen A. Hennessy
Deputy Executive Director
and Chief Negotiator
4
<PAGE> 1
Exhibit 10.10
RELEASE AGREEMENT
January __, 1997
Vitro, Sociedad Anonima
Ave. Santa Engracia No. 400
Colonia Valle del Campestre
Garza Garcia, N.L. 66250
Mexico
Attention: Tomas Cantu Gonzalez
Reference is made to Section 9.A. of that certain Agreement
dated as of December 18, 1996, between Vitro, Sociedad Anonima, a corporation
organized under the laws of Mexico ("Vitro"), Consumers Packaging Inc. for
itself and on behalf of Anchor Glass Acquisition Corporation, a Delaware
corporation ("New Anchor"), pursuant to which Vitro agreed that upon (i) the
delivery of an effective release of Vitro from any and all obligations and
claims by or on behalf of Anchor Glass Container Corporation, a Delaware
corporation ("Anchor"), or the Official Committee of Unsecured Creditors of
Anchor (the "Creditors' Committee") appointed in the case commenced under
Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 301 et seq.
in the United States Bankruptcy Court for the District of Delaware pending under
Case No. 96-1434 PJW with respect to Anchor (the "Reorganization Case") and (ii)
the satisfaction of certain other conditions, Vitro shall contribute $8.4
million to the bankruptcy estate of Anchor (the "Vitro Contribution").
In consideration of the Vitro Contribution, each of Anchor,
New Anchor and the Creditors' Committee hereby releases unconditionally Vitro
and each of its officers, directors, shareholders, employees and other agents,
in each case acting on behalf of Vitro, and each of their respective successors,
executors, administrators, heirs and assigns (all such entities are collectively
referred to as the "Releasees"), from any and all claims, obligations, suits,
judgments, damages, rights, causes of action or liabilities whatsoever, whether
known or unknown, foreseen or unforeseen, existing or hereafter arising, in law,
equity or otherwise, based in whole or in part upon any act or omission,
transaction, event or other occurrence taking place on or prior to the
<PAGE> 2
date hereof in any way relating to the Releasees, Anchor, the Creditors'
Committee or the Reorganization Case, except for defenses, offsets and
counterclaims which Anchor may have or assert in respect of any claims Vitro may
assert in the Reorganization Case.
Very truly yours,
ANCHOR GLASS CONTAINER CORPORATION,
By: /s/ Carl H. Young, III
----------------------------------
Name: Carl H. Young, III
Title: Vice President
ANCHOR GLASS ACQUISITION CORPORATION,
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: Chief Executive Officer
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF ANCHOR GLASS CONTAINER
CORPORATION,
By: /s/ Ralph Chin
----------------------------------
Name: Ralph Chin
Title: Chairperson
AGREED AND ACKNOWLEDGED:
VITRO, SOCIEDAD ANONIMA,
By: /s/ Jose Antonio Lopez
--------------------------------
Name: Jose Antonio Lopez
Title: Chief Financial Officer
<PAGE> 1
Exhibit 10.11
EXECUTION COPY
AGREEMENT dated as of December 18, 1996, between
VITRO, SOCIEDAD ANONIMA, a corporation organized under
the laws of Mexico ("Vitro"), CONSUMERS PACKAGING INC.,
a corporation organized under the federal laws of Canada
("Consumers"), and CONSUMERS PACKAGING INC. on behalf of
a new Delaware corporation to be formed by Consumers
Packaging Inc. in accordance with Section 25 hereof
("New Anchor").
WHEREAS, Consumers and Owens Brockway Glass Container Inc., a
Delaware corporation ("Owens", and together with Consumers, the "Buyers") have
entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") dated
as of the date hereof with Anchor Glass Container Corporation, a Delaware
corporation ("Anchor"), and a wholly owned subsidiary of Container Holdings
Corp., which is a wholly owned subsidiary of Vitro; and
WHEREAS, in connection with the Asset Purchase Agreement and
Anchor's filing of a petition for relief under Chapter 11 of the United States
Code, as amended, with the United States Bankruptcy Court for the District of
Delaware having jurisdiction over the case, the parties hereto desire to set
forth certain ancillary agreements;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Conditions to Obligations. (a) Obligations of New Anchor. The
effectiveness of this Agreement and the obligations of New Anchor hereunder are
subject to the satisfaction (or waiver by New Anchor) of the following
conditions on or prior to the Closing Date (as defined in the Asset Purchase
Agreement):
(i) The representations and warranties of Vitro made in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made as of such time, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects, on and as of such earlier date). Vitro shall have performed or
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by Vitro by the Closing Date.
(ii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued by any Federal, State, local
or foreign government or any court of competent jurisdiction, administrative
agency or commission or other governmental authority or
<PAGE> 2
instrumentality, domestic or foreign (a "Governmental Entity") preventing the
execution or performance of this Agreement shall be in effect.
(iii) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding, challenging or seeking to restrain or
prohibit the execution or performance of this Agreement or any provision
thereof, or seeking to obtain any material damages from New Anchor or any of its
Affiliates (as defined herein) in connection with the execution or performance
of this Agreement.
(iv) The conditions to the Buyers' obligation under the Asset
Purchase Agreement shall have been satisfied or waived.
(b) Obligations of Vitro. The effectiveness of this Agreement and
the obligations of Vitro hereunder are subject to the satisfaction (or waiver by
Vitro) of the following conditions on or prior to the Closing Date:
(i) The representations and warranties of each of New Anchor and
Consumers made in this Agreement shall be true and correct in all material
respects as of the Closing Date as though made as of such time, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case such representations and warranties shall be true and correct in
all material respects, on and as of such earlier date). Each of New Anchor and
Consumers shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by each of them by the Closing Date.
(ii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued by any Governmental Entity
preventing the execution or performance of this Agreement shall be in effect.
(iii) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding, challenging or seeking to restrain or
prohibit the execution or performance of this Agreement or any provision thereof
or seeking to obtain any material damages from Vitro or any of its Affiliates
(other than Anchor and Anchor's subsidiaries) in connection with the execution
or performance of this Agreement.
(iv) The Buyers shall have purchased the Purchased Assets (as
defined in the Asset Purchase Agreement) and assumed the Assumed Liabilities (as
defined in the Asset Purchase Agreement) in accordance with the terms of the
Asset Purchase Agreement as in effect on the date hereof without any waiver,
modification or amendment thereto which is not approved in writing by Vitro.
Vitro agrees that it will give such approval unless a proposed waiver,
modification, or amendment has or would be reasonably expected to have a
material adverse effect on (x) Vitro or its Affiliates' rights, liabilities or
obligations under this Agreement, (y) Vitro or its Affiliates' rights,
liabilities or obligations arising as a result of or in connection with Anchor,
its business or assets or (z) Vitro.
2
<PAGE> 3
(v) The Pension Benefit Guaranty Corporation ("PBGC") shall not have
instituted proceedings under Title IV of ERISA to terminate or appoint a trustee
or receiver for any of the Seller Defined Benefit Plans (as defined in the Asset
Purchase Agreement) on or before the Closing Date and the PBGC shall provide
written assurance on the Closing Date that it shall not initiate such
proceedings solely because of the assumption of the Seller Defined Benefit Plans
by New Anchor or because of the transactions contemplated by the Asset Purchase
Agreement.
2. Representations and Warranties of Vitro. Vitro hereby represents
and warrants to New Anchor and Consumers as follows:
(a) Authority. Vitro is a corporation duly organized, validly
existing and in good standing under the laws of Mexico. Vitro has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
All corporate and stockholder acts and other proceedings required to be taken by
Vitro to authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
properly taken. This Agreement has been duly executed and delivered by Vitro and
constitutes a legal, valid and binding obligation of Vitro, enforceable against
Vitro in accordance with its terms.
(b) No Conflicts; Consents. (i) The execution and delivery of this
Agreement by Vitro do not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, (A) the Certificate of Incorporation or By-laws or other
constituent documents, as the case may be, of Vitro, (B) any agreement or
obligation to which Vitro or any subsidiary of Vitro is a party or by which any
of their respective assets are bound or (C) any judgment, injunction, order or
decree, or statute, law, ordinance, rule or regulation applicable to Vitro or
any subsidiary of Vitro or their respective assets, other than in the case of
clauses (B) and (C) such as, in the aggregate, would not have a material adverse
effect on the ability of Vitro to perform the obligations contemplated hereby.
(ii) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Vitro in
connection with the execution, delivery and performance of this Agreement.
3. Representations and Warranties of Consumers and New Anchor. (a)
Consumers hereby represents and warrants to Vitro as follows:
(i) Authority. Consumers is a corporation duly organized, validly
existing and in good standing under the federal laws of Canada and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted.
Consumers has all requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. All corporate and stockholder acts and other
proceedings required to be taken by Consumers to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken.
3
<PAGE> 4
This Agreement has been duly executed and delivered by Consumers and constitutes
a legal, valid and binding obligation of Consumers, enforceable against
Consumers in accordance with its terms.
(ii) No Conflicts; Consents. (A) The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof shall not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, (I) the constituent documents of Consumers or the comparable governing
instruments of any subsidiary of Consumers, (II) any agreement or obligation to
which Consumers or any subsidiary of Consumers is a party or by which any of
their respective assets are bound, or (III) any judgment, injunction, order, or
decree, or statute, law, ordinance, rule or regulation applicable to Consumers
or any subsidiary of Consumers or their respective assets, other than in the
case of clauses (II) and (III) such as in the aggregate would not have a
material adverse effect on the ability of Consumers to perform the obligations
contemplated hereby.
(B) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Consumers in
connection with the execution, delivery and performance of this Agreement.
(b) On and after the date the Addendum (as defined below) to this
Agreement is executed, New Anchor hereby represents and warrants to Vitro as
follows:
(i) Authority. New Anchor is a corporation duly organized, validly
existing and in good standing under the federal laws of Delaware and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted. New
Anchor has all requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. All corporate and stockholder acts and other
proceedings required to be taken by New Anchor to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by New Anchor and constitutes a
legal, valid and binding obligation of New Anchor, enforceable against New
Anchor in accordance with its terms.
(ii) No Conflicts; Consents. (A) The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof shall not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, (I) the constituent documents of New Anchor or the comparable governing
instruments of any subsidiary of New Anchor, (II) any agreement or obligation to
which New Anchor or any subsidiary of New Anchor is a party or by which any of
their respective assets are bound, or (III) any judgment, injunction, order, or
decree, or statute, law, ordinance, rule or regulation applicable to New Anchor
or any subsidiary of New Anchor or their respective assets, other than in the
case of clauses (II) and (III) such as in the aggregate would not have a
material adverse effect on the ability of New Anchor to perform the obligations
contemplated hereby.
4
<PAGE> 5
(B) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to New Anchor in
connection with the execution, delivery and performance of this Agreement.
(C) Consumers and New Anchor each represent and warrant as follows:
(i) All of the conditions set forth in subparagraphs (a), (b), (d)
and (e) of paragraph 4 of Part One of the letter dated December 2, 1996, from
Owens-Brockway Glass Container Inc. to Consumers Packaging Inc. have been
satisfied or waived.
(ii) The Buyers will purchase the Purchased Assets and assume the
Assumed Liabilities in accordance with the terms of the Asset Purchase Agreement
as in effect on the date hereof without any waiver, modification or amendment
thereto which is adverse to the interests of Vitro.
4. Noncompetition. (a) Vitro agrees that, except as provided in
paragraph (b) of this Section 4, for a period of five full years from the
Closing Date, neither it nor any of its Affiliates shall engage, either directly
or indirectly, as a principal or for its own account or solely or jointly with
others, or as a stockholder or equity owner in any corporation or other entity,
in any business (whether such business was established by Vitro or any of its
Affiliates or was acquired as an existing business) or as a licensor of
technology for any business that manufactures Anchor Products (as defined
herein) in the United States and Canada (a "Competing Business"); provided that
nothing herein shall prohibit the acquisition by Vitro or any of its Affiliates
(i) of a diversified company or other entity having not more than 10% of its
sales (based on its latest published annual audited financial statements)
attributable to any business engaged in a Competing Business, (ii) of less than
10% of the stock or other ownership interests in a company or other entity
engaged in a Competing Business or (iii) of a non-Controlling (as defined
herein) equity interest in any person, including a person engaged in a Competing
Business, if such non-Controlling equity interest was acquired in exchange for,
or as part of the consideration in a transaction involving, the sale of Vitro or
any Affiliate of Vitro, a division, line of business or other significant
portion of the assets of Vitro or any of its Affiliates or the sale of a
subsidiary of Vitro or any of its Affiliates; and provided, further that, except
as set forth in paragraph (d) of this Section 4, nothing herein shall prohibit
Vitro or any of its Affiliates from engaging, directly or indirectly, in a
business that manufacturers Anchor Products in Canada so long as such Anchor
Products are not sold into the United States or intended or directed by Vitro or
any of its Affiliates for sale into the United States through a distributor or
otherwise.
(b) (i) Vitro agrees, that for a period of five full years from the
Closing Date, neither it nor any of its Affiliates shall sell any Anchor
Products to any customer who purchased Anchor Products from Anchor on or after
September 30, 1994, provided that such customer (x) is not a Common Customer (as
defined in clause (ii) below), (y) is not engaged in the business of
distributing Anchor Products and (z) has purchased an aggregate amount of more
than $25,000 of Anchor Products from plants other than the Hayward, California
plant or the Antioch, California plant in at least one year since September 30,
1994 (each, an "Anchor Customer").
5
<PAGE> 6
(ii) Vitro agrees, that for a period of five full years from the
Closing Date, neither it nor any of its Affiliates shall sell Anchor Products to
(x) any customer (I) who purchased Anchor Products from anchor on or after
September 30, 1994, provided that such customer (A) is not engaged in the
business of distributing Anchor Products and (B) has purchased an aggregate
amount of more than $25,000 of Anchor Products from plants other than the
Hayward California plant or the Antioch, California plant in at least one year
since September 30, 1994 and (II) who has also purchased glass containers used
in the food and beverage industry from Vitro or its Affiliates on or after
January 1, 1992 (each, a "Common Customer") or (y) persons engaged in the
business of distributing Anchor Products to the extent that Vitro knows by
reason of shipping arrangements, discussions with the distributor or otherwise
that such Anchor Products are to be resold to Anchor Customers or Common
Customers if, but only if, the aggregate price for the sale of all such Anchor
Products referred to in clauses (x) and (y) above during the applicable period
set forth below would be an amount in excess of the amounts set forth below
opposite such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Closing Date through and including $6,187,500.00
the day immediately preceding the
first anniversary of the Closing Date
The day of the first anniversary of the Closing 6,960,937.50
Date through and including the day
immediately preceding the second
anniversary of the Closing Date
The day of the second anniversary of the Closing 7,831,054.69
Date through and including the day
immediately preceding the third
anniversary of the Closing Date
The day of the third anniversary of the Closing 8,809,936.52
Date through and including the day
immediately preceding the fourth
anniversary of the Closing Date
The day of the fourth anniversary of the Closing 9,911,178.59
Date through and including the day
immediately preceding the fifth
anniversary of the Closing Date
</TABLE>
(iii) Notwithstanding the provisions of paragraphs (b)(i) and (b)
(ii) of this Section 4, the sale by Vitro or its Affiliates of any Anchor
Products that are sourced from New Anchor or its Affiliates shall not be
restricted and such sales shall be disregarded for purposes of the dollar
limitations set forth in paragraph (b)(ii) of this Section 4.
6
<PAGE> 7
(iv) Except as set forth above in this Section 4, Vitro shall not be
prohibited or restricted in any manner with respect to the ability to
manufacture, sell, license or otherwise deal in any Anchor Products or any other
products.
(c) Vitro agrees that from the date hereof to the first anniversary
of the Closing Date neither it nor any of its Affiliates shall directly or
indirectly solicit for employment any employees of Anchor other than the persons
set forth on Schedule A hereto.
(d) (i) Vitro agrees, that for a period of five full years from the
Closing Date, neither it nor any of its Affiliates shall enter into any joint
venture, partnership or similar arrangement (a "Joint Venture") with another
person to manufacture Anchor Products in Canada, unless prior thereto (A) Vitro
shall have provided written notice (the "Vitro Notice") to Consumers of its
intention to enter into a Joint Venture and setting forth the material terms of
the proposed Joint Venture and (B) either (I) Consumers shall not have provided
written notice to Vitro within 30 days after the Vitro Notice is given to
Consumers of its intention to enter into such Joint Venture with Vitro or any
such Vitro Affiliate or (II) Consumers shall have provided written notice within
30 days after the Vitro Notice is given to Consumers of its intention to enter
into the Joint Venture with Vitro or any such Vitro Affiliate, but such Joint
Venture between Consumers and Vitro or any such Vitro Affiliate shall have not
been consummated, after good faith efforts by Vitro or any such Vitro Affiliate,
within 180 days after the Vitro Notice is given to Consumers. If the conditions
set forth in clauses (A) and (B) above shall have been satisfied, then Vitro or
its Affiliates may enter into a Joint Venture with a third party on terms not
materially more favorable in the aggregate to the third party than those set
forth in the Vitro Notice.
(ii) If there is a "Change of Control" (as defined below) of Vitro,
then the second proviso to Section 4(a) hereof shall no longer apply to Vitro or
any successor thereto, any subsidiary of Vitro or such successor or any other
entity controlled by Vitro or such successor. For purposes of this paragraph,
"Change of Control" means, with respect to Vitro, the occurrence of any of the
following events: (i) any person (a) shall acquire, in a transaction or series
of transactions, outstanding securities of Vitro which, when added to the voting
power previously held, entitles such person to exercise more than fifty percent
(50%) of the total voting power of Vitro in the election of directors or (b)
shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934), directly or indirectly, of fifty percent
(50%) or more of the outstanding common stock of Vitro; or (ii) Vitro shall (a)
consolidate or merge with any other person, but only if shares of Vitro's common
stock are converted into cash, securities or other property in a transaction in
which the holders of Vitro's common stock immediately prior to the merger hold
in the aggregate less than fifty percent (50%) of the voting securities of the
continuing or surviving corporation or (b) sell, lease, exchange, or otherwise
transfer (in one transaction or a series of related transactions) all, or
substantially all, of the assets of Vitro.
(e) If any provision contained in this Section 4 shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section 4, but this Section 4 shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. It is the
intention of
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<PAGE> 8
the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section 4 to provide for a covenant having the maximum
enforceable geographic area, time period and other provisions (not greater than
those contained herein) as shall be valid and enforceable under such applicable
law. Vitro acknowledges that New Anchor would be irreparably harmed by any
breach of this Section 4 and that there would be no adequate remedy at law or in
damages to compensate New Anchor for any such breach. Vitro agrees that New
Anchor shall be entitled to injunctive relief requiring specific performance by
Vitro of this Section 4.
(f) For purposes of this Agreement, "Affiliate" of a person means
any person which Controls, is Controlled by or is under common Control with,
such person; "Anchor Products" means glass containers used in the food and
beverage industries other than Specialty Products; "Specialty Products" means,
collectively, (A) decorated ware, also known as "ACL", (B) larger ware (i.e.,
glass containers of three gallon size or larger) and (C) miniature bottles and
samplers; and "Control" means either (I) direct or indirect ownership of 50%
(or, in the case of clause (iii) of the first proviso of Section 4(a) only, 33%)
or more of the voting equity interests of a person or (II) direct or indirect
power to direct or cause the direction of the management and policies of a
person, whether through ownership of voting securities, by contract or
otherwise; and "Controlled" and "Controlling" have correlative meanings.
5. Vitro Packaging. (a) Prior to the date of this Agreement,
Affiliates of Vitro have purchased glass containers manufactured by Anchor from
Anchor in order to fulfill customer orders in the United States depending on the
product and delivery requirements of the customer order. New Anchor understands
that Vitro's distribution Affiliates also purchase supplies of glass containers
from manufacturing Affiliates of Vitro. Vitro agrees that, subject to paragraphs
(b) and (c) of this Section 5, its distribution Affiliates shall purchase not
less than 1.3 million gross of glass containers of a similar variety (such
variety being subject to market conditions) from New Anchor in any year during
the 5-year period commencing on the Closing Date unless there is a proportionate
reduction in the amount of Anchor Products sold by Vitro's manufacturing
Affiliates for distribution in the United States market during such year.
Subject to paragraph (b) of this Section 5, the purchase of such glass
containers shall be on the same terms and conditions (including comparable
quality and service) as such glass containers are presently supplied by Anchor
to Vitro and its Affiliates.
(b) Vitro represents that the purchase price paid by Vitro and its
Affiliates for such glass containers presently supplied by Anchor to Vitro and
its Affiliates is equal to standard cost (determined pursuant to consistently
applied procedures), plus 10%, FOB the factory (the "Price Formula"). The
purchase price (the "Purchase Price") to be paid by Vitro and its Affiliates to
New Anchor for any such glass containers purchased by Vitro and its Affiliates
pursuant to this Section 5 shall be determined pursuant to the Price Formula,
with standard cost being determined in the same manner and using the same
procedures as are currently used by Anchor to determine the purchase price
charged by Anchor to Vitro and its Affiliates. Notwithstanding the foregoing,
if, prior to any such purchase of glass containers by Vitro or its Affiliates
from New Anchor
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<PAGE> 9
pursuant to this Section 5, Vitro demonstrates to New Anchor that the Price
Formula is commercially unreasonable with respect to such purchase of glass
containers, New Anchor and Vitro shall negotiate in good faith to determine the
appropriate price for such purchase of glass containers, taking into account the
then current market price for, and cost to manufacture, such amount of glass
containers (but without reference to Vitro pricing for similarly situated
customers in the relevant geographic area). If New Anchor and Vitro are unable
to agree upon the appropriate price for such purchase of glass containers, Vitro
may purchase such glass containers from another source of supply. If Vitro and
its distribution Affiliates shall have failed to fulfill the obligation to
purchase the amount of glass containers required pursuant to Section 5(a) (the
"Purchase Obligation") at the end of any year during the five year period
commencing on the Closing Date, as a result of the failure during such year of
New Anchor and Vitro to agree in good faith on prices for certain purchases of
glass containers pursuant to this Section 5(b), Vitro shall be deemed not to
have failed to fulfill the Purchase Obligation to the extent of the aggregate
gross amount of the glass containers as to which New Anchor and Vitro were
unable during such year to agree in good faith on the prices.
(c) If New Anchor or its Affiliates sells glass containers to a
customer who had previously purchased glass containers from Vitro or its
Affiliates and Vitro and its Affiliates had supplied such customer orders with
purchases from New Anchor or Anchor, the annual 1.3 million gross of glass
containers referred to in clause (a) of this Section 5 shall be reduced by the
number of glass containers which such customer had ordered from Vitro and its
Affiliates during the 12-month period ending on the date of the last sale to
such customer by Vitro or its Affiliates.
(d) Vitro and New Anchor agree to cooperate in good faith in the
administration of sales pursuant to this Section 5, through participation in
periodic planning sessions to review Vitro's expected requirements and New
Anchor's manufacturing capacity and availability. New Anchor shall provide Vitro
with detailed information concerning its determination of the Purchase Price for
sales under this Section 5 and such backup information with respect thereto as
Vitro shall reasonably request. Not more than once per year on reasonable notice
to New Anchor, Vitro shall have the right to obtain an audit of the
determination by New Anchor of the Purchase Prices paid by Vitro and its
Affiliates to New Anchor pursuant to this Section 5 by an independent nationally
recognized accounting firm appointed by it, reasonably satisfactory to New
Anchor, which such firm shall have entered into a confidentiality agreement with
New Anchor. Such Audit shall be at Vitro's cost and expense unless the auditor
finds that the aggregate Purchase Prices charged by New Anchor to Vitro during
any annual period were more than 5% in excess of the amounts that should have
been charged in accordance with this Agreement, in which event New Anchor shall
bear the cost of such audit.
6. Environmental Indemnity. (a) Subject to the limitations set forth
in this Section 6, Vitro shall indemnify New Anchor and its Affiliates against
and hold each of them harmless from any and all damage, loss, cost, liability
and expense (including (A) capital or operating expenditures required to achieve
compliance with environmental protection standards imposed by law or as a
condition of any license, permit or agreement, each as in effect under
Environmental Laws as of the Closing Date, (B) costs to investigate any known or
potential environmental matter, including any matters disclosed in Schedule 3.12
to the Asset Purchase Agreement and in the Supplemental Environmental Notice (as
defined below), (C) administrative
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<PAGE> 10
oversight costs (not including, however, any costs, expenses or hourly fees
imputed to New Anchor's employees on account of their oversight of or
participation in, any investigation or remediation) and reasonable expenses of
investigation by engineers, environmental consultants and similar technical
personnel, (D) costs of remediation, cleanup, removal and disposal and (E)
reasonable attorney's fees and expenses) but excluding lost profits and any
other consequential damages (collectively, "Loss"), incurred or suffered by New
Anchor or any of its Affiliates arising out of or in connection with matters
arising or relating to Environmental Laws (as defined below) (including any
matter disclosed or required to be disclosed in Schedule 3.12 to the Asset
Purchase Agreement or in the Supplemental Environmental Notice which (y) relate
to or arise in connection with Anchor or any of its subsidiaries, the Purchased
Assets (as defined in the Asset Purchase Agreement), the Business (as defined in
the Asset Purchase Agreement) or any properties now or previously owned, leased
or operated by Anchor or any of its subsidiaries and (z) arise out of or in
connection with actions occurring (including offsite disposal of wastes or
Hazardous Substances) or conditions existing on or prior to the Closing Date
(collectively, the "Environmental Liabilities"). Notwithstanding the foregoing,
(i) Vitro shall not be liable to indemnify New Anchor or its Affiliates for any
Environmental Liability under this Section 6 which in any manner relates to or
arises in connection with the Rocky Mountain Bottling Company plant located in
Colorado or the properties located in Antioch, California or Hayward, California
or the Business or operations currently or previously conducted thereon; (ii)
Vitro shall not be liable to indemnify New Anchor or its Affiliates for any
Environmental Liability under this Section 6 unless and until the aggregate
amount of all such Environmental Liabilities exceeds $15,000,000 and New Anchor
or its Affiliates shall have actually paid the first $15,000,000 of
Environmental Liabilities; (iii) Vitro shall only be liable to indemnify New
Anchor or its Affiliates for 50% of the aggregate amount of Environmental
Liabilities which exceeds $15,000,000 but is less than or equal to $30,000,000
and only if such amount has actually been paid by New Anchor or its Affiliates;
(iv) Vitro shall be liable to indemnify New Anchor and its Affiliates for 100%
of the aggregate amount of Environmental Liabilities which exceeds $30,000,000
but is less than or equal to $45,000,000 but only if New Anchor or its
Affiliates have actually paid their share of the first $30,000,000 as set forth
in clauses (ii) and (iii) above; and (v) Vitro shall have no liability pursuant
to this Section 6 for any amount of Environmental Liabilities which exceeds
$45,000,000. Nothing contained in this Section 6 shall be construed to require
Vitro, and Vitro shall not otherwise be required, to indemnify or be liable to,
any persons or entities, other than New Anchor and its Affiliates for any Loss.
(b) Notwithstanding anything herein to the contrary, with respect to
environmental matters for which Vitro is potentially obligated to indemnify New
Anchor and its Affiliates pursuant to this Section 6, New Anchor shall have the
option to retain exclusive control of the resolution of any such environmental
matter, including the exclusive option to (i) conduct and obtain any tests,
reports, surveys and investigations, (ii) contact Governmental Entities, make
any report to such Governmental Entities and submit any remediation or
compliance plans to such Governmental Entities, (iii) prepare any work plan for
any remediation or correction of noncompliance, (iv) conduct or direct any such
remediation or correction of noncompliance and (v) control any proceeding,
action, litigation or claim.
(c) In performing any remedial, removal or cleanup activities (the
"Remedial Activities") in connection with this Section 6, New Anchor agrees that
it will use reasonable, cost
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effective methods under the circumstances, to be determined by taking into
account as a factor methods which will permit completion of any such Remedial
Activity prior to the expiration of the relevant indemnity period and allow the
use of the property as used as of the Closing Date; provided that New Anchor
shall, prior to initiating any Remedial Activity which would have a cost in
excess of $100,000 that would not represent a reasonable, cost effective method
of completing such Remedial Activity if the term of the indemnity were
indefinite, provide Vitro with a reasonably detailed description of the proposed
activity (it being understood and agreed that initial remedial plans and any
significant modifications thereto shall constitute a reasonably detailed
description) and a reasonable period of time, given the specific circumstances
(it being understood and agreed that a period of 30 calendar days shall
constitute a reasonable period of time unless an imminent and substantial
endangerment to human health or the environment exists in which event New Anchor
shall only be required to provide such prior notice, if any, as is reasonable
under the circumstances), to permit Vitro to comment on such proposed activity,
provided that failure to give such notice shall not relieve Vitro from any
liability under this Section 6 except to the extent that Vitro has been
prejudiced by such failure.
(d) New Anchor shall submit any invoices or reimbursement requests
for which it is seeking indemnification under this Section 6 to Vitro on a
quarterly basis, and Vitro shall promptly pay any such invoices or requests or,
if applicable, Vitro's proportionate share of such invoices or requests.
(e)(i) New Anchor shall provide to Vitro annual or semi-annual
status reports describing significant environmental projects covered by this
Section 6, and New Anchor shall provide to Vitro any information reasonably
requested by Vitro relating to the matters covered by this Section 6 promptly
after any such request.
(ii) If any Governmental Entity intends to take any action
which would be reasonably likely to result in a direct claim against Vitro under
this Section 6, New Anchor shall provide written notice thereof to Vitro
promptly after New Anchor has knowledge thereof, provided that failure to give
such notice shall not relieve Vitro from any liability under this Section 6
except to the extent that Vitro has been prejudiced by such failure. Subject to
clause (b) of this Section 6, Vitro shall have the right to participate with New
Anchor in resolving any such disputes with a Governmental Entity.
(f) Between the date of this Agreement and the Closing Date, Vitro
shall use all reasonable efforts to cause Anchor to provide New Anchor with a
list of environmental matters which have arisen or been discovered between the
date of this Agreement and the Closing Date (the "Supplemental Environmental
Notice") which constitute specific exceptions to the representations set forth
in Section 3.12 of the Asset Purchase Agreement. Vitro agrees that each item in
the Supplemental Environmental Notice shall be as specific as possible,
including disclosure as to the location, nature, extent and status of any
contamination. In the event that the parties disagree about whether an item
belongs on, or is sufficiently disclosed in, the Supplemental Environmental
Notice, the parties agree to negotiate in good faith as to the nature and
content of such disclosure. If the parties cannot agree, the parties shall
choose a mutually acceptable independent environmental consultant to determine
whether such item (i) constitutes a
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recognizable environmental condition and (ii) is sufficiently disclosed, and
shall abide by the decision of such consultant.
(g) Vitro's obligation to indemnify New Anchor and its Affiliates
under this Section 6 shall survive for six years after the Closing Date
(including any Losses actually incurred within such six-year period), provided
that Vitro's indemnification obligation shall survive for ten years after the
Closing Date (including any Losses actually incurred within such ten-year
period) in connection with any Environmental Liabilities arising out of or in
connection with
(i) (x) any obligations under the Industrial Site Recovery Act
(or the Environmental Cleanup Responsibility Act) at the property located
in Salem, New Jersey and (y) known groundwater contamination at the
properties located at Chattanooga, Tennessee (including any investigation,
remediation, or monitoring in connection with regional deep aquifer
contamination), Shakopee, Minnesota and Winchester, Indiana, and
investigations, remediation and monitoring of potential groundwater
contamination arising out of or in connection with contamination in the
area of the northern boundary of the railroad siding north of the
maintenance shop at the property located at Chattanooga, Tennessee;
(ii) off-site disposal of wastes or Hazardous Substances by
Anchor or any of its subsidiaries or in connection with any properties now
or previously owned, leased or operated by Anchor or any of its
subsidiaries, including liability under CERCLA; and
(iii) properties that were not owned, Leased or operated by
Anchor or any of its subsidiaries on the Closing Date but which were, at
some point prior to the Closing Date, owned, leased or operated by Anchor
or any of its Subsidiaries.
For purposes of this Section 6, the following terms shall have the
meanings set forth below:
"Anchor" and "subsidiary" shall include any entity which is, in
whole or in part, a predecessor of Anchor or any subsidiary of Anchor.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time and
any rules or regulations promulgated thereunder.
"Environmental Laws" means any and all federal, state, local or
foreign law, treaty, regulation, rule, judicial decision, judgment, order,
decree, injunction, permit or agreement relating to human health and
safety, the environment or to pollutants, contaminants, wastes or
chemicals or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substances, wastes or materials.
"Hazardous Substance" means any pollutant, contaminant or waste or
any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substance, waste or
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material, including petroleum, its derivatives, by-products and other
hydrocarbons, and any substance, material or chemical regulated under
Environmental Laws.
7. Indemnity. (a) Vitro hereby indemnifies New Anchor and its
Affiliates and holds each of them harmless from any and all Loss incurred or
suffered by New Anchor or any of its Affiliates arising out of any
misrepresentation or breach of warranty (disregarding any limitation on the
survival of representations and warranties contained in the Asset Purchase
Agreement) made by Anchor in (i) Section 3.05(b) of the Asset Purchase Agreement
(without giving any effect to the materiality qualification in such
representation and warranty) and (ii) Section 3.12(b) of the Asset Purchase
Agreement; provided that (X) Vitro shall not be liable for any Loss under clause
(i) above unless and until the aggregate amount of all such Losses exceeds
$3,750,000 and then only to the extent of such excess, and the liability of
Vitro for any Loss under clause (i) above shall not exceed $37,500,000 in the
aggregate and (Y) Vitro shall not be liable for any Loss under clause (ii) above
unless and until the aggregate amount of all such Losses exceeds $1,000,000 and
then only to the extent of such excess, and the liability of Vitro for any Loss
under clause (ii) above shall not exceed $37,500,000 in the aggregate; provided,
further, that Vitro shall not be liable for any Loss under clause (i) above if
(I) the Buyers have received written notice prior to the Closing under the Asset
Purchase Agreement of a material liability or obligation relating to the
Purchased Assets or the Business (as defined in the Asset Purchase Agreement)
which would be required to be disclosed on Schedule 3.05 to the Asset Purchase
Agreement and is not so set forth on such schedule and (II) the Closing under
the Asset Purchase Agreement occurs after the Buyers have waived the disclosed
breach of Section 3,05(b) of the Asset Purchase Agreement.
(b) The indemnity obligation of Vitro contained in this Section 7
shall terminate on the second anniversary of the Closing Date; provided that the
indemnity obligation of Vitro contained in this Section 7 shall survive the time
it would otherwise terminate if written notice of any claim, event, condition,
proceeding or other matter giving rise to such right to indemnity shall have
been given to Vitro prior to such time.
(c) Any person that may be entitled to indemnification under this
Section 7 (an "Indemnified Party") shall give written notice to Vitro with
reasonable promptness upon becoming aware of any claim or other facts upon which
a claim for indemnification will be based; provided that the failure to give
such notice shall not relieve Vitro from any liability under this Section 7,
except to the extent that Vitro has been prejudiced by such failure. The notice
shall set forth such information with respect thereto as is then reasonably
available to the Indemnified Party. Except as otherwise provided in this Section
7, with respect to any such claim or proceeding by or in respect of a third
party, Vitro shall have the right to direct, through counsel of its own
choosing, reasonably satisfactory to the Indemnified Party, the defense or
settlement thereof at its own expenses. If Vitro elects to assume the defense of
any such claim or proceeding, the Indemnified Party may participate in such
defense, but in such case the expenses of the Indemnified Party shall be paid by
the Indemnified Party; provided that the fees and expenses of one counsel plus
any local counsel (if necessary), for all Indemnified Parties shall be borne by
Vitro if representation of both Vitro and the Indemnified Parties by one counsel
would be inappropriate due to actual or potential differing interests between
Vitro and the Indemnified Parties. The Indemnified Party shall provide Vitro
with reasonable access to its records and
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personnel relating to any such claim, assertion, event or proceeding during
normal business hours and shall otherwise cooperate with Vitro in the defense or
settlement thereof, of Vitro shall reimburse the Indemnified Party for all its
reasonable out-of-pocket expenses in connection therewith. No such third party
claim may be settled by the Indemnified Party without the written consent of
Vitro, which consent shall not be unreasonably withheld; and Vitro shall not be
liable for any claim settled without its consent. If Vitro shall fail to
promptly defend or fail to promptly prosecute or withdraws from such defense,
the Indemnified Party shall have the right to undertake the defense or
settlement thereof, at Vitro's expense. If the Indemnified Party assumes the
defense of any such claim or proceeding pursuant to this Section and proposes to
settle such claim or proceeding prior to a final judgment thereon or to forego
any appeal with respect thereto, then the Indemnified Party shall give Vitro
prompt written notice thereof and Vitro shall have the right to participate in
the settlement or assume or reassume the defense of such claim or proceeding.
Notwithstanding anything to the contrary contained herein, Vitro may not settle
any claim or proceeding involving equitable relief against New Anchor or any of
its Affiliates without the prior written consent of New Anchor, which consent
shall not be unreasonably withheld.
8. Letters of Credit. New Anchor agrees that on the Closing Date,
New Anchor shall replace the Vitro letter of credit facilities described in
Schedule B hereto if and to the extent such letter of credit facilities relate
to the Purchased Assets or the Assumed Liabilities with letters of credit or
other arrangements satisfactory to the holders of such letters of credit. In
addition, New Anchor agrees that it shall reimburse Vitro for any draw under any
such letter of credit facility made after September 13, 1996 if and to the
extent (i) such letter of credit facility relates to the Purchased assets and
Assumed Liabilities and (ii) such draw results in an equivalent reduction in the
amount that the Buyers would otherwise have been required to pay in connection
with the Asset Purchase Agreement after giving full effect to the provisions
thereof.
9. Tampa Lease. New Anchor understands that Vitro has guaranteed all
obligations of Anchor under that certain Lease Agreement dated as of March 31,
1988 as modified and amended, (the "Lease") by and between Anchor and Fountain
Associates I, Ltd., a Florida limited partnership (the "Borrower"), as modified
and amended by that certain First Amendment to Lease dated as of June 16, 1992,
as further modified and amended by that certain Second Amendment to Lease dated
as of September 30, 1993 and as further modified and amended by that certain
Third Amendment to Lease dated as of February 22, 1995, and as further modified
by that certain Agreement dated as of March 31, 1996 (the "Waiver Agreement")
among Anchor, the Borrower and Citicorp Leasing, Inc. (the "Lender"), which
provided for the waiver of the default under the Lease pursuant to Section
9(a)(13) of the Lease (the "Lease Default"), through September 15, 1996, and
that certain Amended and Restated Agreement dated as of September 12, 1996 (the
"Amended and Restated Waiver Agreement") among Anchor, the Borrower and the
Lender, which provided for the waiver of the Lease Default through January 15,
1997, and the related Building Option Agreement dated as of March 31, 1988
between Anchor and the Borrower, as modified and amended by the First Amendment
to Building Option Agreement dated as of June 16, 1992, and as further modified
and amended by that certain Agreement dated as of June 16, 1992, and as further
modified and amended by the Waiver Agreement and the Amended and Restated Waiver
Agreement (collectively, the "Tampa Lease Obligations"). New Anchor confirms
that, if the Buyers proceed with the Closing under the Asset Purchase Agreement,
on the Closing Date New Anchor will assume the Lease and from and after
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the Closing Date will perform the Tampa Lease Obligations, subject to such
modifications, if any, as shall be made in the Tampa Lease Obligations in
accordance with the Asset Purchase Agreement, so that Vitro will not have to
make any payments in respect of the Tampa Lease Obligations under its guarantee
thereof.
9.A. Vitro Contribution. Vitro agrees that upon (i) replacement or
termination of the letter of credit facilities in accordance with Section 8,
(ii) reimbursement of any draws on the related letters of credit, (iii)
assumption of Tampa Lease Obligations in accordance with Section 9, and (iv)
delivery of an effective release of Vitro from any and all obligations and
claims by or on behalf of Anchor or its creditors' committee, Vitro shall
contribute $8.4 million to the bankruptcy estate of Anchor.
10. Use of Anchor Name. After the Closing Date, except as provided
in Section 5.06 of the Asset Purchase Agreement, Vitro shall not, and shall not
permit any of its Affiliates to, use the name or mark "Anchor" or "Anchor Glass"
or any derivative thereof for any commercial purpose.
11. Best Efforts of Consumers and New Anchor. Each of Consumers and
New Anchor agrees that it shall use its commercially reasonable efforts to
complete the transactions contemplated by the Asset Purchase Agreement as in
effect on the date hereof without any waiver, modification or amendment thereto
which is adverse to the interests of Vitro.
12. Further Assurances. From time to time, as and when requested by
any party hereto, the other parties shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions (subject to the terms and
conditions of this Agreement) as such other party may reasonably deem necessary
or desirable to consummate the transactions contemplated by this Agreement.
13. 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 assigns; provided that this Agreement and the rights
and obligations hereunder shall not be assigned by New Anchor, Consumers or
Vitro without the prior written consent of the other parties hereto.
14. No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person, other
than the parties hereto and such assigns, any legal or equitable rights
hereunder.
15. Expenses. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
16. Amendments. No amendment, modification or waiver in respect of
this Agreement shall be effective unless it shall be in writing and signed by
all parties hereto. No
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failure or delay by any party in exercising a right, power or privilege
hereunder shall operate as a waiver thereof 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.
17. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by confirmed fax or sent, postage prepaid, by registered, certified
or express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand, confirmed faxed or if mailed, three days after
mailing (one business day in the case of express mail or overnight courier
service), as follows:
(i) if to Consumers or New Anchor,
Consumers Packaging Inc.
401 The West Mall
Suite 900
Etobicoke, Ontario M9C 507
Canada
Attention: Chairman
Telecopy: (416) 232-3635
with copies to:
Jones Day Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
Attention: Marc S. Kirschner, Esq.
Telecopy: (212) 755-7306
Eckert Seamans Cherin & Mellott
42nd Floor - 600 Grant Street
Pittsburgh, PA 15219
Attention: C. Kent May, Esq.
Telecopy: (412) 566-6099
(ii) if to Vitro,
Vitro, Sociedad Anonima
Ave. Santa Engracia No. 400
Colonia Valle del Campestre
Garza Garcia, N.L. 66250, Mexico
Tel: 011-528-329-1272
Fax: 011-528-329-1372
Attention: Tomas Cantu Gonzalez
with a copy to:
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Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Tel.: (212) 474-1000
Fax: (212) 474-3700
Attention: Gregory M. Shaw, Esq.
18. Interpretation; Certain Definitions. (a) The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
(b) For all purposes hereof:
(i) "including" means including, without limitation; and
(ii) "person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or other
entity.
19. Fees and Commissions. (a) Vitro shall pay all fees or
commissions of Donaldson, Lufkin & Jenrette Securities Corporation and J.P.
Morgan & Co. Incorporated, which Vitro represents are the only investment
bankers, brokers or finders that have acted for Vitro which might be entitled to
any fee or commission in connection with this Agreement or the transactions
contemplated hereby.
(b) Consumers shall pay all fees or commissions of Rothschild Inc.,
which Consumers represents is the only investment banker, broker or finder that
has acted for Consumers which might be entitled to any fee or commission in
connection with this Agreement or the transactions contemplated hereby.
20. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
21. Entire Agreement. This Agreement and the Asset Purchase
Agreement contain the entire Agreement and understanding between all of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings relating to such subject
matter. Vitro shall not be liable or bound to New Anchor or Consumers, and New
Anchor and Consumers shall not be liable or bound to Vitro, in any manner by any
representations, warranties or covenants relating to such subject matter except
as specifically set forth herein or in the other documents referred to herein or
therein.
22. Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such
17
<PAGE> 18
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
23. Consent to Jurisdiction. Each party hereto irrevocably submits
to the exclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, (b) the United States District Court for the Southern District
of New York, and (c) to the extent applicable, the United States Bankruptcy
Court for the District of Delaware for the purposes of any suit, action or other
proceeding arising out of or related to this Agreement, any other document
referred to herein or any transaction contemplated hereby or thereby. Each party
hereto agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County or, to the extent applicable, the United States Bankruptcy Court for the
District of Delaware. Each party hereto further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction in this Section 23. Each party hereto irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County, (ii) the United States District Court for the Southern District of New
York or (iii) to the extent applicable, the United States Bankruptcy Court for
the District of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
24. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER DOCUMENT REFERRED TO
HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
25. Formation of New Anchor. As soon as possible after the date
hereof but in no event later than two (2) business days prior to the Closing
under the Asset Purchase Agreement, Consumers shall cause (i) New Anchor to be
duly formed and (ii) New Anchor to execute an addendum (the "Addendum") to this
Agreement pursuant to which New Anchor shall confirm that it is a party hereto
and it is in agreement with the terms hereof. Prior to the due formation of New
Anchor, Consumers shall be liable for all of the obligations and liabilities of
New Anchor set forth in this Agreement.
26. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
18
<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
VITRO, SOCIEDAD ANONIMA,
by /s/ Jose Antonio Lopez
-------------------------------
Name: Jose Antonio Lopez
Title: Chief Financial Officer
CONSUMERS PACKAGING INC.
by /s/ John J. Ghaznavi
-------------------------------
Name:
Title:
CONSUMERS PACKAGING INC.
ON BEHALF OF A NEW DELAWARE
CORPORATION TO BE FORMED BY
CONSUMERS PACKAGING INC. IN
ACCORDANCE WITH SECTION 25 HEREOF,
By /s/ John J. Ghaznavi
-------------------------------
Name:
Title:
19
<PAGE> 20
Schedule A
Vitro and its Affiliates may, directly or indirectly, solicit for
employment the following employees of Anchor:
1. Lee Farlander
2. L. Whalen
3. W. Stedeford
4. P. Hilferty
5. J. Torres
6. L. Bergholtz
7. Lazaro Casas
8. Claudio del Valle
9. Carlos Gutierrez
10. Luis Rendon
11. Francisco Romero
12. Alfonso G. Palacio
13. Jorge Trevino
14. Eduardo Taylor
15. Gerardo Salazar
<PAGE> 21
Schedule B
Letters of Credit
1. Bank of America National Trust and Savings Association established an
irrevocable standby letter of credit in favor of General Electric Capital
Corporation for drawings up to $2 million expiring on April 30, 1997,
which can be drawn at the request of an authorized representative of
Anchor or if Anchor is in default of its obligation, pursuant to Section
7.08 of the Lease Agreement dated as of June 30, 1995, to rebuild the
manufacturing unit located at Shop Eleven of its Henryetta, Oklahoma
facility.
2. Bank of America National Trust and Savings Association established an
irrevocable standby letter of credit in favor of Aetna Life and Casualty
for drawings up to $9.5 million expiring on April 30, 1997, which can be
drawn to secure obligations of Anchor to Aetna. Anchor's obligations to
Aetna under the policy consist of an obligation to make monthly deferred
workers compensation payments.
3. Bank of America National Trust and Savings Association established an
irrevocable standby letter of credit in favor of Central Valley Regional
Water Quality Control Board for drawings up to $632,000 expiring on April
30, 1997, which can be drawn upon certification that (a) it is payable
pursuant to rules issued under certain sections of Title 23 of the
California Code of Regulations and not to cover workers compensation or
certain other specified matters or (b) it is drawn on to cover taking
corrective action for all known or reasonably foreseeable releases from
closure and post-closure maintenance of a certain waste management unit
designated as a Class II Landfill.
4. Bank of America National Trust and Savings Association established an
irrevocable standby letter of credit in favor of Lockheed Martin Finance
Corporation for drawings up to $1 million expiring on April 30, 1997,
which can be drawn upon certification that Anchor has not paid amounts due
under Article 4 of Attachment A to Agreement 703451 effective November 1,
1995, as amended, relating to the payment of a fee which Anchor agreed to
pay over time in connection with the purchase of a hardware system from
Lockheed.
5. Bank of America National Trust and Savings Association established an
irrevocable standby letter of credit in favor of IBM Credit Corporation
for drawings up to $56,380 expiring on April 30, 1997, which can be drawn
upon certification that an event of default or a default by Anchor has
occurred under the terms of the installment payment master agreement, term
lease master agreement or general business lease agreement executed by
Anchor and IBM Credit Corporation relating to the purchase of certain AS
400 computer equipment.
<PAGE> 1
Exhibit 10.12
EXECUTION COPY
FIRST AMENDMENT dated as of February
4, 1997 (this "Amendment"), to the Agreement
dated as of December 18, 1996 (the "Vitro
Agreement"; capitalized terms used but not
otherwise defined herein shall have the
meanings assigned to such terms in the Vitro
Agreement), between Vitro, Sociedad Anonima,
a corporation organized under the laws of
Mexico ("Vitro"), Consumers Packaging Inc.,
a corporation organized under the federal
laws of Canada ("Consumers"), and Anchor
Glass Acquisition Corporation, a Delaware
corporation ("New Anchor").
WHEREAS, Vitro is undertaking the obligations set forth in the
Vitro Agreement in part to prevent the termination of the Seller Defined Benefit
Plans (the "Plans"); and
WHEREAS, in order to avert the termination by the PBGC of the
Plans, Vitro and the PBGC have entered into a Term Sheet dated as of January 29,
1997, pursuant to which, among other things, Vitro has agreed to provide a
contingent guarantee in favor of the PBGC; and
WHEREAS, the parties hereto recognize that the non-termination
of such Plans now and in the future is part of the on-going consideration of the
Vitro Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
understandings described above and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Amendment to the Vitro Agreement. (a) The Vitro
Agreement is hereby amended by adding a new Section 27 as follows:
"27. PBGC Guarantee. Notwithstanding anything to the contrary
contained herein, if after the Closing Date, any of the Seller
Defined Benefit Plans are terminated (unless pursuant to a
successful standard termination pursuant to Section 4041(b) of
ERISA), then Vitro shall, as of the date of termination cease
to have any continuing obligations under Sections 4, 5, 6 and
7 of this Agreement and all such obligations of Vitro shall be
null and void; provided, however, to the extent that any
obligation of Vitro arising under any such Section shall have
been incurred before the date of any such termination, Vitro
shall continue to be thereunder liable to such extent;
provided further that if any of such Plans are terminated
pursuant to Section 4042(a)(4) of ERISA, such obligations
shall terminate and become null and void only upon the PBGC's
demanding payment under or asserting that it may have a right
to payment under the PBGC Agreement (as defined below) or the
PBGC's otherwise taking any action in furtherance of the
foregoing."
<PAGE> 2
(b) The Vitro Agreement is hereby amended by adding a new
Section 28 as follows:
"28. Subrogation Rights of Vitro in respect of PBGC Guaranty.
New Anchor hereby acknowledges that Vitro and its Affiliates have subrogation
rights against New Anchor with respect to any and all payments made by Vitro or
any of its Affiliates under the contingent guarantee in favor of the PBGC
pursuant to that certain Term Sheet dated as of January 29, 1997 or the
agreement entered into pursuant thereto (as the same may be amended from time to
time, the "PBGC Agreement"), and New Anchor hereby waives, and agrees not to
assert, any defenses with respect to such subrogation rights."
(c) The Vitro Agreement is hereby amended by adding a new
Section 29 as follows:
"29. Rights of Vitro in respect of Vitro Guaranty of Tampa
Lease. (a) Vitro and its Affiliates shall have the right to set off and
otherwise apply any and all amounts owed by Vitro and any such
Affiliate to New Anchor under this Agreement against any and all Losses
of Vitro or any of its Affiliates arising in respect of and all
payments made by Vitro or any of its Affiliates in respect of that
certain Guaranty Agreement dated as of March 31, 1996, among Vitro,
Citibank, N.A. and Citicorp Leasing, Inc., as amended from time to
time, or any guaranty issued in replacement or substitution therefor
(collectively, "Tampa Payments"), irrespective of whether Vitro or any
such Affiliate shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of Vitro and its
Affiliates under the foregoing sentence are in addition to other rights
and remedies (including, without limitation, other rights of set-off)
that Vitro or any such Affiliate may have.
(b) In addition to the rights set forth in paragraph (a)
above, if New Anchor fails to reimburse Vitro or any of its Affiliates
in respect of any Tampa Payments within 30 business days after demand
therefor, Vitro and its Affiliates shall, as of such date, cease to
have any continuing obligations under Sections 4, 5, 6 and 7 of this
Agreement and all such obligations of Vitro and any such Affiliate
shall be null and void; provided, however, to the extent that any
obligation of Vitro or any such Affiliate arising under any such
Section shall have been incurred before such date, Vitro and any such
Affiliate shall continue to be thereunder liable to such extent."
SECTION 2. Vitro Agreement; Terms. Except for the amendments
expressly entered into pursuant to this Amendment, the Vitro Agreement shall
continue in full force and effect in accordance with the provisions thereof on
the date hereof. This Amendment shall apply and be effective only with respect
to the provisions of the Vitro Agreement specifically amended or modified
hereby. As used in the Vitro Agreement, the terms "Agreement", "this Agreement",
"herein", "hereinafter", "hereunder", "hereto" and words of similar import shall
mean from and after the date hereof unless the context otherwise specifically
requires, the Vitro Agreement as amended or modified by this Agreement.
2
<PAGE> 3
SECTION 3. Applicable Law. This Amendment shall be governed by
and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to conflicts of law principles of such State.
SECTION 4. Counterparts. This Amendment may be executed in one
or more counterparts, all of which shall be considered one and the same
Amendment, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 5. Headings. The headings of this Amendment are for
the purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
VITRO, SOCIEDAD ANONIMA,
by
/s/ Jose Antonio Lopez
-------------------------------
Name: Jose Antonio Lopez
Title: Chief Financial Officer
CONSUMERS PACKAGING INC.,
by
/s/ John J. Ghaznavi
-------------------------------
Name: John J. Ghaznavi
Title: Chief Executive Officer
ANCHOR GLASS ACQUISITION
CORPORATION,
by
/s/ John J. Ghaznavi
-------------------------------
Name: John J. Ghaznavi
Title: Chief Executive Officer
3
<PAGE> 1
Exhibit 10.13
WAIVER AGREEMENT
This WAIVER AGREEMENT is made and entered into as of February
5, 1997, by and between ANCHOR GLASS CONTAINER CORPORATION, a Delaware
corporation ("Anchor") and CONSUMERS PACKAGING INC., a corporation organized
under the federal laws of Canada ("Consumers").
WITNESSETH:
WHEREAS, Anchor has entered into an Asset Purchase Agreement
with Consumers and Owens-Brockway Glass Container Inc., a Delaware corporation
("OI"), dated as of December 18, 1996 (the "Asset Purchase Agreement") with
respect to the sale by Anchor to Consumers and OI of substantially all of the
assets of Anchor on the terms and conditions specified in the Asset Purchase
Agreement, which Asset Purchase Agreement has been approved by order of the
United States Bankruptcy court for the District of Delaware (the "Bankruptcy
Court") which has jurisdiction over the Bankruptcy Case filed by Anchor, as
debtor, pursuant to Chapter 11 of the Bankruptcy Code (Capitalized terms used
herein but not otherwise defined herein shall have the same meanings given them
in the Asset Purchase Agreement);
WHEREAS, pursuant to Section 2.01(i) of the Asset Purchase
Agreement Anchor agreed to transfer and assign to Consumers and OI, and
Consumers and OI agreed to purchase from Anchor, among other things, all of
Anchor's right, title and interest in, to and under all leases of real property
used or owned or held for use in the Business;
WHEREAS, pursuant to Section 2.03(ii) Consumers and OI agreed
to assume all liabilities and obligations of Anchor arising from and after the
Closing Date under all Included Contracts (such definition including all rights
under leases relating to the Purchased Assets or the Business);
WHEREAS, notwithstanding the provisions of Sections 2.01(i)
and 2.03(ii) of the Asset Purchase Agreement, Consumers desires not to purchase
from Anchor its rights under the six leases of real property described on
Schedule A annexed hereto (the "Leases") and Anchor is willing to waive the
obligations of Consumers to purchase the Leases and assume Anchor's liabilities
and obligations thereunder in exchange for the payment of cash and issuance of
securities of New Anchor as described herein;
NOW, THEREFORE, in consideration of the foregoing and for good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Anchor and Consumers hereby agree as follows:
<PAGE> 2
1. Waiver. Notwithstanding anything to the contrary contained
in the Asset Purchase Agreement, Anchor hereby waives, and releases Consumer
from, the obligation to purchase Anchor's right, title and interest in, to and
under the Leases and assume Anchor's liabilities and obligations under the
Leases. In furtherance of the foregoing, as between Anchor and Consumers, the
Purchased Assets to be acquired by Consumers pursuant to the Asset Purchase
Agreement shall not include Anchor's right, title and interest in, to and under
the Leases and (ii) the Assumed Liabilities to be assumed by Consumers pursuant
to the Asset Purchase Agreement shall not include Anchor's liabilities and
obligations under the Leases.
2. Consideration. (a) In consideration of the foregoing waiver
by Anchor, Consumers hereby agrees to pay to Anchor at the Closing under the
Asset Purchase Agreement, in addition to the Purchase Price provided for
therein, (i) the amount of $595,000 in cash plus (ii) an additional 3,320 shares
of Series A 10% Cumulative Convertible Preferred Stock of New Anchor and 898
shares of Class A Common Stock of New Anchor (collectively, the "Additional
Shares"). The Additional Shares shall have rights, privileges and preferences
identical to the Shares to be issued to Anchor pursuant to the Asset Purchase
Agreement.
(b) The parties hereto acknowledge that the consideration
provided for in paragraph 2(a) hereof was predicated on the assumption that the
allowed claims of the lessors under the Leases pursuant to Section 502(b)(6) of
the Bankruptcy Code would aggregate $1,083,385 (the "Base Amount"). If the
actual aggregate allowed claims of such lessors under the Leases (the "Actual
Claims") exceed the Base Amount for any reason, Consumers agrees to pay to
Anchor, promptly upon the determination of such allowed claims by order of the
Bankruptcy Court, additional consideration for the foregoing waiver by Anchor
equal to 64.6% of the amount by which the Actual Claims exceed the Base Amount
(the "Additional Consideration"). Such Additional Consideration, if any, shall
be paid (i) 85% in cash, (ii) 11.9% by issuance of additional shares of Series A
10% Cumulative Convertible Preferred Stock of New Anchor valued for such purpose
at $25 per share and (iii) 3.1% by issuance of additional shares of Common Stock
of New Anchor valued for such purpose at $24.50 per share. Any shares of New
Anchor issued pursuant to clauses (ii) and (iii) of the preceding sentence shall
be deemed to have been issued and shall be dated as of the Closing Date under
the Asset Purchase Agreement.
3. Assignment to New Anchor. Prior to the Closing, Consumers
shall have assigned to New Anchor all of its rights under this Waiver Agreement
and shall have caused New Anchor to assume all of the liabilities and
obligations of Consumers hereunder. Such assignment and assumption shall not
relieve Consumers of its liabilities and obligations under this Waiver
Agreement.
4. Governing Law, etc. This Waiver Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to the conflicts of law rules of such State. The provisions of Sections
13.11 (Consent to Jurisdiction) and 13.12 (Waiver of Jury Trial) of the Asset
Purchase Agreement shall be applicable to this Waiver Agreement as though fully
set forth herein.
IN WITNESS WHEREOF, each party has caused this Waiver
Agreement to be executed by its duly authorized representative as of the date
first written above.
2
<PAGE> 3
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ Carl H. Young, III
-------------------------------------------
Name: Carl H. Young, III
Title: Vice President
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
-------------------------------------------
By: John J. Ghaznavi
Title: Chairman & Chief Executive Officer
3
<PAGE> 4
SCHEDULE A
<TABLE>
<CAPTION>
Name Address City/State Zip Acres/Sq. Ft. Rent Per mth Term
<S> <C> <C> <C> <C> <C> <C>
Portland Whse 4440 E. 26th St. Vernon, CA 90023 220,000 $72,000 11/31/01
Wes-Flo, Inc. 5707 N. 54th St. Tampa, FL 33682 varies $ 2,333 mth to
mth
St. Louis Sales 410 Sovereign Court Manchester, MO 63011 1830
Office Ste. 8
Napa Sales 1804 Soscol Ave., Napa, CA 94559 3029
Office Ste 204
Pleasanton Sales 5994 W. Las Positas, Pleasanton, CA 94588 1940
Office Ste 115
La Palma Sales 5 Centerpointe Dr., La Palma, CA 90623 2305
Office Ste 170
</TABLE>
<PAGE> 1
EXHIBIT 10.14
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made as of this 5th day of
February, 1997, by and between CONSUMERS PACKAGING INC., a corporation organized
under the federal laws of Canada ("Consumers"), and ANCHOR GLASS ACQUISITION
CORPORATION, a corporation organized under the laws of the State of Delaware
("New Anchor").
BACKGROUND
A. Anchor Glass Container Corporation, a Delaware corporation
("Old Anchor"), Consumers and Owens-Brockway Glass Container Inc., a Delaware
corporation ("O-I"), are the parties to an Asset Purchase Agreement dated as of
December 18, 1996 (the "Asset Purchase Agreement") pursuant to which, among
other things, Old Anchor has agreed to sell to Consumers certain assets of Old
Anchor specified in, or in accordance with the terms of, the Asset Purchase
Agreement.
B. Consumers and Old Anchor are the parties to a Waiver
Agreement pursuant to which Old Anchor and Consumers agreed that in
consideration of the payment to Old Anchor of (i) Five Hundred Ninety Five
Thousand Dollars ($595,000) cash, (b) 3,320 shares of Series A 10% Cumulative
Convertible Preferred Stock of New Anchor, and (c) 898 shares of Class A Common
Stock of New Anchor, Old Anchor has agreed to release Consumers from its
obligation to assume the leases for the following facilities: (a) the Portland
Warehouse located in Vernon, California, (b) the West-Flo Warehouse located in
Tampa, Florida, (c) the St. Louis sales office located in Manchester, Missouri,
(d) the Napa sales office located in Pleasonton, California, and (f) the La
Palma sales office located in La Palma, California (the "Waiver Agreement"); and
C. Consumers and Old Anchor are the parties to an Amendment to
Asset Purchase Agreement pursuant to which Old Anchor's plant facilities located
at Corsicana, Texas, Huntington Park, California and San Leandro California were
excluded from the assets to be purchased by Consumers pursuant to the Asset
Purchase Agreement and the Purchase Price and the Estimated Purchase Price under
the Asset Purchase Agreement were reduced by $5,700,000.
D. Consumers and New Anchor desire to enter into this
Agreement to provide for (i) the assignment by Consumers to New Anchor of all of
Consumer's rights under the Asset Purchase Agreement, the Waiver Agreement and
the Amendment to Asset Purchase Agreement (collectively, the "Amended Asset
Purchase Agreement"), and (ii) the assumption by New Anchor of all of
<PAGE> 2
Consumers' liabilities and obligations under the Amended Asset Purchase
Agreement, all as hereinafter provided.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Assignment to and Assumption by New Anchor. Consumers hereby assigns
to New Anchor all of Consumers' rights under the Amended Asset Purchase
Agreement. New Anchor hereby accepts such assignment, assumes all of Consumers'
liabilities and obligations under the Amended Asset Purchase Agreement and,
agrees to perform all of Consumers' duties under the Amended Asset Purchase
Agreement. The foregoing assignment and assumption shall not relieve Consumers
of its liabilities and obligations under the Amended Asset Purchase Agreement.
2. Indemnification. Because nothing in this Assignment and Assumption
Agreement shall be construed so as to release Consumers from its liabilities and
obligations under the Amended Asset Purchase Agreement, New Anchor shall
indemnify and hold Consumers harmless from any damages or other costs sustained
by Consumers as a result of a failure by New Anchor to satisfy and perform the
duties of Consumers under the Amended Asset Purchase Agreement.
3. Miscellaneous.
(a) This Assignment and Assumption Agreement may not be
changed, modified or discharged, in whole or in part, except in a writing signed
by the parties hereto.
[Remainder of Page Left Intentionally Blank]
-2-
<PAGE> 3
(b) This Assignment and Assumption Agreement and the rights
and obligations of the parties hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first above written.
CONSUMERS PACKAGING INC.
By:/s/ John J. Ghaznavi
--------------------------
Name:John J. Ghaznavi
------------------------
Title:Chief Executive Officer
-----------------------
ANCHOR GLASS ACQUISITION
CORPORATION
By:/s/ John J. Ghaznavi
--------------------------
Name:John J. Ghaznavi
------------------------
Title:Chairman and Chief
-----------------------
Executive Officer
-----------------
-3-
<PAGE> 4
EXHIBIT A
Form of Addendum to Vitro Agreement
ADDENDUM
Anchor Glass Acquisition Corporation, a Delaware corporation ("New
Anchor"), is executing this Addendum in accordance with Section 25 of the
Agreement dated as of December 18, 1996 between VITRO, SOCIEDAD ANONIMA, a
corporation organized under the laws of Mexico, CONSUMERS PACKAGING INC., a
corporation organized under the federal laws of Canada, and CONSUMERS PACKAGING
INC. on behalf of New Anchor (the "Vitro Agreement").
New Anchor hereby confirms that it is a party to the Vitro Agreement
and that it is in agreement with the terms thereof and has caused this Agreement
to be duly executed by one of its officers as of the day of February, 1997.
Anchor Glass Acquisition Corporation
By:
---------------------------------
<PAGE> 1
Exhibit 10.15
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made
and entered into as of February 5, 1997, by and between ANCHOR GLASS CONTAINER
CORPORATION, a Delaware corporation ("Assignor"), and ANCHOR GLASS ACQUISITION
CORPORATION, a Delaware corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor has entered into an Asset Purchase Agreement with
Consumers Packaging Inc., a corporation organized under the federal laws of
Canada ("Consumers"), and Owens-Brockway Glass Container Inc., a Delaware
corporation ("OI"), dated as of December 18, 1996 (the "Asset Purchase
Agreement") with respect to the sale by Assignor to Consumers and OI of
substantially all of the assets of Assignor on the terms and conditions
specified in the Asset Purchase Agreement. Capitalized terms used herein but not
otherwise defined herein shall have the meanings given them in the Asset
Purchase Agreement; and
WHEREAS, as contemplated by the Asset Purchase Agreement, pursuant
to an Assignment and Assumption Agreement dated February 5, 1997, Consumers has
assigned all of its rights under the Asset Purchase Agreement to Assignee and
has caused Assignee to assume all of' the liabilities and obligations of
Consumers under the Asset Purchase Agreement; and
WHEREAS, Assignor has sold, assigned and transferred to Assignee,
and Assignee has purchased from Assignor, all of Assignor's right, title and
interest in and to the Purchased Assets (other than the OI Assets ) and Assignee
has assumed the Assumed Liabilities (other than the OI Assumed Liabilities); and
WHEREAS, pursuant to Section 9.01(a) of the Asset Purchase
Agreement, Consumers agreed to cause Assignee to assume sponsorship of the
Seller Defined Benefit Plans, (and assume the liability for any required
contributions with respect thereto accrued but not paid as of the Closing Date)
and the Seller Defined Contribution Plans, as well as the trusts maintained in
connection with such plans; and
WHEREAS, pursuant to Section 9.01(b) of the Asset Purchase
Agreement, Consumers agreed to cause Assignee to assume sponsorship of the
Anchor Glass Container Corporation Non-Qualified Additional Credited Service and
ERISA Excess Plan and the Diamond Bathhurst, Inc. Preferred Compensation Plan,
as well as the "rabbi trust" maintained in connection therewith; and
<PAGE> 2
WHEREAS, pursuant to Section 9.02(a) of the Asset Purchase Agreement,
Consumers agreed to cause Assignee to assume sponsorship of certain Employee
Plans and Benefit Arrangements;
NOW, THEREFORE, for and in consideration of the sale of the
Purchased Assets (other than the OI Assets) by Assignor to Assignee, the
assumption of the Assumed Liabilities (other than the OI Assumed Liabilities) by
Assignee and the receipt by Assignor of the Estimated Purchase Price and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Assignor and Assignee hereby agree as follows:
1. Assumption of Sponsorship. Assignee hereby assumes sponsorship
of: (i) the Anchor Glass Container Corporation Service Retirement Plan (the
"Service Retirement Plan"), the Pension Plan for Hourly Employees of Latchford
Glass Company and Associated Companies, (the "Latchford Hourly Plan") and the
Anchor Glass Container Corporation Retirement Plan for Salaried Employees (the
"Salaried Employees Plan") (collectively, the "Defined Benefit Plans"); (ii) the
Anchor Glass Container Corporation Salaried Savings Plan (the "Salaried Savings
Plan") and the Anchor Glass Container Corporation Hourly Employees Supplemental
Retirement Plan (the "Hourly Supplemental Retirement Plan") (collectively the
"Defined Contribution Plans"); (iii) the Anchor Glass Container Corporation
Non-Qualified Additional Credited Service and ERISA Excess Plan and the Diamond
Bathhurst, Inc. Preferred Compensation Plan (the "Nonqualified Plans"); (iv) the
Anchor Glass Container Corporation Group Insurance Plan for All Employees,
including insured health and/or life polices (HMOs Hourly Life Insurance,
Salaried Life Insurance, Dependent Life Insurance), self-insured plans (Hourly
Plan: Passive PPO or Comprehensive Major Medical, Dental; Salaried Plan: PPO,
Dental), Retiree Benefits (Salaried employees: life insurance, secondary program
to medicare or comprehensive medical plan; Hourly (AFGWU): life insurance and
medicare supplement program), short-term disability benefits for Hourly and
Salaried employees; (v) the Anchor Glass Container Corporation Travel Accident
Plan; (vi) the Anchor Glass Container Corporation Long-Term Disability Plan;
(vii) the Anchor Glass Container Corporation Health Care Flexible Spending
Account Plan; (viii) the Anchor Glass Container Corporation Dependent Care
Flexible Spending Account Plan; (ix) the Anchor Glass Container Corporation
Flexible Benefits Plan; (x) the Anchor Glass Container Corporation Medical and
Dental Cafeteria Plan; (xi) the Anchor Glass Container Corporation Health Care
Flexible Spending Account Plan for AFGWU Hourly Employees; (xii) the Anchor
Glass Container Corporation Medical and Dental Cafeteria Plan for AFGWU and GMP
Hourly Employees; and (xiii) the Anchor Glass Container Corporation
Executive/Key Employee Retention Plan (collectively the "Plans").
2. Amendment of Plans. Assignor hereby amends the Seller Defined
Benefit Plans and the Seller Defined Contribution Plans as follows:
a) Effective as of the Closing Date, the definition of "Board" in
section 1.15 of the Service Retirement Plan, section 1.06 of the
Salaried Employees Plan, section 1.13 of the Latchford Hourly Plan,
section 1.09 of the Salaried Savings Plan and section
2
<PAGE> 3
1.07 of the Hourly Supplemental Retirement Plan is amended to
provide that "(i) with respect to periods prior to February 5, 1997,
"Board" means the Board of Directors of Anchor or any committee of
such Board of Directors to whom the Board may delegate any of its
powers or functions under the Plan or Trust Agreement, and (ii) with
respect to periods on and after February 5, 1997, "Board" means the
Board of Directors of Anchor Glass Acquisition Corporation or any
committee of such Board of Directors to whom the Board may delegate
any of its powers or functions under the Plan or under the Trust
Agreement."
b) Effective as of the Closing Date, the first sentence of the
definition of "Employer" in section 1.26 of the Service Retirement
Plan, section 1.11 of the Salaried Employees Plan, section 1.21 of
the Latchford Hourly Plan, section 1.17 of the Salaried Savings Plan
and section 1.15 of the Hourly Supplemental Retirement Plan is
amended to provide that "(i) with respect to periods prior to
February 5, 1997, "Employer" means Anchor Glass Container
Corporation or any other employer who with the consent of the Board
adopts this Plan, and (ii) with respect to periods on and after
February 5, 1997, "Employer" means Anchor Glass Acquisition
Corporation or any other employer who with the consent of the Board
adopts this Plan."
3. Assumption of Liabilities. Assignee hereby assumes and agrees to
pay, honor, perform and discharge on the Closing Date all liabilities (other
than OI Assumed Liabilities) related to the Plans, including liabilities to the
PBGC, which are due and unpaid as of the Closing Date and to pay, honor, perform
and discharge when due all liabilities related to the Plans; provided, however,
that Assignee does not assume any liability for excise tax, related tax, penalty
or interest due to the Internal Revenue Service arising out of the failure of
Assignor to contribute to the Defined Benefit Plans.
4. Excluded Liabilities. Nothing contained herein shall be construed
to effect an assignment by Assignor or assumption by Assignee of the Excluded
Liabilities.
5. Other Benefit Plan Obligations. Nothing contained herein shall be
construed to limit the obligations of Assignee under the Asset Purchase
Agreement, the Collective Bargaining Agreements, applicable law or otherwise
with respect to the Employee Plans and Benefit Arrangements assumed hereunder.
6. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
principles of conflicts of law.
3
<PAGE> 4
IN WITNESS WHEREOF, each party has caused this Agreement to be
executed by its duly authorized representative as of the date first written
above.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ Mark A. Kirk
-----------------------------------
Name: Mark A. Kirk
Title: Senior Vice President
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ John J. Ghaznavi
-----------------------------------
Name:
Title:
4
<PAGE> 1
EXHIBIT 10.16
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made as of this 5th day of
February, 1997, by and between CONSUMERS PACKAGING INC., a corporation organized
under the federal laws of Canada ("Consumers"), and ANCHOR GLASS ACQUISITION
CORPORATION, a corporation organized under the laws of the State of Delaware
("New Anchor").
BACKGROUND
A. Anchor Glass Container Corporation, a Delaware corporation
("Old Anchor"), Consumers and Owens-Brockway Glass Container Inc., a Delaware
corporation ("O-I") are the parties to an Asset Purchase Agreement dated as of
December 18, 1996 (the "Asset Purchase Agreement") pursuant to which, among
other things, Old Anchor has agreed to sell to Consumers certain assets of Old
Anchor specified in, or in accordance with the terms of, the Asset Purchase
Agreement.
B. Consumers is party to (i) the Commitment Letter dated
December 2, 1996 from Bankers Trust Company and an indemnification Letter of the
same date from Bankers Trust Company (the "BTC Letters, (ii) a Commitment Letter
dated December 2, 1996 from BT Securities Corporation (the "BTSC Letter"), (iii)
a Commitment Letter dated December 2, 1996 and a supplemental letter of the same
date from BT Commercial Corporation (the "BTCC Letters"), and (iv) a letter
dated as of July 17, 1996 from Rothschild Inc. and amendatory letter dated
January 16, 1997 from Rothschild Inc. (the "Rothschild Letters").
C. Consumers and New Anchor desire to enter into this
Agreement to provide for (i) the assignment by Consumers to New Anchor of all of
Consumer's rights under the BTCo Letters, the BTSC Letter, the BTCC Letters and
the Rothschild Letters and (ii) the assumption by New Anchor of all of
Consumers' liabilities and obligations under the BTCo Letters,, the BTSC Letter,
the BTCC Letters and the Rothschild Letters, all as hereinafter provided.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Assignment to and Assumption by New Anchor. Consumers hereby assigns
to New Anchor all of Consumers' rights under the BTCo Letters, the BTSC Letter,
the BTCC Letters and the Rothschild Letters. New Anchor hereby accepts such
assignment, assumes all of Consumers' liabilities and obligations under the BTCo
Letters, the BTSC Letter, the BTCC Letters and the Rothschild Letters and,
agrees to perform all of Consumers' duties under the BTCo Letters, the BTSC
Letter, the BTCC Letters
<PAGE> 2
and the Rothschild Letters, except for the obligation to pay an aggregate of
$6,000,000 in fees, while obligation is retained by Consumers. The foregoing
assignment and assumption shall not relieve Consumers of its liabilities and
obligations under the BTCo Letters, the BTSC Letter, the BTCC Letters and the
Rothschild Letters.
2. Indemnification. Because nothing in this Assignment and Assumption
Agreement shall be construed so as to release Consumers from its liabilities and
obligations under the BTCo Letters, the BTSC Letter, the BTCC Letters and the
Rothschild Letters, New Anchor shall indemnify and hold Consumers harmless from
any damages or other costs sustained by Consumers as a result of a failure by
New Anchor to satisfy and perform the duties of Consumers under the BTCo
Letters, the BTSC Letter, the BTCC Letters and the Rothschild Letters, other
than the retained obligation of Consumers to pay an aggregate of $6,000,000 in
fees.
3. Miscellaneous.
(a) This Assignment and Assumption Agreement may not be
changed, modified or discharged, in whole or in part, except in a writing signed
by the parties hereto.
[Remainder of Page Left Intentionally Blank]
-2-
<PAGE> 3
(b) This Assignment and Assumption Agreement and the rights
and obligations of the parties hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first above written.
CONSUMERS PACKAGING INC.
By:/s/ John J. Ghaznavi
--------------------------
Name:John J. Ghaznavi
------------------------
Title:Chief Executive Officer
-----------------------
ANCHOR GLASS ACQUISITION
CORPORATION
By:/s/ John J. Ghaznavi
--------------------------
Name:John J. Ghaznavi
------------------------
Title:Chairman and Chief
------------------
Executive Officer
-----------------
-3-
<PAGE> 4
EXHIBIT A
Form of Addendum to Affiliate Transaction Agreement
<PAGE> 5
ADDENDUM
The Undersigned ("Subsidiary") is executing this Addendum in accordance
with Section 6 of the Agreement dated February __, 1997 by and among Anchor
Glass Acquisition Corporation, the "Affiliated Companies" named therein and BT
Commercial Corporation ("the Affiliated Transaction Agreement").
Subsidiary hereby confirms that it is a party to the Affiliated
Transaction Agreement and that it is in agreement with the terms thereof and has
caused this Agreement to be duly executed by one of its officers as of the ___
day of ___________, ____.
[Subsidiary]
By:________________________
<PAGE> 1
Exhibit 10.17
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
This BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement") is made and entered into as of February 5, 1997, by and between
ANCHOR GLASS CONTAINER CORPORATION, a Delaware corporation ("Assignor") and
ANCHOR GLASS ACQUISITION CORPORATION, a Delaware corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor has entered into an Asset Purchase Agreement
with Consumers Packaging Inc. ("Consumers") and Owens-Brockway Glass Container
Inc. ("OI"), dated as of December 18, 1996 (the "Asset Purchase Agreement") with
respect to the sale by Assignor to Consumers and OI of substantially all of the
assets of Assignor on the terms and conditions specified in the Asset Purchase
Agreement (Capitalized terms used herein but not otherwise defined herein shall
have the meanings given them in the Asset Purchase Agreement);
WHEREAS, as contemplated by the Asset Purchase Agreement,
pursuant to an Assignment and Assumption Agreement dated February 5, 1997,
Consumers has assigned all of its rights under the Asset Purchase Agreement to
Assignee and has caused Assignee to assume all of the liabilities and
obligations of Consumers under the Asset Purchase Agreement; and
WHEREAS, Assignor desires to sell, assign and transfer to
Assignee, and Assignee desires to purchase from Assignor, all of Assignor's
right, title and interest in and to the Purchased Assets (other than the OI
Assets) and Assignee agrees to assume the Assumed Liabilities (other than the OI
Assumed Liabilities);
NOW, THEREFORE, for and in consideration of the sale of the
Purchased Assets (other than the OI Assets) by Assignor to Assignee, the
assumption of the Assumed Liabilities (other than the OI Assumed Liabilities) by
Assignee and the receipt by Assignor of the Estimated Purchase Price and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Assignor and Assignee hereby agree as follows:
1. Assignment. Assignor hereby grants, bargains, sells,
assigns, transfers, conveys, sets over and delivers to Assignee, all of its
right, title and interest in the Purchased Assets (other than the OI Assets)
pursuant to, and upon the terms set forth in, the Asset Purchase Agreement.
TO HAVE AND TO HOLD all such Purchased Assets (other than the
OI Assets) hereby sold and transferred to Assignee forever.
1
<PAGE> 2
IN WITNESS WHEREOF, each party has caused this Agreement to be
executed by its duly authorized representative as of the date first written
above.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ Carl H. Young, III
---------------------------------
Name: Carl H. Young, III
Title: Vice President
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ John J. Ghaznavi
---------------------------------
Name:
Title:
2
<PAGE> 1
EXHIBIT 10.18
ASSIGNMENT
WHEREAS, Anchor Glass Container Corporation, a Delaware corporation,
having an office at 1 Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, Florida
33634 (herein "ASSIGNOR") is the owner of all right, title and interest, for all
countries, in and to any and all inventions and improvements which are disclosed
and claimed, and any and all improvements which are disclosed but not claimed,
in the following United States Patent Applications and Patents (said inventions,
improvements, patent applications and patents collectively referred to herein as
"PATENT PROPERTY"):
<TABLE>
<CAPTION>
Patent Title Patent No. Issue Date
------------ ---------- ----------
<S> <C> <C>
Box Separator 4,144,995 March 20, 1979
Electronic Apparatus and Method for 4,149,621 April 17, 1979
Control of Container Orienting Machinery
Thermoplastic Ink Decorated Polymer 4,265,947 May 5, 1981
Coated Glass Articles
Liquor Flask Orienter 4,308,943 January 5, 1982
Container Masking and Coating Apparatus 4,319,543 March 16, 1982
</TABLE>
<TABLE>
<CAPTION>
Patent Application Title Serial No. Filing Date
------------------------ ---------- -----------
<S> <C> <C>
Ornamental Design of a Bottle Des. 29/040,135 June 9, 1995
Ornamental Design of a Bottle Des. 29/051,870 March 8, 1996
Ornamental Design of a Bottle Des. 29/051,289 March 8, 1996
Ornamental Design of a Bottle Des. 29/051,869 March 8, 1996
Beverage Bottle Des. 29/056,085 June 21, 1996
</TABLE>
AND is the owner of an undivided 50% interest for all countries, in and
to any and all inventions and improvements which are disclosed and claimed, and
any and all improvements which are disclosed but not claimed, in the following
United States Design Patent (said inventions, improvements and patents herein
collectively referred to herein as "DESIGN PROPERTY"):
<TABLE>
<CAPTION>
Patent Title Patent No. Issue Date
------------ ---------- ----------
<S> <C> <C>
Ornamental Design of a Bottle Des. 366,209 January 16, 1996
</TABLE>
AND WHEREAS Anchor Glass Acquisition Corporation, a Delaware
corporation (herein "ASSIGNEE"), is desirous of acquiring ASSIGNOR'S entire
right, title, and interest in and to said PATENT PROPERTY and the inventions and
improvements therein disclosed;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, and in accordance with its obligations under the Asset
Purchase Agreement dated December 18, 1996, to which ASSIGNOR and Consumers
Packaging, Inc. (which assigned all of its rights and obligations under the
Asset Purchase Agreement to ASSIGNEE), and Owens-Brockway Glass Container Inc.
are parties, and the understanding underlying said Agreement, ASSIGNOR hereby
assigns, sells, transfers, and sets over unto said ASSIGNEE the entire right,
title, and interest in and to said PATENT PROPERTY and DESIGN PROPERTY and the
inventions and improvements therein disclosed for the United States and all
foreign countries and any Letters Patent which may issue therefor in the United
States and all foreign countries and all divisions, reissues, continuations,
renewals, and/or extensions thereof including all priority rights under the
International Convention associated therewith for each country and the Union,
said assignee to have and to hold the interests herein assigned to the full ends
of the terms of said Letters Patent and any and all divisions, reissues,
continuations, renewals, and/or
<PAGE> 2
extensions thereof, respectively, as fully and entirely as the same would have
been held and enjoyed by ASSIGNOR had this assignment not been made.
The Commissioner of Patents and Trademarks is requested to issue such
Letters Patent in accordance herewith. ASSIGNOR covenants that it is the lawful
owner of the PATENT PROPERTY and DESIGN PROPERTY, inventions, and improvements,
that the same are unencumbered, that no license has been granted to make, use,
or vend the said inventions or improvements or any of them, and that it has the
full right to make this assignment.
And for the consideration aforesaid, ASSIGNOR agrees that it will
communicate to said ASSIGNEE or the representatives thereof any facts known to
ASSIGNOR respecting said inventions and improvements, and will, upon request,
but at ASSIGNEE's expense, testify in any legal proceedings, sign all lawful
papers, execute all divisional, reissue, continuation, renewal, and/or extension
applications, make all rightful oaths, and generally do all other and further
lawful acts, deemed necessary or expedient by said assignee or by counsel for
said assignee, to assist or enable said assignee to obtain and enforce full
benefits from the rights and interests herein assigned.
EXECUTED February 5, 1997.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ Mark A. Kirk (SEAL)
-------------------------------
Title: Senior Vice President
----------------------------
State of New York :
: ss.
County of New York :
Before me, a Notary Public in and for the said County and State,
personally appeared Mark A. Kirk, who acknowledged that he/she is the person who
executed the foregoing assignment and acknowledged it to be his/her free and
voluntary act and deed.
Witness my hand and notarial seal this 4th day of February, 1997.
/s/ Beth A. Shindler
----------------------------------------
Notary Public
(NOTARIAL SEAL)
- 2 -
<PAGE> 1
EXHIBIT 10.19
TRADEMARK ASSIGNMENT
Whereas, Anchor Glass Container Corporation, a Delaware
corporation, having an office at 1 Anchor Plaza, 4343 Anchor Plaza Parkway,
Tampa, Florida 33634 (herein "ASSIGNOR"), is the owner of all worldwide common
law and registered right, title and interest in and to the following trademarks
and the United States applications and registrations herein identified (said
marks and registrations hereinafter collectively referred to as "THE MARKS"):
<TABLE>
<CAPTION>
Trademark Registration Registration No. Int'l. Class
---------------------- ---------------- ------------
<S> <C> <C>
STELLAR 1,953,772 21
Cornucopia Design 1,265,032 21
GOLDEN HARVEST and 1,300,589 21
Cornucopia Design
Anchor Design 1,320,769 21
LINELITES 1,929,484 21
Trademark Application Serial No. Int'l. Class
--------------------- ---------- ------------
LASTING IMPRESSIONS 75/037,786 42
SPLASH 75/088,093 21
COUNTRY WICKS (filed 12/31/96) 4
</TABLE>
Whereas, Anchor Glass Acquisition Corporation, a Delaware
corporation (herein "ASSIGNEE"), is desirous of acquiring all worldwide right,
title and interest in THE MARKS and the goodwill associated therewith.
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, and in accordance with its obligations under
the Asset Purchase Agreement dated December 18, 1996, to which the ASSIGNOR and
Consumers Packaging, Inc. (which assigned all of its rights and obligations
under the Asset Purchase Agreement to ASSIGNEE), and Owens-Brockway Glass
Container Inc. are parties, and the understanding underlying said Agreement,
said ASSIGNOR does hereby assign unto said ASSIGNEE all worldwide right, title
and interest in and to THE MARKS together with the goodwill of the business
symbolized by THE MARKS.
<PAGE> 2
ANCHOR GLASS CONTAINER CORPORATION
By /s/ Mark A. Kirk
Title Senior Vice President
Date February 5, 1997
State of New York :
: ss:
County of New York :
Before me, a Notary Public in and for the said County and
State, personally appeared Mark A. Kirk, who acknowledged that he/she is the
person who executed the foregoing Assignment and acknowledged it to be his/her
free and voluntary act and deed.
Witness my hand and notarial seal this 4th day of February 1997.
/s/ Beth A. Shindler
------------------------------
Notary Public
(NOTARY SEAL)
- 2 -
<PAGE> 1
EXHIBIT 10.20
FOREIGN TRADEMARK ASSIGNMENT
Whereas, Anchor Glass Container Corporation, a Delaware
corporation, having an office at 1 Anchor Plaza, 4343 Anchor Plaza Parkway,
Tampa, Florida 33634 (herein "ASSIGNOR"), is the owner of all worldwide common
law and registered right, title and interest in and to the following foreign
trademarks and registrations herein identified (said marks and registrations
hereinafter collectively referred to as the "FOREIGN MARKS"):
<TABLE>
<CAPTION>
Country Mark Registration No.
<S> <C> <C>
Argentina GLASSCAN 1,824,635
Brazil GLASSCAN 816528640
Canada LINELITES 733,175
Canada STELLAR 778,038
Canada Anchor Design 324,040
Mexico LINELITES 502,888
Mexico STELLAR 491,744
Mexico GLASSCAN 416,585
Uruguay GLASSCAN 249,589
</TABLE>
Whereas, Anchor Glass Acquisition Corporation, a Delaware
corporation (herein "ASSIGNEE"), is desirous of acquiring all worldwide right,
title and interest in REGISTERED MARKS and the goodwill associated therewith.
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, and in accordance with its obligations under
the Asset Purchase Agreement dated December 18, 1996, to which ASSIGNOR and
Consumers Packaging, Inc. (which assigned all of its rights and obligations
under the Asset Purchase Agreement to ASSIGNEE), and Owens-Brockway Glass
Container Inc. are parties, and the understanding underlying said Agreement,
said ASSIGNOR does hereby assign unto said ASSIGNEE worldwide all right, title
and interest in and to the FOREIGN MARKS together with the goodwill of the
business symbolized by the FOREIGN MARKS and hereby agrees to execute any
additional documents necessary to perfect ASSIGNEE's title in said FOREIGN
MARKS.
<PAGE> 2
ANCHOR GLASS CONTAINER CORPORATION
By /s/ Mark A. Kirk
--------------------------------
Title Senior Vice President
Date February 5, 1997
State of New York :
: ss:
County of New York :
Before me, a Notary Public in and for the said County and
State, personally appeared Mark A. Kirk, who acknowledged that he/she is the
person who executed the foregoing Assignment and acknowledged it to be his/her
free and voluntary act and deed.
Witness my hand and notarial seal this 5th day of February 1997.
/s/ Beth A. Shindler
---------------------------
Notary Public
(NOTARY SEAL)
- 2 -
<PAGE> 1
EXHIBIT 10.21
COPYRIGHT ASSIGNMENT
Anchor Glass Container Corporation, a Delaware corporation,
having an office at 1 Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, Florida
33634 (herein "ASSIGNOR") in accordance with its obligations under the Asset
Purchase Agreement dated December 18, 1996, by and among ASSIGNOR,
Owens-Brockway Glass Container Inc. and Consumers Packaging, Inc. (the
obligations of Consumers Packaging Inc. under the Asset Purchase Agreement
having been assigned to Anchor Glass Acquisition Corporation) (Anchor Glass
Acquisition Corporation herein called "ASSIGNEE"), and the understanding
underlying the Asset Purchase Agreement, hereby assigns to said ASSIGNEE all of
its worldwide right, title and interest to the copyright and any related
intellectual property rights that exist in the following works, copyrights and
United States registrations (herein "WORKS") and in and to all renewals and
extensions of the copyrights and right to seek copyright for the WORKS that may
now or hereinafter be secured or securable under the laws of the respective
countries:
<TABLE>
<CAPTION>
Name Registration No.
---- ----------------
<S> <C>
Party Jar VA733-169
Oriental Floral Jar VA733-170
Floral Grid Jar VA733-171
Flower Garden Jar VA733-172
Heart Sampler Jar VA733-173
Hearts Galore Jar VA733-174
Modern Floral Jar VA733-175
Ivy Jar VA733-176
Rose Buds Jar VA733-177
Roosters Jar VA733-178
Plaid Jar VA733-179
Peach Blossom Jar VA733-180
Crocus jar VA733-181
Cows Jar VA733-182
Contemporary Grid Jar VA733-183
Cherries Jar VA733-184
Checkerboard Scribble Jar VA733-185
Celestial Jar VA733-186
Victorian Rose Jar VA733-187
Wild Iris Jar VA733-188
Assorted Fruit Jar VA733-189
Splatters 1 Jar VA733-190
Splatters 2 Jar VA733-191
Surfing Suntea Jar VA733-192
Sunrise Suntea Jar VA733-193
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Name Registration No.
---- ----------------
<S> <C>
Scribble Stripes Jar VA733-194
Scribble Fish Jar VA733-195
Tropical Birds Jar VA733-196
Tropical Fish Jar VA733-197
Tulips Jar VA733-198
Sailboats Jar VA733-199
</TABLE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal in the
City of New York and State of New York this 5th day of February, 1997.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ Mark A. Kirk
--------------------------------
Title: Senior Vice President
Date: February 5, 1997
State of New York :
: ss:
County of New York :
Before me, a Notary Public in and for the said County and State,
personally appeared Mark A. Kirk who acknowledged that he/she is the person
who executed the foregoing assignment and acknowledged it to be his/her free
and voluntary act and deed.
Witness my hand and notarial seal this 4th day of February 1997.
/s/ Beth A. Shindler
---------------------------
Notary Public
(NOTARIAL SEAL)
- 2 -
<PAGE> 1
Exhibit 10.22
AGREEMENT
AGREEMENT dated as of February 5, 1997, between The Travelers
Indemnity Company and Its Affiliates including The Aetna Casualty and Surety
Company and their predecessors ("Travelers/Aetna") and Anchor Glass Acquisition
Corporation, a Delaware Corporation ("New Anchor").
RECITALS
A. Travelers/Aetna issued workers compensation, general
liability, products liability, and automobile liability insurance policies to
Anchor Glass Container Corporation ("Anchor" or "Debtor"), and Travelers/Aetna
and Anchor entered into corresponding premium and reimbursement agreements (the
insurance policies and agreements, together, "Policies").
B. Anchor's obligations to pay liabilities and expenses
relating to claims arising under the Policies prior to January 1, 1997
("Obligations") are backed by a $9,500,000.00 letter of credit no. LASB-219420
issued by Bank of America International Trade Banking Division in favor or
Travelers/Aetna ("Existing LOC").
C. Pursuant to the Asset Purchase Agreement dated December 18,
1996 (Asset Purchase Agreement"), among the Debtor, Consumers Packaging Inc.,
and Owens-Brockway Glass Container Inc., and the Order dated December 20, 1996
that approves (i) the Asset Purchase Agreement and (ii) the assumption and
assignment of certain executory contracts, upon the closing of the transactions
pursuant to the Asset Purchase Agreement, the Policies will be assumed by the
Debtor and assigned to New Anchor, and New Anchor will assume the Obligations
related to any of the assumed Policies up to the aggregate amount of $30,614,000
("Aggregate Amount").
<PAGE> 2
D. Pursuant to the Agreement dated as of December 18, 1996
among Vitro, Sociedad Anonima, Consumers Packaging Inc., and Consumers on behalf
of New Anchor, the Existing LOC will be replaced by a new $9,500,000.00 letter
of credit ("New LOC") in favor of Travelers/Aetna. The New LOC will be in form
and content, and from an issuer, satisfactory to Travelers/Aetna.
E. Travelers/Aetna agrees to accept the New LOC, and surrender
the Existing LOC to issuer upon the closing of the transactions set forth in the
Asset Purchase Agreement, including New Anchor's assumption of the Policies and
the Obligations up to the Aggregate Amount.
F. Travelers/Aetna and New Anchor seek to specify the
circumstances constituting defaults pursuant to which Travelers/Aetna may, among
other things, draw the New LOC.
THEREFORE, Travelers/Aetna and New Anchor agree as follows:
1. Defaults. Each of the following will be a default:
(a) After the closing of the transactions
contemplated by the Asset Purchase Agreement, New
Anchor fails to pay any Obligations to
Travelers/Aetna (or its assignee) when due.
(b) New Anchor fails to maintain the New LOC or any
renewal, replacement, or amendment of it or fails to
provide notice of renewal or replacement of the New
LOC at least sixty (60) days prior to any expiration
thereof.
(c) New Anchor becomes insolvent or unable to pay its
debts as they become due or commences or has
commenced against it a case or proceeding under
applicable bankruptcy, insolvency, or similar laws.
2. Remedies.
(a) Upon a payment default as described in paragraph
1(a) hereof, Travelers/Aetna may provide written
notice to New Anchor of such
2
<PAGE> 3
default. If such default is not cured within three
business days of receipt of notice, Travelers/Aetna
may immediately:
(i) satisfy any amounts then due to
Travelers/Aetna by drawing on the New LOC or
on any letter of credit held by
Travelers/Aetna up to the amounts then due
and applying the amounts so drawn to all or
a portion of the amounts then due; and
(ii) pursue any and all other legal and
equitable rights and remedies available
under applicable law.
(b) Upon any default other than a payment
default as described in paragraph 1(a) hereof,
Travelers/Aetna may immediately:
(i) consider due and payable all
Obligations, including Obligations accruing
in the future;
(ii) satisfy amounts due to Travelers/Aetna
by drawing up to the full amount of the new
LOC or any letter of credit held by
Travelers/ Aetna and hold the proceeds of
any letter of credit until such time as
Travelers/Aetna has determined that the
Obligations up to the Aggregate Amount are
final and paid; and
(iii) pursue any and all other legal and
equitable rights and remedies, including
collection of the balance of the Obligations
up to the Aggregate Amount available under
applicable law.
3. Policies. The Policies and the rights and obligations
of Travelers/Aetna and New Anchor, as assignee, remain unchanged except as
modified by the Asset Purchase Agreement and this Agreement.
4. Notices. All notice, demands or communications
required or permitted to be given hereunder shall be in writing and shall deemed
to have been received when delivered personally or by electronic facsimile,
receipt confirmed (with a hard copy sent within one (1) business day by other
means described in this paragraph), to the party designated to receive such
notice, or on the date following the day delivered by sender to a nationally
recognized overnight courier for overnight priority delivery, directed to the
following addresses or to such other addresses as any party may reasonably
designate by written notice to the other party:
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To New Anchor: Mr. John Ghaznavi
Chief Executive Officer
Consumer Packaging Inc.
401 The West Mall, Suite 900
Etobicoke, Ontario M9C5J7
Phone: (416) 232-3209
Fax: (416) 232-3635
Mr. John Ghaznavi
Glenshaw Glass
3140 William Flinn Hwy.
Allison Park, Pennsylvania 15101
Phone: (412) 487-7061
Fax: (412) 487-0390
With a copy to: C. Kent May, Esq.
Eckert Seamans Cherin & Mellott
800 Grant Street, 42nd Fl.
Pittsburgh, Pennsylvania 15219
Phone: (412) 566-6037
Fax: (412) 566-6099
To Travelers/Aetna: Mr. Frank D. Judice
Second Vice President
The Travelers Indemnity Company
and its affiliates including The
Aetna Casualty and Surety Company
One Tower Square
Hartford, Connecticut 06183
Phone: (860) 954-0896
Fax: (860) 277-2650
With a copy to: Ralph Chin, Esq.
Counsel to The Travelers Indemnity
Company and its affiliates including
The Aetna Casualty and Surety Company
One Tower Square
Hartford, Connecticut 06183
Phone: (860) 954-5053
Fax: (860) 277-9407
5. Nothing herein shall affect the rights of New Anchor
or Consumers Packaging, Inc. with respect to the obligations of Owens-Brockway
Glass Container Inc. to New Anchor and Consumers Packaging Inc. under the Asset
Purchase Agreement.
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<PAGE> 5
6. Miscellaneous. This Agreement (a) cannot be changed or
terminated except in a writing executed by the parties to this Agreement and (b)
will be governed by and construed in accordance with the laws of the State of
New York (without giving effect to conflicts of laws principles). This Agreement
may be executed in counterparts, each of which when executed constitutes an
original, and all of which, taken together, will constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective, duly authorized officers.
The Travelers Indemnity Company and Anchor Glass Acquisition Corporation,
Its Affiliates including The Aetna a Delaware Corporation
Casualty and Surety Company and
their predecessors
By: /s/ Frank D. Judice Jr. By: /s/ John J. Ghaznavi
----------------------------- ---------------------------------
Name: Frank D. Judice Jr. Name: John J. Ghaznavi
Title: Second Vice President Title: Chief Executive Officer
5
<PAGE> 1
Exhibit 10.23
ALLOCATION AGREEMENT
AGREEMENT dated as of February 5, 1997, between Consumers
Packaging Inc., a corporation organized under the federal laws of Canada
("Consumers"), and Owens-Brockway Glass Container Inc., a Delaware corporation
("OI"), and, together with Consumers, the "Buyers").
W I T N E S S E T H:
WHEREAS, the Buyers and Anchor Glass Container Corporation
(the "Seller") are parties to an Asset Purchase Agreement, dated as of December
18, 1996 (as amended, the "Asset Purchase Agreement") pursuant to which the
Buyers are purchasing substantially all of the Seller's assets, and assuming
substantially all of the Seller's liabilities (the "Acquisition"); and
WHEREAS, the Buyers desire to record their agreement as to the
allocation between them of certain rights, benefits and obligations arising
under the Asset Purchase Agreement, and as to certain related matters;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms that are defined in the Asset Purchase Agreement are used herein as
therein defined.
2. The Acquisition. (a) OI agrees that, at or prior to the
time of the Closing, it shall take all steps necessary, including executing and
delivering to the Seller the necessary instruments of assumption, to (i) take
over ownership from the Seller of the OI Assets, and (ii) assume the OI Assumed
Liabilities. In addition, OI shall deliver to the Seller at the Closing, in the
manner set forth in Section 2.07(a) of the Asset Purchase Agreement, an amount
in cash as determined in paragraph 4(a) below.
(b) OI further agrees that, at or prior to the time of the
Closing, it shall take all steps necessary to become the substitute general
partner for the Seller in the Rocky Mountain Bottle Company, a general
partnership created under the terms of a Partnership Agreement dated March 24,
1995 between Anchor and Coors Brewing Company, as amended.
(c) Consumers agrees that, at or prior to the time of the
Closing, it shall take all steps necessary, including executing and delivering
to the Seller the necessary instruments of assumption, to (i) take over
ownership from the Seller of the Purchased Assets other than the OI Assets, and
(ii) assume the
<PAGE> 2
Assumed Liabilities other than the OI Assumed Liabilities. In addition,
Consumers shall deliver to the Seller at the Closing, in the manner set forth in
Section 2.07(a) of the Asset Purchase Agreement, an amount in cash as determined
in paragraph 4(a) below, and shall cause New Anchor to deliver to the Seller the
Shares.
3. Best Efforts. Each of the Buyers agrees that it shall use
its best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary or desirable under applicable laws and
regulations, or otherwise, to consummate the transactions contemplated by the
Asset Purchase Agreement, including, without limitation, to cause the conditions
contained in Section 10.02 of the Asset Purchase Agreement to be satisfied. Each
of the Buyers agrees that the failure of any condition set forth in Section
10.01 of the Asset Purchase Agreement to the Buyers' obligations thereunder
shall be waived if such failure was caused by the failure of one or both of the
Buyers to act in good faith or to use reasonable efforts to cause the
satisfaction of such condition.
4. Allocation of Purchase Price. (a) As soon as practicable
following the receipt of the certificates described in Section 2.06(b) of the
Asset Purchase Agreement setting forth the Estimated Post-Filing Trade Payables
and the Estimated Final Net Assets, but in no event later than one business day
prior to the Closing Date, the Buyers shall determine the respective amount of
the cash portion of the Estimated Purchase Price to be paid by each Buyer at the
Closing. The amount of the Estimated Purchase Price to be paid by OI shall be an
amount in cash equal to (i) $125 million plus (ii) that portion of the June 30
Trade Payables associated directly with the OI Assets minus (iii) that portion
of the Estimated Post-Filing Trade Payables that would, if such liabilities were
included in the Final Post-Filing Trade Payables, constitute OI Assumed
Obligations plus or minus (iv) an amount determined in the same manner as the
adjustment to the Estimated Purchase Price set forth in Section 2.06(b) of the
Asset Purchase Agreement is to be determined but as if such adjustment were to
be determined on the basis of using only that portion of the June 30 Net Assets
and Estimated Final Net Assets that would, if such assets and liabilities were
included in the Final Net Assets, constitute OI Assets and OI Assumed
Obligations, respectively. The amount of the Estimated Purchase Price to be paid
by Consumers shall be the Estimated Purchase Price minus the amount of the
Estimated Purchase Price to be paid in cash by OI as determined in the
immediately preceding sentence. The Buyers shall provide joint instructions to
the Seller with respect to the foregoing allocations not later than the Closing
Date.
(b) As soon as practicable following the determination of the
adjustments to the Purchase Price set forth in Sections 2.09(a) and 2.09(b) of
the Asset Purchase Agreement, but in no event later than seven days after the
same have been determined,
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<PAGE> 3
the Buyers shall determine the respective amounts of the cash payments to be
paid to the Seller or the other Buyer or to be received from the Seller or the
other Buyer relating to such adjustments. The amount of such payments relating
to OI shall be determined as follows:
(i) If OI's portion of the Estimated Final Net Assets
(determined on the basis of using only that portion of the Estimated
Final Net Assets that would, if such assets and liabilities were
included in the Final Net Assets, constitute OI Assets and OI Assumed
Obligations, respectively) exceeds OI's portion of the Final Net Assets
(determined on the basis of using only that portion of the Final Net
Assets that constitutes OI Assets and OI Assumed Obligations), the
amount of such excess shall be paid to OI by the Seller, in the manner
and with interest as provided in Section 2.09(c) of the Asset Purchase
Agreement, to the extent that such excess is less than or equal to the
aggregate amount, if any, payable to the Buyers by the Seller pursuant
to Section 2.09(a) of the Asset Purchase Agreement. If such excess
exceeds the aggregate amount payable to the Buyers pursuant to such
Section (or if no amount is payable to the Buyers pursuant thereto),
the portion of such excess not payable to OI under the preceding
sentence shall be paid to OI by Consumers, with interest as provided in
Section 2.09(c) of the Asset Purchase Agreement.
(ii) If OI's portion of the Final Net Assets (determined as
provided in paragraph 4(b)(i) above) exceeds OI's portion of the
Estimated Final Net Assets (determined as provided in paragraph 4(b)(i)
above), OI shall pay to the Seller, in the manner and with interest as
provided in Section 2.09(c) of the Asset Purchase Agreement, the amount
of such excess to the extent that such excess is less than or equal to
the aggregate amount, if any, payable to the Seller pursuant to Section
2.09(a) of the Asset Purchase Agreement. If such excess exceeds the
aggregate amount payable to the Seller pursuant to such Section (or if
no amount is payable to the Seller pursuant thereto), OI shall pay the
portion of such excess not payable to the Seller under the preceding
sentence to Consumers, with interest as provided in Section 2.09(c) of
the Asset Purchase Agreement.
(iii) If OI's portion of the Final Post-Closing Trade Payables
(determined on the basis of using only that portion of the Final
Post-Closing Trade Payables that constitutes OI Assumed Obligations)
exceeds OI's portion of the Estimated Final Post-Closing Trade Payables
(determined on the basis of using only that portion of the Estimated
Final Post-Closing Trade Payables that would, if such liabilities were
included in the Final Post-Closing Trade Payables, constitute OI
Assumed Obligations), the amount of such excess shall be paid to OI by
the Seller, in the manner and with interest as provided in Section
2.09(c) of the Asset
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<PAGE> 4
Purchase Agreement, to the extent that such excess is less than or
equal to the aggregate amount, if any, payable to the Buyers by the
Seller pursuant to Section 2.09(b) of the Asset Purchase Agreement. If
such excess exceeds the aggregate amount payable to the Buyers pursuant
to such Section (or if no amount is payable to the Buyers pursuant
thereto), the portion of such excess not payable to OI under the
preceding sentence shall be paid to OI by Consumers, with interest as
provided in Section 2.09(c) of the Asset Purchase Agreement.
(iv) If OI's portion of the Estimated Final Post-Closing Trade
Payables (determined as provided in paragraph 4(b)(iii) above) exceeds
OI's portion of the Final Post-Closing Trade Payables (determined as
provided in paragraph 4(b)(iii) above), OI shall pay to the Seller, in
the manner and with interest as provided in Section 2.09(c) of the
Asset Purchase Agreement, the amount of such excess to the extent that
such excess is less than or equal to the aggregate amount, if any,
payable to the Seller pursuant to Section 2.09(b) of the Asset Purchase
Agreement. If such excess exceeds the aggregate amount payable to the
Seller pursuant to such Section (or if no amount is payable to the
Seller pursuant thereto), OI shall pay the portion of such excess not
payable to the Seller under the preceding sentence to Consumers, with
interest as provided in Section 2.09(c) of the Asset Purchase
Agreement.
The balance of any amounts receivable from or payable to the Seller under
Sections 2.09(a) and Section 2.09(b) of the Asset Purchase Agreement shall be
respectively paid to or paid by Consumers. The Buyers shall provide joint
instructions to the Seller with respect to the foregoing allocations not later
than eight days following the determination of the adjustments to the Purchase
Price set forth in Sections 2.09(a) and 2.09(b) of the Asset Purchase Agreement.
(c) The final Purchase Price shall be allocated between the
Buyers in accordance with the amounts determined pursuant to this paragraph 4.
5. Allocation Statement and Calculation of Adjustments to the
Purchase Price. (a) The Buyers shall cause the Allocation Statement to be
prepared in good faith and delivered to Seller as provided in Section 2.06(c) of
the Asset Purchase Agreement. The Buyers shall also allocate the Purchase Price
among the Purchased Assets being purchased by each Buyer.
(b) The Buyers shall cause the Closing Balance Sheet, the
Final Post-Filing Trade Payables and the certificate described in Section
2.08(a) of the Asset Purchase Agreement to be prepared in good faith and
delivered to Seller as provided in such Section and in such form as to permit
the determination of any adjustments to the Purchase Price pursuant to Section
2.09 of
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the Asset Purchase Agreement and paragraph 4(b) hereof with respect to the
portions of the adjustments to the Purchase Price allocable to each Buyer.
6. Claims under the Asset Purchase Agreement. (a) In the
event of any disagreement between the Buyers and the Seller, the Buyers agree
that they shall mutually agree in good faith with respect to all decisions on
behalf of the Buyers regarding any claim which is made or is to be made either
by or against both of the Buyers (including settlement of any such claim) in
connection with the Asset Purchase Agreement, or the transactions contemplated
thereby, unless such claim could not reasonably be expected to result in any
loss or benefit to one of the Buyers or its affiliates. The Buyers agree that in
determining "good faith" as used in the preceding sentence the relative
detriments or benefits to each Buyer or its affiliates (including, but not
limited to, the respective monetary value of such detriments or benefits) shall
be taken into consideration. The Buyers also agree that the term "claim" as used
in this paragraph 6(a) shall not include any issue that is disputed to the
extent that it is submitted to an Accounting Referee pursuant to Section 2.06 or
2.08 of the Asset Purchase Agreement.
(b) The Buyers agree that they shall contribute to amounts
payable by one or both of the Buyers to the Seller arising out of a claim in
connection with the Asset Purchase Agreement, or the transactions contemplated
thereby, in such proportion as is appropriate to reflect the relative fault of
the Buyers in connection with such claim.
(c) The Buyers agree that any amounts payable to them by the
Seller arising out of a claim in connection with the Asset Purchase Agreement,
or the transactions contemplated thereby, shall be divided between the Buyers
based on the relative losses suffered by them in connection with the events
underlying such claim.
7. Disputes Referred to an Accounting Referee. (a) If the
Buyers become jointly liable for a portion of the costs, fees and expenses of an
Accounting Referee appointed pursuant to Section 2.06(e) of the Asset Purchase
Agreement to resolve a dispute concerning the Allocation Statement, such costs
shall be apportioned to each Buyer based on such Buyer's fractional ownership of
the assets concerning which the dispute arose. The determination of the
Accounting Referee as to the amount of such costs for which each Buyer is liable
shall be final and binding upon the Buyers.
(b) If the Buyers become jointly liable for a portion of the
costs, fees and expenses of an Accounting Referee appointed pursuant to Section
2.08 (c) of the Asset Purchase Agreement to resolve a dispute concerning
calculation of Closing Net Assets or Final Post-Filing Trade Payables, then, if
either Buyer has, prior to commencement of the review by the Accounting
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<PAGE> 6
Referee contemplated by such section, given written notice to the other Buyer of
its intention not to participate in such review, such Buyer shall not be liable
for any portion of the costs of such review. If both Buyers are liable for a
portion of such costs, such costs shall be apportioned based on such Buyer's
fractional ownership of the assets and/or liabilities concerning which the
dispute arose.
8. Governmental Filings. The Buyers shall cooperate with each
other in providing information to the other party that is necessary or desirable
with respect to any report intended by such party (the "Filing Party") to be
filed with a Governmental Entity, including a filing pursuant to Federal or
state securities laws, which report makes reference to the Acquisition or
related transactions. The Filing Party hereby agrees to indemnify the party
supplying such information (the "Non-Filing Party") against, and agrees to
protect, save and keep harmless the Non-Filing Party from payment of, and hereby
assumes liability for the payment of, all liabilities, obligations, losses,
damages, claims, actions, suits, judgments or settlements, including all costs,
expenses and disbursements, including reasonable attorneys' fees and expenses,
arising out of or resulting from any such filings (other than any untrue
statement of a material fact in the information so provided by the Non-Filing
Party or any omission by the Non-Filing Party to state a material fact necessary
in order to make the information so provided, in the light of the circumstances
under which the information so used is to be made, not misleading).
9. Tax Matters. The Buyers agree that the amounts of any real
estate taxes, personal property taxes and similar ad valorem obligations levied
with respect to the Purchased Assets for which the Buyers are liable pursuant to
Section 8.03(b) of the Asset Purchase Agreement shall be apportioned between
them based on each Buyer's respective ownership of the Purchased Assets on which
such obligations are levied.
10. Insurance Matters. (a) The Buyers agree that any insurance
proceeds payable to them by the Seller pursuant to Section 5.03(b) of the Asset
Purchase Agreement or otherwise shall be divided between the Buyers based on the
relative losses suffered by them in connection with the events underlying such
proceeds.
(b) To the extent that (i) there are third-party insurance
policies maintained by the Seller covering any loss, liability, damage or
expense (the "Insured Losses") relating to the assets, businesses, operations,
conduct, products and employees (including former employees) of the Business and
relating to or arising out of occurrences prior to the Closing, (ii) such
insurance policies continue after the Closing to permit claims to be made with
respect to the Insured Losses, (iii) such Insurance Policies have been assigned
to Consumers (the "Consumers Insurance Policies"), and (iv) after the Closing,
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<PAGE> 7
claims relating to or arising out of occurrences prior to the Closing arise
under one or more of the Consumers Insurance Policies, and payment by an
insurance company in connection with such claims would be for the benefit of OI,
then Consumers shall cooperate with OI in submitting such claims on behalf of
OI. Notwithstanding the foregoing, Consumers shall be entitled to control the
claims settlement process and contacts with insurers in connection with the
Consumers Insurance Policies. Consumers shall not agree to settle any claim made
under the Consumers Insurance Policies for the benefit of OI for an amount in
excess of $50,000 without the prior approval of OI, which approval shall not be
unreasonably withheld.
11. Employee Benefit Plans. As soon as practicable but in no
event later than three business days prior to the Closing Date, the Buyers shall
by mutual agreement determine the Multiemployer Plans for which each Buyer will
assume Seller's obligations to contribute pursuant to, and the other obligations
set forth in, Section 9.01(c) of the Asset Purchase Agreement. Such
determination shall be based upon the plant or plants in connection with which
the Seller's employees who are participants in each such plan are currently
employed and which Buyer is acquiring such plant or plants. The Buyers shall
provide joint instructions to the Seller with respect to the foregoing
determination not later than three business days prior to the Closing Date.
12. Transition Agreement and Access. (a) Each of the Buyers
agrees that it shall use its best efforts on or prior to the Closing Date to
enter into a mutually agreeable agreement with respect to, among other things,
the provision by Consumers or one of its Affiliates for the periods of time
specified therein of certain services specified therein to OI.
(b) The Buyers agree that, after the Closing Date, each will
cooperate with and make available to the other, during normal business hours,
all Books and Records, information and employees (without substantial disruption
of employment) of the Business retained and remaining in existence after the
Closing Date which are necessary or useful in connection with any inquiry
relating to Taxes or any audit, investigation or dispute, any litigation or
investigation or any other matter requiring any such Books and Records,
information or employees for any reasonable business purpose. The party
requesting any such Books and Records, information or employees shall bear all
of the out-of-pocket costs and expenses including, without limitation,
attorneys' fees, but excluding reimbursement for general overhead, salaries and
employee benefits) reasonably incurred in connection with providing such Books
and Records, information or employees.
13. 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 assigns. The
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parties agree that if either Buyer shall transfer or assign, in whole or from
time to time in part, to one or more of its Affiliates, the right to purchase
all or a portion of the Purchased Assets, such Affiliate or Affiliates shall be
made parties to this Agreement.
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, without regard to
the conflicts of law rules of such state.
15. Counterparts; Effectiveness. 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 shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
16. Entire Agreement; Third Party Beneficiaries. This
Agreement and the documents referred to herein constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to such subject matter. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
17. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
18. Severability. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other Persons or circumstances.
19. Consent to Jurisdiction. Each party hereto irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County, (b) the United States District Court for the Southern
District of New York and (c) to the extent applicable, the United States
Bankruptcy Court for the District of Delaware for the purposes of any suit,
action or other proceeding arising out of or related to this Agreement, or any
transaction contemplated hereby but for no other purpose. Each party hereto
agrees to commence any action, suit or proceeding relating hereto either in the
United States District Court for the Southern District of New York or if such
suit, action or proceeding may not be brought in such court for
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<PAGE> 9
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County or, to the extent applicable, the United States Bankruptcy Court for the
District of Delaware. Each party hereto further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth in Section 13.01 of the Asset Purchase Agreement
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction in
this paragraph 19. Each party hereto irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, (ii) the United States District
Court for the Southern District of New York or (iii) to the extent applicable,
the United States Bankruptcy Court for the District of Delaware, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum. Consumers also hereby
irrevocably and unconditionally waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the venue of any
such action, suit or proceeding brought in one of the above-named courts is
improper, or that this Agreement or the transactions contemplated hereby may not
be enforced in of by such court.
20. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER DOCUMENT REFERRED TO
HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
------------------------------
Name: John J. Ghaznavi
Title: Chairman and CEO
OWENS-BROCKWAY GLASS CONTAINER INC.
By: /s/ Thomas L. Young
------------------------------
Name: Thomas L. Young
Title: Vice President
10
<PAGE> 1
Exhibit 10.24
SUPPLY AGREEMENT
This SUPPLY AGREEMENT (this "Agreement") is made as of the 5th day of
February, 1997, by and between ANCHOR GLASS ACQUISITION CORPORATION, a Delaware
corporation, with offices at 4343 Anchor Plaza Parkway, Tampa, Florida 33634
("SUPPLIER"), and OWENS-BROCKWAY GLASS CONTAINER INC., a Delaware corporation,
with offices at One SeaGate, Toledo, Ohio 43666 ("PURCHASER").
WITNESSETH:
WHEREAS, PURCHASER, Consumers Packaging Inc., a corporation organized
under the federal laws of Canada and the corporate parent of SUPPLIER, and
Anchor Glass Container Corporation, a Delaware corporation ("Anchor"), have
entered into an Asset Purchase Agreement dated as of December 18, 1996 (as
amended, the "Asset Purchase Agreement"), pursuant to which, as of the date
hereof, PURCHASER is purchasing the OI Assets and SUPPLIER is purchasing
substantially all of the assets of the Business (other than the OI Assets) and
Anchor is selling, assigning, transferring and delivering the OI Assets to
PURCHASER and substantially all of the assets of the Business (other than the OI
Assets) to SUPPLIER (as those terms are defined in the Asset Purchase
Agreement); and
WHEREAS, certain products related to the portion of the Business being
acquired by PURCHASER have been manufactured, packaged and supplied using assets
of the Business not among the OI Assets; and
WHEREAS, PURCHASER desires to have SUPPLIER manufacture, package and
supply PURCHASER with such products for resale by PURCHASER; and
WHEREAS, SUPPLIER is willing to do so under the terms and conditions
hereinafter set forth; and
WHEREAS, PURCHASER'S willingness to consummate the transactions
contemplated by the Asset Purchaser Agreement are conditioned upon and dependent
upon SUPPLIER entering into this Agreement;
NOW, THEREFORE, in consideration of these presents and the covenants,
agreements and stipulations hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
1.1 "Product(s)" shall mean the glass containers produced at SUPPLIER's
plants conforming to the Specifications.
1.2 "Specifications" shall mean such specifications for the Product as
are described below and otherwise from time to time proposed by Coors and agreed
to by PURCHASER and SUPPLIER.
<PAGE> 2
1.3 "Coors" shall mean Coors Brewing Company, a Colorado corporation,
to which PURCHASER is reselling the Products.
2. MATERIALS
Packaging shall be in accordance with normal industry standards, unless
specific packaging requirements are provided to SUPPLIER by PURCHASER and agreed
to by SUPPLIER. Said agreement shall not be unreasonably withheld.
3. PRODUCTION AND PRODUCTION FORECASTS
3.1 Beginning on the effective date of this Agreement, PURCHASER will
provide SUPPLIER with PURCHASER's estimated Product requirements for the
upcoming ten (10) weeks, by item and by Coors brewery to which such items are to
be shipped.
3.2 SUPPLIER's production load plan and any subsequent changes thereto
will be subject to PURCHASER's review and approval. Said approval shall not be
unreasonably withheld. SUPPLIER agrees to minimize the number of plants
supplying PURCHASER.
3.3 PURCHASER's estimates provided pursuant to Section 3.1 shall be
revised periodically by PURCHASER with a rolling ten-week forecast of
requirements. SUPPLIER will be obligated to provided all of PURCHASER's revised
needs for Products.
3.4 SUPPLIER shall manufacture and package the Products pursuant to the
requirements set forth in PURCHASER's shipping instructions. Such shipping
instructions shall be firm and shall be timely filled by SUPPLIER.
3.5 All Products manufactured by SUPPLIER (including any Products
embodying Specification changes mutually agreed upon among Coors, PURCHASER and
SUPPLIER) shall qualify to Coors' reasonable satisfaction for product
compatibility and for handling and passage through the receiving, processing,
closure and distribution handling systems at each of the applicable Coors
facilities where such Products will be utilized.
3.6 Movement of finished goods from SUPPLIER's plant or warehouse to
designated locations shall be arranged by SUPPLIER in coordination with
PURCHASER. Product is to be shipped via clean trucks and trailers suitable for
transportation of glass containers and protection of their contents with respect
to integrity and quality, in keeping with good commercial practice and all
applicable laws, rules and regulations.
4. ORDERING AND DELIVERY
4.1 PURCHASER shall order Products from SUPPLIER by issuing a standard
purchase order form with a reference on the front side thereof to this
Agreement. In the event that there are any inconsistencies between the terms and
conditions stated on the preprinted purchase order and the terms and conditions
of this Agreement, the provisions of this Agreement shall govern.
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<PAGE> 3
4.2 All Products purchased by PURCHASER pursuant to this Agreement
shall be delivered to the Coors brewery or other location specified by PURCHASER
in full truckload quantities. If requested by PURCHASER, SUPPLIER shall deliver
all Products purchaser hereunder using transport vehicles that are operated or
contracted by SUPPLIER. In addition, PURCHASER shall have the right to arrange
its own transportation of Products. If PURCHASER arrange its own transportation
of Products. If PURCHASER arranges its own transportation of Products, title and
risk of loss shall pass to PURCHASER upon the Products being loaded onto
PURCHASER's or PURCHASER's agent's truck at SUPPLIER's facility.
4.3 Upon request, SUPPLIER shall also report its inventories of
finished Product and any materials purchased or supplied by PURCHASER to
PURCHASER.
5. EQUIPMENT AND CAPACITY
SUPPLIER shall furnish, at its own cost and expense, all equipment
required by PURCHASER for manufacturing and packaging the Products in accordance
with the Specifications and in compliance with federal, state and local laws,
rules and regulations.
6. PRICES AND PAYMENT TERMS
6.1 The initial prices of Products to be purchased hereunder are set
forth on Schedule A, which is attached hereto and by this reference made a part
hereof.
6.2 Should PURCHASER backhaul Products on its own or utilize its own
designated carriers, the backhaul allowance is equivalent to the truckload rates
set forth on Schedule A and will be credited directly to PURCHASER. In order to
be entitled to the full backhaul allowance hereunder, PURCHASER must utilize
equipment that carries at least the same amount of Products as that provided
through SUPPLIER. The allowance shall be adjusted downward for smaller trailers
or for less than full truckload quantities.
6.3 All Products sold pursuant to this Agreement shall be invoiced upon
shipment with payment terms of "1% Ten/Net 30 days," i.e., a one percent
discount will be taken by PURCHASER for payment by the 10th day following
receipt of the invoice, with net payment due by the thirtieth day following
receipt of the invoice.
6.4 All invoices shall be accompanied by a signed copy of the outbound
bill of lading setting forth the relevant consignee, production codes and
quantities of each code shipped. Invoices shall be sent to PURCHASER.
6.5 SUPPLIER shall maintain and retain accurate records of production,
shipment, scrap losses, rejected raw materials, and rejected Product, as well as
other records required to be kept by applicable local, state or federal law or
as may be reasonably requested by PURCHASER. Such records shall be available to
PURCHASER for audit verification at any time during SUPPLIER's regular business
hours and shall be retained by SUPPLIER for PURCHASER's use for at least one (1)
year after completion of production with respect to any Product.
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<PAGE> 4
7. QUALITY CONTROL, TESTING
7.1 SUPPLIER shall manufacture and package the Product in accordance
with the representations and warranties set forth in Section 10 and in such
fashion as to permit PURCHASER TO maintain at least a "93" rating on Coors'
vendor rating program, consistent with the practice of Anchor. SUPPLIER agrees
to permit access to its facilities so that PURCHASER may participate in Coors'
supplier certification program.
7.2 PURCHASER reserves the right to issue Specifications at any time,
delete, alter or add to any Specifications, or to issue supplementary
instructions by written notice at any time.
7.3 SUPPLIER shall store all raw materials, packaging materials and
finished Product in a clean, dry area, in a manner to prevent contamination by
foreign materials. Storage and handling shall be strictly in accordance with the
provisions of all applicable laws and the quality control programs and standards
set forth in this Section 7.
7.4 SUPPLIER shall have each shipment of raw materials and packaging
materials, whether supplied by PURCHASER or purchased by SUPPLIER, analyzed for
such matters as PURCHASER may reasonably require before any of said materials
are used in making and packaging the Product. Such analysis may be conducted
in-house or by an outside laboratory approved by PURCHASER. These tests are to
be considered routine and are to be performed at SUPPLIER's expense.
7.5 SUPPLIER shall not use any raw materials or packaging materials
that do not strictly comply with PURCHASER's instructions or applicable laws,
rules or regulations.
7.6 SUPPLIER shall perform routine in-process and finished product
checks it deems necessary to assure Product quality. These tests are to be
considered routine and are to be performed at SUPPLIER's expenses.
7.7 Product shall not be released for shipment unless it strictly
complies with the Specifications and all applicable laws, rules and regulations.
SUPPLIER shall place any noncomplying Product on hold.
7.8 Production codes for Product must be in accordance with the
Specifications. SUPPLIER shall maintain detailed records on raw and packaging
material usage, finished product records on raw and packaging material usage,
finished product production by code date and shipping of Product, so that
Product can be traced in case of a recall. SUPPLIER shall be capable of giving a
complete response to PURCHASER within twenty-four (24) hours of notification,
including the code date and location of each lot of Product still within its
direct control.
7.9 (a) Product that PURCHASER alleges does not meet the Specifications
may be rejected by PURCHASER on notice to SUPPLIER ("Rejected Product").
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<PAGE> 5
(b) Rejected Product is to be stored intact by PURCHASER and made
available to representatives of SUPPLIER for inspection and testing promptly
after notification of such rejection.
(c) Should any dispute arise as to whether Rejected Product does
or does not comply with the Specifications, the parties agree to submit within
fifteen (15) days of the notice referred to in clause (a) above samples of the
Rejected Product to an independent, third party testing laboratory. The cost of
such testing shall be paid equally by the parties hereto. The decision of the
laboratory shall be binding on both parties.
(d) Any Rejected Product agreed by both parties to not comply
fully with the Specifications, or so determined by the laboratory referred to in
clause (c) above ("Unusable Product"), shall be disposed of in a manner
designated by SUPPLIER at SUPPLIER's expense.
(e) Where PURCHASER has paid in full to SUPPLIER the price for
Products so determined to be Unusable Product, SUPPLIER shall reimburse
PURCHASER for the price of such Products.
8. INSPECTION, ACCESS, AUDITS
SUPPLIER's facility shall meet or exceed all requirements established
by state, local or federal regulations, including but not limited to Good
Manufacturing Practices. Upon forty-eight (48) hours notice, PURCHASER's
personnel shall have access to SUPPLIER's facility during normal business hours
and during production of the Products for the purpose of conducting quality
inspections, and shall have access to the results of any test or audit performed
by SUPPLIER or at SUPPLIER's direction.
9. QUALITY CONTROL SAMPLES
At its own cost and expense, SUPPLIER shall collect and keep retention
samples in accordance with SUPPLIER's normal operating procedures.
10. WARRANTIES, CONFORMITY
10.1 SUPPLIER represents and warrants that the Products that it sells
pursuant to this Agreement will be produced utilizing technology that is either
in the public domain, or the exclusive property of SUPPLIER or to which SUPPLIER
has access pursuant to a valid license. SUPPLIER will indemnify PURCHASER from
any costs associated with SUPPLIER's failure to comply with this Section 10.1.
10.2 SUPPLIER expressly warrants that Products furnished to PURCHASER
pursuant to this Agreement shall be free from defects in workmanship and
materials and shall conform to PURCHASER's Specifications, standards and
tolerances in effect as of the date hereof or as revised by PURCHASER and agreed
to by SUPPLIER prior to production. SUPPLIER further warrants that all Products
sold hereunder will conform in quality and will be fit for the
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<PAGE> 6
purpose for which they are intended, i.e., that they shall be commercially
acceptable containers for Coors products.
10.3 SUPPLIER represents and warrants that (1) the substances and
materials which SUPPLIER uses in connection with the manufacture of Products are
(A) permissible under all applicable federal, state, local, or foreign laws,
regulations, or rules as they may be amended from time to time and (B) neither
unsafe food additives nor adulterated nor misbranded under the Federal Food,
Drug and Cosmetic Act; and (2) that the Products manufactured from such
substances may be introduced into interstate commerce within the provisions of
Section 402 and 409 of the Federal Food, Drug and Cosmetic Act.
10.4 The above warranties shall survive acceptance of and payment for
Products by PURCHASER. SUPPLIER shall reimburse PURCHASER for any costs incurred
as a result of recalls required due to SUPPLIER's failure to comply with Section
10.1 or 10.2.
10.5 PURCHASER shall give SUPPLIER written notice of any breach of
warranty promptly after PURCHASER's discovery thereof.
10.6 SUPPLIER MAKES NO INDEMNITY, REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS EXCEPT FOR THE WARRANTIES AND
INDEMNITIES EXPRESSLY SET FORTH IN THIS SECTION 10 AND IN SECTION 12, AND IN NO
EVENT SHALL SUPPLIER BE LIABLE TO PURCHASER FOR SPECIAL OR CONSEQUENTIAL DAMAGES
BEYOND THOSE DAMAGES EXPRESSLY PROVIDED HEREIN.
10.7 (a) SUPPLIER warrants and represents that SUPPLIER shall comply
with all local, state and Federal labor and employment laws, including, but not
limited to Title VII as amended, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, the Fair
Labor Standards Acts, the Occupational Safety and Health Act of Labor Standards
Acts, the Occupational Safety and Health Act of 1979 and ERISA and any rules and
regulations relating to said acts.
(b) SUPPLIER hereby acknowledges that the qual opportunity clause
required by Executive Order 11246, as amended by Executive Order 11375, is
incorporated by reference in this contract and SUPPLIER certifies, by execution
of the contract that:
(i) no segregated facilities are maintained contrary to the
regulations under the Executive Orders;
(ii) it has developed and follows appropriate affirmative action
programs under such regulations; and
(iii) it will incorporate by reference or otherwise in its subcontracts
the equal opportunity clause and obtain assurance from its subcontractors as to
facilities and affirmative action programs.
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<PAGE> 7
(c) SUPPLIER shall notify PURCHASER of any potential strike or labor
action in SUPPLIER's facility that could affect the production or shipment of
the Product.
11. INSURANCE; INDEMNIFICATION
11.1 SUPPLIER shall provide all proper safeguards and shall assume all
risks in its performance of this Agreement.
11.2 SUPPLIER agrees to and shall indemnify PURCHASER against and hold
PURCHASER harmless from any and all claims, loss, damage, causes of action,
suits and liabilities of every kind (including, but not limited to, liabilities
under applicable environmental laws, attorney's fees and expenses incurred in
the investigations, defense and settlement of any claim or suit or for the
payment of any judgment) for injuries or death of any person, and all damages to
and destruction of property by whomsoever owned including loss of use and/or
contamination thereof, resulting directly or indirectly, in whole or in part,
from the prosecution or omission of any work or obligation undertaken by
SUPPLIER or required of SUPPLIER by this Agreement, except to the extent, but
only to the extent, that such injuries, death or damages are proximately caused
by PURCHASER's or Coors' negligence. SUPPLIER shall defend PURCHASER against any
claim or litigation in connection with any injury, death, or damage cover by
SUPPLIER's indemnity at SUPPLIER's expense with counsel reasonably acceptable to
PURCHASER or, at the election of PURCHASER, shall reimburse PURCHASER for
reasonable legal fees and other costs incurred in PURCHASER's own defense of
such claims or litigation. PURCHASER shall have the right to participate in the
defense of any claims or litigation and PURCHASER shall have the right to
approve any settlement in any case over $25,000 in which SUPPLIER is obligated
to indemnify PURCHASER, which approval may not be unreasonably withheld. The
foregoing indemnity shall apply without limitation in the event of any such
injury's occurrence in connection with materials or equipment supplied by
PURCHASER.
11.3 SUPPLIER shall secure before commencing, and maintain during the
performance of its obligations under this Agreement, with insurance carriers
satisfactory to PURCHASER, the following types of insurance and minimum
coverages: (A) Comprehensive General Liability Insurance including Product
Liability with the minimum bodily injury limits of $50,000,000 each occurrence
and property damage limits of $50,000,000 each occurrence; (B) Automobile
Liability Insurance with minimum bodily injury limits of $50,000,000 each
occurrence and property damage limits of $50,000,000 each occurrence; (C)
Statutory Workmen's Compensation and Occupational Disease Disability Insurance;
(D) Employer's Liability Insurance with limits of $50,000,000 each occurrence.
SUPPLIER shall furnish to PURCHASER evidence of such insurance coverage in the
form of Certificates of Insurance, together with evidence that the insurance
carrier has assumed the liability of SUPPLIER hereunder either under a properly
executed Assumption of Contractual Liability endorsement or by a Certificate of
Contractual Liability Insurance. PURCHASER and Coors shall be named as
additional insureds on all insurance policies required of SUPPLIER hereunder.
All Certificates of Insurance shall provide that PURCHASER shall be given 30
days written notice prior to any change, substitution or cancellation prior to
the stated expiration date. Insurance policies in Items (A) and (B) above which
are secured by SUPPLIER pursuant to this Agreement shall be "occurrence" type
policies and shall not be "claims made" policies. All Certificates of Insurance
shall provide evidence of the
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<PAGE> 8
type of policies being provided. Product Liability Insurance shall continue in
effect for PURCHASER's benefit for a period of two (2) years from the date of
the last delivery of Product to PURCHASER. In case of SUPPLIER's failure to
furnish said policies and/or certificates of insurance or the cancellation of
any required insurance, PURCHASER may, at its option, immediately terminate this
Agreement. SUPPLIER shall have the right to self insure for all or part of its
obligations under this Section 11.3.
11.4 SUPPLIER's representations, warranties, covenants, agreements,
indemnities and obligations in this Agreement, including, without limitation,
those contained in this Section 11 and Sections 8 and 10, shall survive and
shall not in any way be diminished, affected or deemed to be waived by
PURCHASER's acceptance of any Product or its payment therefor. No failure by
PURCHASER to conduct any test or inspection, or to give notice following any
test or inspection of any defects or non-conformities of any Product, shall
constitute a waiver of any breach by SUPPLIER of any of its representations,
warranties, covenants, agreements, indemnities or other obligations contained
herein, including, without limitation, those contained in this Section 11 and
Sections 8 and 10.
12. RELATIONSHIP OF THE PARTIES
SUPPLIER shall be deemed an independent contractor and not an agent or
employee of PURCHASER with respect to the terms and provisions of this Agreement
and neither it nor any of its employees shall in any respect act as an agent or
employee of PURCHASER. All persons employed by SUPPLIER in connection with this
Agreement are to be employees or agents or SUPPLIER and under no circumstances
shall SUPPLIER or any of its employees or agents be deemed to be employees or
agents of PURCHASER.
13. TERM, TERMINATION
13.1 This Agreement shall commence as of the date hereof and shall
remain in effect until it is terminated by PURCHASER giving not less than thirty
(30) days' prior written notice to SUPPLIER; provided, however, that this
Agreement may not be terminated by PURCHASER pursuant to this Section 13.1 for a
period of ninety (90) days after the date hereof.
13.2 Notwithstanding the foregoing, either party may terminate this
Agreement immediately on notice if:
(i) the other party suspends or discontinues its business operations,
makes any assignment for the benefit of its creditors, commences voluntary
proceedings for liquidation in bankruptcy, admits in writing its inability
to pay its debts generally as they become due or consents to the appointment
of a receiver, trustee or liquidator of the other party or of all or any
part of its property, or if there is an execution sale of a material portion
of its assets;
(ii) involuntary bankruptcy or reorganization proceedings a recommenced
against the other party or any of its properties or if a receiver or trustee
is appointed for the other party or any of its property;
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<PAGE> 9
(iii) the other party files or consents to the filing of a petition for
reorganization or arrangements under the Bankruptcy Code; or
(iv) the other party fails materially to comply with any provision of
this Agreement on its part to be performed and fails to correct such failure
within thirty (30) days of the date on which such party is notified in
writing of the failure.
13.3 The continuation of any obligation of PURCHASER to purchase
Product pursuant to this Agreement shall be subject to SUPPLIER's continuing
satisfaction of SUPPLIER's obligations contained in Sections 3.1 and 3.5 and to
SUPPLIER showing continuing improvement, to the reasonable satisfaction of
PURCHASER, in SUPPLIER's level of quality, service and innovation and
maintaining quality, service and innovation at levels that meet or exceed the
levels maintained by Coors' prior supplier of Products.
13.4 Within ninety (90) days of the termination of this Agreement, for
any reason other than SUPPLIER's breach, PURCHASER shall order out any packaging
materials, labels or decorating supplies that SUPPLIER has purchased exclusively
for PURCHASER in accordance with this Agreement for the production of the
Products (or that Anchor had prior to the date hereof purchased exclusively for
the production of the Products). The amount of such materials covered shall not
exceed a quantity consistent with PURCHASER's forecasts under Section 3.3
(unless such quantity is consistent with Coors' forecasts as of the date hereof
under its previous existing supply agreement with Anchor and SUPPLIER has not
purchased any materials of the kind after the date hereof).
13.5 Upon termination of this Agreement for any reason whatsoever,
SUPPLIER shall immediately deliver to PURCHASER all Specifications, artwork, all
packaging materials purchased by PURCHASER and all other materials, supplies or
equipment provided by PURCHASER. SUPPLIER shall also deliver to PURCHASER all
Product manufactured hereunder, and shall invoice PURCHASER in accordance with
the terms hereof.
14. FORCE MAJEURE
In the event that either party's performance of its obligations under
this Agreement shall be delayed or prevented as a result of any law, decree,
order or regulation, either local, state or federal, or in the event of such
delay or prevention of performance as a result of any riots, war, public
disturbances, strikes, fires, floods, acts of God, accidents of navigation,
failure of delivery of raw material, or for any other reason (whether or not of
the same class or kind as set forth above), which occurrence was not within the
control of the party whose performance has been affected and which, by the
exercise of reasonable diligence, that party could not have reasonably prevented
or avoided, then such party's failure to perform shall be excused and such party
shall not be subject to any liability for its failure to perform its obligations
hereunder; provided that the party whose performance has been affected takes all
reasonable action to remove the occurrence which has prevented or delayed its
performance as expeditiously as possible. The requirement that any such Force
Majeure be removed as quickly as possible shall not require the settlement of
strikes or labor controversies by acceding to the demands of the opposing party
or parties to the extent that the party whose performance has been affected (or,
in the case of PURCHASER,
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Coors, as the case may be) continues to negotiate with such party. Either party
may, at its option, suspend delivery or receipt of Products during the period
that such cause continues, and reduce its obligation to sell or purchase
Products by the amount of suspended deliveries or receipts.
15. APPLICABLE LAW
This Agreement shall be construed in accordance with the laws of the
State of Ohio, without regard to its rules on conflicts of law.
16. NOTICE; DESIGNATION
16.1 Unless otherwise indicated herein, all notices, requests, demands
or other communications to the respective parties hereto shall be deemed to have
been given or made when deposited in the mails, registered or certified mail,
return receipt requested, postage prepaid, or by means of overnight delivery
service when delivered to such service addressed or by facsimile to the
respective party at the following address:
To PURCHASER:
Owens-Brockway Glass Container Inc.
One SeaGate
Toledo, Ohio 43666
Attention: G.J. Lemieux
with copies to:
Owens-Brockway Glass Container Inc.
One SeaGate
Toledo, Ohio 43666
Attention: James W. Baehren
To SUPPLIER:
Anchor Glass Acquisition Corporation
4343 Anchor Plaza Parkway
Tampa, Florida 33634
Attention: John J. Ghaznavi
Chairman
with copies to:
Consumers Packaging Inc.
401 The West Mall
Suite 900
Etobicoke, Ontario M9C 5J7
Attention: John J. Ghaznavi
Chairman
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16.2 If a specific contact person is mentioned in a provision, notice
concerning the subject matter of such provision shall be directed to such
person. The address or the name of any contact person may be changed by sending
notice in the manner set forth above. Unless otherwise indicated, if no contact
person is designated for a specific function as set forth in this Agreement, the
contact person for such function shall be G.J. Lemieux for PURCHASER and John J.
Ghaznavi for SUPPLIER.
17. ASSIGNMENT
Neither party shall assign its interest in this Agreement without the
prior written consent of the other party.
18. MODIFICATION, NONWAIVER, SEVERABILITY
18.1 Neither this Agreement nor any part hereof may be changed, altered
or amended orally. Any modification must be by written instrument signed by
parties.
18.2 No failure or delay on the part of either party in exercising its
right, power or remedy under this Agreement shall operate as a waiver of such
right, power or remedy nor shall any single or partial exercise of any right,
power or remedy operate as a waiver thereof.
18.3 If any provision of this Agreement is held ineffective for any
reason, the other provisions shall remain effective.
19. ENTIRE AGREEMENT; CAPTIONS; COUNTERPARTS
19.1 This Agreement contains the entire understanding of the parties,
superseding in all respects any and all prior oral or written agreements or
understandings pertaining to the subject matter hereof.
19.2 The captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof.
19.3 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.
20. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
20.1 Each party hereto irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
(b) the United States District Court for the Southern District of New York and
(c) to the extent applicable, the United States Bankruptcy Court for the
District of Delaware for the purposes of any suit, action or other proceeding
arising out of or related to this Agreement, or any transaction contemplated
hereby
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but for no other purpose. Each party hereto agrees to commence any action, suit
or proceeding relating hereto either in the United States District Court for the
Southern District of New York or if such suit, action or proceeding may not be
brought in such court for jurisdictional reasons, in the Supreme Court of the
State of New York, New York County or, to the extent applicable, the United
States Bankruptcy Court for the District of Delaware. Each party hereto further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Section 16.1
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction in
this paragraph 20.
20.2 Each party hereto irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, (ii) the United States District
Court for the Southern District of New York or (iii) to the extent applicable,
the United States Bankruptcy Court for the District of Delaware, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum. SUPPLIER also hereby
irrevocably and unconditionally waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the venue of any
such action, suit or proceeding brought in one of the above-named courts is
improper, or that this Agreement or the transactions contemplated hereby may not
be enforced in of by such court.
20.3 EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT, ANY OTHER DOCUMENT REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ John J. Ghaznavi
-------------------------------------
Name: John J. Ghaznavi
Title: Chairman and CEO
OWENS-BROCKWAY GLASS CONTAINER INC.
By: /s/ Thomas L. Young
-------------------------------------
Name: Thomas L. Young
Title: Vice President
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SCHEDULE A
<TABLE>
<CAPTION>
PACKAGING MEMPHIS/ELKTON GOLDEN GOLDEN
MOLD NUMBER (IF APPLICABLE) DESCRIPTION BULK $/GROSS BULK $/GROSS CASED $/GROSS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
71218 12 oz. Returnable 16.00 17.49 N/A
80735 24--carrier 7 oz. Short or Tall 9.34 10.20 11.22
812HB/812K1 24--carrier 12 oz. LNNR 11.40 12.49 14.14
812B2/812J1 24--carrier 12 oz. Convenience 9.90 10.89 12.39
812E9/812G2 24--carrier 12 oz. Zima 11.04 12.12 13.58
81614 16 oz. BB Bat 24.04 38.33 N/A
81602 16 oz. BB Bat 25.57 39.01 N/A
82206 22 oz. 19.97 21.74 N/A
82204/82205 24--carrier 22 oz Zima 19.48 21.48 22.80
83225 12--carrier 32 oz. 22.61 24.96 27.16
81611 24--carrier 16 oz .Widemouth 14.28 15.71 16.74
81611 24--partition 16 oz. Widemouth 14.28 15.71 17.80
82207 22 oz. Widemouth 19.97 21.84 N/A
83233 12-carrier 32 oz. Widemouth 24.28 26.62 28.82
83233 12--partition 32 oz. Widemouth 24.28 26.62 30.32
84020 12--carrier 40 oz. Widemouth 25.93 28.57 30.91
84020 12--partition 40 oz. Widemouth 25.93 28.57 32.78
</TABLE>
Price for cased goods with 24 bottles include $0.65/gross for carton setup and
$0.24/gross for carrier or partition insertion
Prices for cased goods with 12 bottles include $0.75/gross for carton setup and
$0.34/gross for carrier or partition insertion.
Prices for bottles delivered to Golden have been adjusted to include incremental
freight in accordance with the Coors Supply Agreement.
Prices include 6.5% volume discount rebate.
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ANCHOR GLASS CONTAINER CORPORATION
TRANSACTION FEES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Other Payments Required At Closing:
Change of Control Payments to Key
Executives $ 1,045,064.27
Pension Cash Payments 9,056,100.00
Rothschild Inc. 4,412,790.00
Cleary Gottlieb 495,237.63
White & Case 574,299.14
Title Payment Due to Stewart Title for CGC
Work 765,549.98
---------------
Total Other Payments Required At Closing $ 16,349,041.02
Other Payments Due After Closing:
Jones, Day $ 838,478.00
Eckert Seamans 748,732.00
Environ 61,094.42
Towers Perrin 25,530.00
American Appraisal 251,583.00
Cliff Jones 13,950.00
Citibank (Tampa Lease Extension) 100,000.00
---------------
Total Other Fees Due After Closing $ 2,039,367.42
BT Fees:
Revolver:
------------------------
Upfront Fee 2.25% $110,000,000.00 $ 2,475,000.00
------------------------
Agent Fee 75,000.00
Expenses 64,003.68
---------------
Total BTCC Revolver $ 2,614,003.68
Bridge:
------------------------
Commitment Fee 1.50% $130,000,000.00 $ 1,950,000.00
Funding Fee 1.50% $130,000,000.00 1,950,000.00
------------------------
Expenses & BT Canada 125,143.46
---------------
Total BT Bridge $ 4,025,143.46
- ------------------------------------------------------------------------------------------------
TOTAL CONSUMERS FUNDING
REQUIREMENT $225,497,555.58
- ------------------------------------------------------------------------------------------------
Consumers Sources:
Consumers Equity $ 75,000,000.00
Consumers Additional Equity 5,000,000.00
Support Payment - Additional Equity 5,000,000.00
Bridge Loan 130,000,000.00
Revolver 104,555.58
Owens' Net Purchase of Inventory 4,393,000.00
Fees Paid by Consumers 6,000,000.00
---------------
------------------------------------------------------------------------------------
Total Sources $225,497,555.58
------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 16
ANCHOR GLASS CONTAINER CORPORATION
TRANSACTION FEES
<TABLE>
<CAPTION>
Fees
----------------
<S> <C>
1. Total Purchase Price (a) $ 392,837,000.00
2. Minus Convertible Preferred (b) (46,900,000.00)
3. Minus Common (b) (12,000,000.00)
----------------
4. Total Cash Purchase Price Before Adjustment for Closed Plants 333,937,000.00
5. Minus Owens-Illinois Portion (a) (128,362,000.00)
----------------
6. Consumers' Cash Portion Before Adjustment for Closed Plants 205,575,000.00
7. Minus Adjustment for Closed Plants (5,700,000.00)
----------------
8. Consumers Portion After Adjustment for Closed Plants 199,875,000.00
9. Plus Extra Cash for Lease Rejections 595,000.00
----------------
- ------------------------------------------------------------------------------------------------
10. Total Consumers Cash Payment to Creditors $ 200,470,000.00
- ------------------------------------------------------------------------------------------------
PAYMENTS TO:
Minus Bell-Foster $ (3,000,000.00)
Coors Cure Costs (3,801,000.00)
Title Company (Stewart Title) (4,266,152.84)
Foothill (108,556,958.60)
----------------
Smith Barney (Creditors) $ 80,845,888.56
-------------------------------------------------------------------------------------
Total Consumers Cash Payment $ 200,470,000.00
-------------------------------------------------------------------------------------
</TABLE>
- ------------------------
(a) Per Mark Kirk Certificate dated 1/24/97.
(b) Does not include the extra 3.320 shares of Convertible Preferred and the
898 shares of Common Stock to be issued to the Creditors for certain
lease rejections.
17
<PAGE> 1
Exhibit 10.25
TRANSITION AGREEMENT
AGREEMENT dated as of February 5, 1997, between Consumers Packaging
Inc., a corporation organized under the federal laws of Canada ("Consumers"),
Anchor Glass Acquisition Corporation, a Delaware corporation ("New Anchor"), and
Owens-Brockway Glass Container Inc., a Delaware corporation ("OI", and, together
with Consumers and New Anchor, the "Buyers").
WITNESSETH:
WHEREAS, Consumers, OI and Anchor Glass Container Corporation (the
"Seller") are parties to an Asset Purchase Agreement, dated as of December 18,
1996 (as amended, the "Asset Purchase Agreement") pursuant to which New Anchor
and OI are purchasing substantially all of the Seller's assets, and assuming
substantially all of the Seller's liabilities (the "Acquisition"); and
WHEREAS, the Buyers desire to record their agreement as to certain
transition arrangements in connection with the Acquisition;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Transition Services. During the six month period (or such other
period as may be provided in Annex A attached hereto) commencing on the date
hereof (the "Transition Period"), New Anchor agrees to provide, or to cause its
affiliates to provide, to OI or its affiliates, as may be requested from time to
time by OI or any of its affiliates, the same type, quality and relative level
of services that the Seller or its affiliates have provided to the business of
the Seller being acquired by OI in the Acquisition at comparable times and
periods during the 24 full months preceding the date of the Acquisition. Except
as otherwise indicated in Annex A hereto, such services will be provided for
charges based upon the same methodologies that have been used during the
12-month period immediately preceding the date of the Acquisition to determine
the charges by New Anchor or its affiliates for the provision of similar
services to OI and its affiliates. The principal types of services, and the
amount of the fee therefor, or the method for calculating such fee, as the case
may be, are set forth in Annex A hereto. Except as the parties may otherwise
agree, the Transition Period shall automatically be extended for an additional
six-month period for any or all transition services (or any portion of any such
services) at the same charges and on the same terms as during the initial
six-month period.
2. Billing and Payment. OI agrees to pay, and to cause any of its
affiliates receiving services pursuant to this Agreement to pay, promptly any
bills and invoices that it receives from New Anchor or its affiliates for
services provided under this Agreement, subject to receiving, if requested, any
appropriate support documentation for such bills and invoices. Such charges
shall be billed at the end of each calendar month of the Transition Period.
3. Interim License Agreement. (a) New Anchor hereby grants to OI and
its affiliates, for the term of the Transition Period, a non-exclusive,
royalty-free right and license to
<PAGE> 2
use in the manufacture, use and sale of products any of the patents, copyrights,
trademarks, trade names, service marks, services names, technology, know-how,
processes, trade secrets, inventions, proprietary data, formulae, research and
development data, computer software programs and other intangible property, and
any applications for the same, acquired by New Anchor from the Seller in the
Acquisition.
(b) The parties acknowledge and agree that the trademarks, trade names,
service marks and service names included in the foregoing license (the
"Trademarks") are the sole and exclusive property of New Anchor except as
otherwise provided herein and subject to the terms and conditions stated in this
Agreement.
(c) The parties shall refrain from using the Trademarks in a form and
manner or for a subject matter as to (i) reduce the value of the Trademarks and
(ii) wrongfully cause injury to the other's business.
(d) OI and its affiliates will not sell any products under any of the
Trademarks pursuant to the grant of paragraph 3(a) hereof that shall fail to
comply with (i) quality standards and specifications, including labeling
specifications, employed by the Seller in commerce prior to the Acquisition, or,
where no such standards and specifications exist, a level of quality comparable
to the quality standards generally accepted for other leading competitive brands
of the same product in the same markets from time to time, or (ii) a level of
quality comparable to that which may be adopted by OI for its or its other
licensees' products. With a view to insuring the maintenance of such standards,
authorized agents selected by mutual consent of the parties shall have access at
reasonable times during the Transition Period for quality inspection purposes to
the premises wherein such products are manufactured or held for sale.
(e) OI shall maintain during the term of the license granted under this
paragraph 3, with insurance carriers with a rating of at least A from A.M. Best
Co., public liability insurance, including, without limitation, products
liability coverage, with minimum limits of $56,000,000 each occurrence. OI shall
furnish to New Anchor evidence of such insurance in the form of Certificates of
Insurance. New Anchor shall be named as an additional insured on all insurance
policies required of OI under this paragraph 3(e). Product liability insurance
policies required under this paragraph 3(e) shall be "occurrence" type policies
and shall not be "claims made" policies. All Certificates of Insurance shall
provide evidence of the type of policies being provided. Product liability
insurance shall continue in effect for New Anchor's benefit for a period of two
years from the date hereof.
(f) OI shall not transfer, sell or assign its rights under this
paragraph 3 without the prior written consent of New Anchor, which shall not be
unreasonably withheld, except that no consent shall be required for a transfer
of rights to an affiliate of OI or a successor in all or substantially all of
the business acquired by OI from the Seller in the Acquisition.
4. Purchase of Certain Inventories. (a) Upon the terms and subject to
the conditions of this Agreement, OI agrees to purchase from New Anchor and New
Anchor agrees to sell, transfer, assign and deliver, or cause to be sold,
transferred, assigned and delivered, to OI, free and clear of all liens and
encumbrances, (i) all finished goods inventories associated with
2
<PAGE> 3
products held for sale to Coors Brewing Company or its affiliates as of the date
of the Acquisition and (ii) all molds and other tools exclusively associated
with such products and acquired by New Anchor from the Seller in the
Acquisition. The purchase price therefor shall be determined by mutual agreement
between the parties, such determination to be made at the time of, in connection
with and using the same methodologies as those used in the determination of the
Allocation statement (as defined in the Asset Purchase Agreement); provided that
the purchase price for the finished goods being acquired pursuant to this
paragraph 4(a) shall be equal to the prices for such finished goods under the
Supply Agreement dated as of the date hereof between New Anchor and OI (the
"Supply Agreement").
(b) Upon the terms and subject to the conditions of this Agreement, New
Anchor agrees to purchase from OI and OI agrees to sell, transfer, assign and
deliver, or cause to be sold, transferred, assigned and delivered, to New
Anchor, free and clear of all liens and encumbrances, (i) all raw materials,
work-in-process, finished goods, supplies and other inventories associated with
products being manufactured for sale, or held for sale, as of the date of the
Acquisition to J.M. Smucker Co., Heublein Inc. or any other customer of Anchor
as of the date of the Acquisition that is intended by the parties thereafter to
be a customer of New Anchor and acquired by OI from the Seller in the
Acquisition and (ii) all molds and other tools exclusively associated with such
products and acquired by OI from the Seller in the Acquisition. The purchase
price therefor shall be determined by mutual agreement between the parties, such
determination to be made at the time of, in connection with and using the same
methodologies as those used in the determination of the Allocation Statement (as
defined in the Asset Purchase Agreement); provided that (i) the purchase price
for the finished goods being acquired pursuant to this paragraph 4(b) shall be
equal to the aggregate average selling price for such finished goods charged by
Anchor during the three-month period immediately preceding the Acquisition and
(ii) the purchase price for the other inventories being acquired pursuant to
this paragraph 4(b) shall be equal to the aggregate net costs thereof reflected
on the books and records of Anchor as of the date of the Acquisition plus a
percentage or percentages of such net costs equal to the gross margin percentage
or percentages earned by Anchor on finished goods incorporating such inventories
(with one such percentage to be calculated for each product type) based upon the
aggregate average selling price for such finished goods charged by Anchor and
the aggregate average costs of goods sold (excluding outbound freight charges)
for such finished goods experienced by Anchor, in each case during the
three-month period immediately preceding the Acquisition.
(c) The purchase prices for the assets being sold pursuant to
paragraphs 4(a) and 4(b) above shall be payable on the date of the Acquisition,
or, if such purchase prices shall not then have been determined, as soon
thereafter as practicable; provided, however, that such purchase prices shall be
paid on the same day either in cash or by way of off-set against the purchase
price otherwise payable by one party to the other.
(d) The finished goods being sold to OI pursuant to paragraph 4(a)
above shall be held by New Anchor and shipped in accordance with shipping
instructions provided by OI pursuant to, and the costs of such shipment borne by
New Anchor as provided by, the terms of the Supply Agreement. The other assets
being sold to OI pursuant to paragraph 4(a) above and the assets being sold to
New Anchor pursuant to paragraph 4(b) above shall be held by New
3
<PAGE> 4
Anchor or OI, as the case may be, and shipped in accordance with instructions
given by, and at the expense of, the other party; provided that all such
shipments must be made within six months of the date of the Acquisition.
(e) NEW ANCHOR AND OI MAKE NO INDEMNITY, REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS BEING SOLD TO THE OTHER
HEREUNDER.
5. General Intent. Each of Consumers and New Anchor agree to use its
best efforts to provide all transition assistance that OI or its affiliates may
reasonably request during the Transition Period and to use its best efforts to
assist OI and its affiliates to end their respective need to use such assistance
as soon as reasonably possible (including, without limitation, the delivery when
requested of all appropriate files and records except to the extent necessary to
continue to perform the services provided hereunder). OI agrees to use, and
agrees to cause its affiliates to use, their respective best efforts to end
their respective need to use such assistance as soon as reasonably possible and
in all events (unless the parties otherwise agree), with respect to each
respective service provided, not later than the end of the period for which such
particular service is provided hereunder as specified in Annex A hereto or, if
no specific period is indicated for any such particular service, not later than
the end of the Transition Period.
6. Validity of Documents. The parties hereto shall be entitled to rely
upon the genuineness, validity or truthfulness of any document, instrument or
other writing presented in connection with this Agreement unless such document,
instrument or other writing appears on its face to be fraudulent, false or
forged.
7. Partial Termination. Except as otherwise indicated in Annex A
hereto, any and all services (or any portion of any such services) to be
provided under paragraph 1 hereof and/or the license granted under paragraph 3
hereof are terminable at OI's option at any time during the term of this
Agreement on five days' prior notice to New Anchor.
8. Confidentiality. Consumers and New Anchor shall hold, and shall
cause their affiliates to hold, all confidential or proprietary information
relating to OI or its affiliates confidential and will not disclose any of such
information to any party unless legally compelled to disclose such information,
in which event Consumers or New Anchor, as the case may be, shall provide OI
with written notice of such legal compulsion to disclose and shall use its
reasonable efforts to afford, or cause its affiliates to afford, OI and its
affiliates a reasonable period of time to contest such disclosure.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York, without regard to the
conflicts of law rules of such state.
10. Counterparts; Effectiveness. 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 shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
4
<PAGE> 5
11. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
12. Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceabilty shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
13. Consent to Jurisdiction. Each party hereto irrevocably submits to
the exclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, (b) the United States District Court for the Southern District
of New York and (c) to the extent applicable, the United States Bankruptcy Court
for the District of Delaware for the purposes of any suit, action or other
proceeding arising out of or related to this Agreement, or any transaction
contemplated hereby but for not other purpose. Each party hereto agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County or, to
the extent applicable, the United States Bankruptcy Court for the District of
Delaware. Each party hereto further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth in Section 13.01 of the Asset Purchase Agreement shall be effective
service of process for any action, suit or proceeding in New York with respect
to any matters to which it has submitted to jurisdiction in this paragraph 13.
Each party hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Supreme Court of the State of
New York, New York County, (ii) the United States District Court for the
Southern District of New York or (iii) to the extent applicable, the United
States Bankruptcy Court for the District of Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of Consumers and New Anchor also
hereby irrevocably and unconditionally waives to the extent not prohibited by
applicable law and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the venue of any
such action, suit or proceeding brought in one of the above-named courts is
improper, or that this agreement or the transactions contemplated hereby may not
be enforced in of by such court.
14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT, ANY OTHER DOCUMENT REFERRED TO HEREIN OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
5
<PAGE> 6
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
-------------------------------
Name: John J. Ghaznavi
Title: Chairman and CEO
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ John J. Ghaznavi
-------------------------------
Name: John J. Ghaznavi
Title: Chairman and CEO
OWENS-BROCKWAY GLASS CONTAINER INC.
By: /s/ Thomas L. Young
-------------------------------
Name: Thomas L. Young
Title: Vice President
6
<PAGE> 7
ANNEX A
<TABLE>
<CAPTION>
TRANSITION SERVICES CALCULATION OF FEE(1)
------------------- ---------------------
<S> <C>
Financial and Administrative Services
-------------------------------------
1. General ledger services
2. Accounts payable processing
3. Administration of stores inventory
(perpetual systems)
4. Administration of payroll and benefits
plans for hourly employees
5. Administration of payroll and benefits
plans for salaried employees
6. Administration of the order entry,
production scheduling, inventory and
customer release systems for finished
goods
7. Manufacturing and production
reporting
TAX SERVICES
------------
1. Sales & use tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
2. Property tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
3. Business license tax preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
4. Payroll tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
</TABLE>
- -------------------
(1) The fee charged is calculated using the same methodology as that used
during the 12-month period immediately preceding the Acquisition,
unless specified otherwise.
<PAGE> 8
<TABLE>
<S> <C>
5. Unemployment tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
6. Excise tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
7. Preparation of 1996 1099's/1096's Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
Environmental Consulting Services
---------------------------------
1 Services relating to obtaining Title V Amount charged by the consultant for services
permits for each plant (services being performed at OI's request
provided by ERM-South Inc. pursuant
to a contract between ERM-South Inc.
and Consumers)
2. Consulting services related to possible Amount charged by the consultant for services
ground contamination at each plant performed at OI's request.
(services being provided by George
Warner pursuant to a contract
between George Warner and
Consumers)
</TABLE>
2
<PAGE> 1
EXHIBIT 10.27
ASSURANCE AGREEMENT
The undersigned are entering into this Assurance Agreement (the
"Assurance Agreement"), dated as of February 5, 1997, in respect of the
Technical Assistance and License Agreement, dated December 18, 1996 (the
"License Agreement"), between Owens-Brockway Glass Container Inc. ("Owens") and
Consumers Packaging Inc. ("Consumers") pursuant to which Anchor Glass
Acquisition Corporation ("New Anchor") is a Licensee Group Member. All
capitalized terms not otherwise defined herein are used as defined in the
License Agreement as in effect on the date hereof.
1. Security Interest. Owens acknowledges and agrees to the
granting on the date hereof by New Anchor of a security interest in the License
Agreement to Bankers Trust Company, as agent (the "Agent") for the lenders under
the Senior Credit Agreement, dated the date hereof (the "Credit Agreement"),
among New Anchor, the Agent and such lenders, and to BT Commercial Corporation,
as agent (the "Revolver Agent") for the lenders under the Credit Agreement,
dated the date hereof (the "Revolving Credit Agreement"), among New Anchor, the
financial institutions named therein, the Revolver Agent, Bankers Trust Company
and PNC Bank, and, subject to the terms and conditions of the License Agreement
and this Assurance Agreement, the exercise by such parties of their rights as
secured creditors in respect of the License Agreement. Owens also agrees to the
granting of a security interest in the License Agreement to the trustee (a "New
Anchor Indenture Trustee") under an indenture (a "Refinancing Indenture") for
any notes secured by property, plant and equipment of New Anchor issued to
refinance borrowings under the Credit Agreement or to the trustee (a "Consumers
Indenture Trustee") under an indenture (a "Consumers Indenture") for the notes
to be issued by Consumers or a subsidiary secured by property, plant and
equipment of Consumers at or near the date of issuance of the notes under the
Refinancing Indenture, and, subject to the terms and conditions of the License
Agreement and this Assurance Agreement, the exercise by such parties of their
rights as secured creditors in respect of the License Agreement. The Agent, the
Revolver Agent, the New Anchor Indenture Trustee, the Consumers Indenture
Trustee and the holders of loans or notes under the Credit Agreement, the
Revolving Credit Agreement, a Refinancing Indenture or a Consumers Indenture are
referred to as the "Secured Parties."
2. Notice and Cure. Owens shall deliver to the Agent, the
Revolving Agent, the Indenture Trustee and the Consumers Trustee (but only so
long as the relevant loans or notes are outstanding), concurrently with delivery
to any member of Licensee Group, copies of any default notices given by Owens
pursuant to the License Agreement. The Secured Parties shall have the right to
cure any such default during the cure periods specified in the License Agreement
and, if during any such cure period a Secured Party has given Owens notice of
its intention to foreclose on the License Agreement, during an additional period
of 30 days beyond the cure periods specified in the License Agreement. In the
event that (i)(A) any such default relates to actions or failures to act by
members of Licensee Group other than New Anchor or its subsidiaries or (B) the
relevant Secured Parties cure any such default relating to actions or failures
to act by New Anchor or its subsidiaries and (ii) Owens exercises any right to
terminate the License Agreement, Owens shall, at the request of New Anchor (or
after foreclosure on the License Agreement by any Secured Party in accordance
with, and subject to, the provisions of paragraph 3 of this
<PAGE> 2
Assurance Agreement, such Secured Party), grant to New Anchor and its
subsidiaries that are members of Licensee Group a license to use the Technical
Information (including, without limitation, Licensed Patents and Licensed Trade
Secrets) in accordance with the terms set forth in Section 22 of the License
Agreement. In the event that (i) (A) any such default relates to actions or
failures to act by New Anchor or its subsidiaries or (B) the relevant Secured
Parties cure any such default relating to actions or failures to act by
Consumers and its subsidiaries (excluding New Anchor and its subsidiaries) that
are members of Licensee Group and (ii) Owens exercises any right to terminate
the License Agreement, Owens shall, at the request of Consumers (or after
foreclosure on the License Agreement by any Secured Party in accordance with,
and subject to, the provisions of paragraph 3 of this Assurance Agreement, such
Secured Party) grant to Consumers and such subsidiaries a license to use the
Technical Information (including, without limitation, Licensed Patents and
Licensed Trade Secrets) in accordance with the terms set forth in Section 22 of
the License Agreement. Each of the Agent, the Revolving Agent, the Indenture
Trustee and the Consumers Trustee shall notify Owens at such time as the
relevant loans or notes in connection with which they are acting as agent or
trustee have been repaid.
3. Foreclosure and Sale. The ownership of the capital stock or
plants of Consumers or its subsidiaries (including New Anchor and its
subsidiaries) or the operation of any plant of Consumers or its subsidiaries
(including New Anchor and its subsidiaries) by any Secured Party shall not
constitute a default or require the consent of Owens under the License Agreement
(or any replacement thereof made pursuant to paragraph 2 of this Assurance
Agreement), and such Secured Parties may continue to use the Technical
Information (including, without limitation, the Licensed Patents and the
Licensed Trade Secrets) at such plants in accordance with, and subject to the
terms of, the License Agreement (or a replacement thereof entered into pursuant
to Section 22 of the License Agreement); provided, that such Secured Party is
neither a Customer nor a Manufacturer. The sale or other disposition of the
capital stock or plants of Consumers or its subsidiaries (including New Anchor
and its subsidiaries) by a Secured Party, whether in connection with or
subsequent to a foreclosure of such Secured Party's security interest in the
License Agreement, shall be subject to, and consummated in accordance with, the
terms and conditions of the License Agreement, including, without limitation,
Sections 21 and 22 thereof.
4. Notices. All notices shall be sent to:
Owens at One Seagate, Toledo, Ohio 43666, Attention: General Counsel
Consumers at 401 The West Mall, Suite 900, Etobicoke, Ontario, Canada,
Attention: John J. Ghaznavi
New Anchor at One Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, Florida
33634, Attention: John J. Ghaznavi
The Agent, Bankers Trust Company, One Bankers Trust Plaza, New York, New
York 10006, Attention: Larry Benison
The Revolver Agent, BT Commercial Corporation, 14 Wall Street, New York
York 10005, Attention: Basil Palmeri
2
<PAGE> 3
The New Anchor Indenture Trustee and the Consumers Indenture Trustee
shall provide their notice addresses to Owens upon becoming parties to
this Assurance Agreement.
5. Additional Parties. The New Anchor Indenture Trustee and the
Consumer Indenture Trustee shall be entitled to become parties to this Assurance
Agreement on the dates of the Refinancing Indenture and the Consumers Indenture.
3
<PAGE> 4
6. Governing Law. This Assurance Agreement shall be construed
according to and governed by the laws of the State of Ohio.
OWENS-BROCKWAY GLASS CONTAINER INC.
By: /s/ James W. Baehren
--------------------------------
Name: James W. Baehren
Title: Vice President
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
--------------------------------
Name: John J. Ghaznavi
Title: Chief Executive Officer and Chairman
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ John J. Ghaznavi
--------------------------------
Name: John J. Ghaznavi
Title: Chairman and Chief Executive Officer
BT COMMERCIAL CORPORATION, as Agent
By: /s/ Rita Dagdelen-Keskinyon
--------------------------------
Name: Rita Dagdelen-Keskinyon
Title: Senior Vice President
BANKERS TRUST COMPANY, as Agent
By: /s/ Rita Dagdelen-Keskinyon
--------------------------------
Name: Rita Dagdelen-Keskinyon
Title: Managing Director
The Bank of New York,
as New Anchor Trustee
By: /s/ Paul J. Schmalzel
--------------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
The Bank of New York
as Consumers Trustee
By: /s/ Paul J. Schmalzel
--------------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
4
<PAGE> 1
EXHIBIT 10.28
April 17, 1997
Owens-Brockway Glass Container Inc.
One Seagate
Toledo, Ohio 43666
Attention: General Counsel
Dear Sir:
Reference is made to the Assurance Agreement, dated as of February 5,
1997 (the "Assurance Agreement"), in respect of the Technical Assistance and
License Agreement, dated December 18, 1996 (the "License Agreement"), between
you and Consumers Packaging Inc. ("Consumers") pursuant to which Anchor Glass
Container Corporation (formerly Anchor Glass Acquisition Corporation ("New
Anchor") is a Licensee Group Member. All capitalized terms not otherwise defined
in this letter are used as defined in the Assurance Agreement and the License
Agreement.
You are hereby advised that the Senior Credit Agreement of New Anchor
for which Bankers Trust Company is acting as Agent has been repaid on the date
hereof and, accordingly, notices are not longer required to be given to Bankers
Trust Company as Agent. (Please note that the Revolving Credit Agreement is
still outstanding and therefore notices still are required to be given to BT
Commercial Corporation as Revolver Agent.) On the date hereof, The Bank of New
York has become the New Anchor Indenture Trustee and is becoming an additional
party to the Assurance Agreement in such capacity pursuant to Section 5 thereof.
In addition, The Bank of New York has become the Consumers Indenture Trustee and
is becoming an additional party to the Assurance Agreement in such capacity
pursuant to Section 5 thereof. The notice address for The Bank of New York is
101 Barclay Street, 21st Floor, New York, New York 10286, Attention Corporate
Trust Trustee Administration.
Very truly yours,
BANKERS TRUST COMPANY, as Agent
By: /s/ T. J. Morris
-----------------------------
Name: T. J. Morris
THE BANK OF NEW YORK, as
New Anchor Trustee and Consumers
Trustee
By: /s/ Paul J. Schmalzel
-----------------------------
Name: Paul J. Schmalzel
<PAGE> 1
EXHIBIT 10.29
INTERCOMPANY AGREEMENT
This Intercompany Agreement (this "Agreement") is made and
entered into as of this 17 day of April, 1997 by and among G & G INVESTMENTS,
INC., a Delaware corporation ("G & G"), GLENSHAW GLASS COMPANY, a Pennsylvania
corporation ("Glenshaw"), HILLSBORO GLASS COMPANY, a Delaware corporation
("Hillsboro"), I.M.T.E.C. ENTERPRISES INC., an Oklahoma corporation ("IMTEC"),
CONSUMERS PACKAGING INC., a corporation organized under the federal laws of
Canada ("Consumers Packaging"), ANCHOR GLASS CONTAINER CORPORATION (formerly
known as Anchor Glass Acquisition Corporation), a Delaware corporation ("New
Anchor"), CONSUMERS INTERNATIONAL INC., a corporation organized under the
federal laws of Canada ("Consumers International"), CONSUMERS U.S., INC., a
Delaware corporation ("Consumers U.S."), BT COMMERCIAL CORPORATION ("BTCC"), as
agent for the Lenders identified in that certain Credit Agreement dated as of
February 5, 1997, as amended from time to time (the "Credit Agreement"), among
New Anchor, the Lenders named therein (including Bankers Trust Company as
Co-Syndication Agent and Issuing Bank ("BTCO") and PNC Bank, National
Association as Co-Syndication Agent and Issuing Bank), THE BANK OF NEW YORK, as
Trustee (the "New Anchor Trustee"), in respect of New Anchor's 11.25% First
Mortgage Notes due 2005 (the "First Mortgage Notes") issued under an Indenture
dated as of April 17, 1997 (the "Anchor Indenture") and THE BANK OF NEW YORK, as
Trustee (the "Consumers Trustee"), in respect of Consumers International's
10.25% Senior Secured Notes due 2005 (the "Senior Secured Notes") issued under
an Indenture dated as of April 17, 1997 (the "Consumers Indenture").
WHEREAS, the Credit Agreement requires New Anchor to covenant and
agree not to engage in transactions with Affiliates except on the terms and
conditions provided for in the Credit Agreement; and
WHEREAS, the Anchor Indenture and the Consumers Indenture
requires New Anchor and Consumers Packaging, respectively, to covenant and agree
not to engage in transactions with Affiliates except on the terms and conditions
provided for in the Anchor Indenture and the Consumers Indenture; and
WHEREAS, G & G, Glenshaw, Hillsboro, IMTEC, Consumers Packaging,
New Anchor, Consumers International and Consumers U.S. are Affiliates and it is
required by the terms of the Credit Agreement and a condition to the issuance of
the First Mortgage Notes under the Anchor Indenture and the Senior Secured Notes
under the Consumers Indenture that the parties enter into this Agreement;
NOW, THEREFORE, the undersigned, intending to be legally bound
hereby, do covenant and agree as follows:
1. Definitions. The following words and phrases have the meanings
ascribed to them below:
<PAGE> 2
"Affiliate" means, when used with reference to any Person, any
other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, the reference person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct or cause the direction of management or policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing or the ownership of more than 10% of the
Voting Stock of such Person; provided that BTCC, Bankers Trust Company and The
Toronto-Dominion Bank and their respective Affiliates will not be deemed to be
Affiliates of New Anchor.
"Affiliated Companies" means Consumers Packaging, G & G,
Glenshaw, Hillsboro, Consumers International, Consumers U.S., IMTEC, New Anchor
and any existing or future direct or indirect Subsidiary of any such Person.
"Affiliated Glass Manufacturers" means Consumer Packaging,
Glenshaw, Hillsboro, New Anchor and any of their respective Subsidiaries engaged
in the manufacture of glass products.
"Members of the Consumers Group" means Consumers Packaging and
its Subsidiaries (excluding Consumers U.S., New Anchor and each of their
Subsidiaries).
"Members of the Anchor Group" means New Anchor and its
Subsidiaries.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Plant Closing Event" means (a) with respect to the Members of
the Anchor Group, the permanent closing by an Affiliated Glass Manufacturer not
a Member of the Anchor Group of one or more of its manufacturing plants, which
closing has been approved by its board of directors, excluding, however, the
closing by Consumers Packaging of its plant at Hamilton, Ontario and (b) with
respect to the Members of the Consumers Group, the permanent closing by an
Affiliated Glass Manufacturer not a Member of the Consumers Group of one or more
of its manufacturing plants, which closing has been approved by its board of
directors, excluding, however, the closing by New Anchor of its plants at
Dayville, Connecticut and Houston, Texas and one additional plant which is
closed as part of New Anchor's business plan following the Anchor Acquisition
(as defined in the Anchor Indenture).
"Subsidiary", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
In addition to the foregoing, capitalized terms not otherwise defined herein
that are defined in the Credit Agreement have the meanings ascribed to them
therein.
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<PAGE> 3
2. The Affiliated Companies acknowledge the restrictions
regarding "Affiliate Transactions" contained in the Credit Agreement, the Anchor
Indenture and the Consumers Indenture, and agree (so long as such agreements are
in effect) that they will not enter into any transaction in violation of any
such restrictions. Transactions covered by this Agreement shall be carried out
in accordance with this Agreement and transactions carried out in accordance
with paragraphs 2-11 of this Agreement shall be deemed to comply with the
restrictions on Affiliate Transactions contained in the Credit Agreement, the
Anchor Indenture and the Consumers Indenture.
3. The Members of the Consumers Group and the Members of the
Anchor Group shall not pay fees or commissions in connection with manufacturing
to Affiliates other than Affiliated Glass Manufacturers.
4. A Member of the Consumers Group may pay commissions to an
Affiliated Glass Manufacturer not a Member of the Consumers Group in connection
with manufacturing done by such Member of the Consumers Group for regular
customers of such Affiliated Glass Manufacturer so long as:
(a) such commissions shall not exceed 5% of the purchase price
paid by the customer for the relevant product;
(b) any such customer is not a regular customer of any Member
of the Consumers Group;
(c) subject to Section 8.25 of the Credit Agreement (so long
as the Credit Agreement is in effect), the aggregate commissions paid by the
Members of the Consumers Group in any twelve-month period shall not exceed the
sum of (i) the aggregate commissions received by the Members of the Consumers
Group pursuant to Section 6, (ii) $U.S.5.0 million and (iii) if the
manufacturing is being done by a Member of the Consumers Group as a result of a
Plant Closing Event, U.S. $2.5 million in addition to the U.S. $5.0 million of
commissions described in clause (ii) of this paragraph (c); provided, however,
the limitations contained in this paragraph (c) shall not apply to (and the
calculations made pursuant to this paragraph (c) shall not include) commissions
paid by the Members of the Consumers Group if the manufacturing is being done by
a Member of the Consumers Group as a result of furnace repairs, strikes or other
events of force majeure, in each case of a temporary nature, affecting the
operation by an Affiliated Glass Manufacturer not a Member of the Consumers
Group of one or more of its plants; and
(d) The relevant Affiliated Glass Manufacturer upon receipt of
payment from its customer will deduct the commission and the balance of the
payment will be remitted to the relevant Member of the Consumers Group.
5. A Member of the Anchor Group may pay commissions to an
Affiliated Glass Manufacturer not a Member of the Anchor Group in connection
with manufacturing done by such Member of the Anchor Group for customers of such
Affiliated Glass Manufacturer so long as:
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<PAGE> 4
(a) such commissions shall not exceed 5% of the purchase price
paid by the customer for the relevant product;
(b) any such customer is not a regular customer of any Member
of the Anchor Group;
(c) subject to Section 8.25 of the Credit Agreement (so long
as the Credit Agreement is in effect), the aggregate commissions paid by the
Members of the Anchor Group in any twelve-month period shall not exceed the sum
of (i) the aggregate commissions received by the Members of the Anchor Group
pursuant to Section 6, (ii) $U.S.5.0 million and (iii) if the manufacturing is
being done by a Member of the Anchor Group as a result of a Plant Closing Event,
U.S. $2.5 million in addition to the U.S. $5.0 million of commissions described
in clause (ii) of this paragraph (c); provided, however, the limitations
contained in this paragraph (c) shall not apply to (and the calculations made
pursuant to this paragraph (c) shall not include) commissions paid by the
Members of the Anchor Group if the manufacturing is being done by a Member of
the Anchor Group as a result of furnace repairs, strikes or other events of
force majeure, in each case of a temporary nature, affecting the operation by an
Affiliated Glass Manufacturer not a Member of the Anchor Group of one or more of
its plants; and
(d) The relevant Affiliated Glass Manufacturer upon receipt of
payment from its customer will deduct the commission and the balance of the
payment will be remitted to the relevant Member of the Anchor Group.
6. In the event that an Affiliated Glass Manufacturer
manufactures products for a customer of a Member of the Consumers Group or a
Member of the Anchor Group, as the case may be, such Member of the Consumers
Group or such Member of the Anchor Group, as the case may be, shall be entitled
to receive a commission from such Affiliated Glass Manufacturer equal to 5% of
the purchase price paid by the customer on the same terms as are set forth in
Section 4 or 5 above, as the case may be.
7. If a customer is transferred from an Affiliated Glass
Manufacturer to a Member of the Consumers Group or a Member of the Anchor Group,
as the case may be, or from a Member of the Consumers Group or a Member of the
Anchor Group, as the case may be, to an Affiliated Glass Manufacturer, such
transfer shall be treated as if the transferee is filling orders for the
transferor and the provisions of Section 4, 5 or 6, as the case may be, shall
apply.
8. The Affiliated Glass Manufacturers may engage in joint
purchasing of raw materials, packaging materials, machinery, insurance,
maintenance services, environmental services and other items and services used
in their business; provided that (a) out-of-pocket costs (including
administrative costs (not including a mark-up, fees or commission) payable to
any Affiliate relating to the joint purchasing activities will be shared ratably
based on the respective amounts purchased and (b) no mark-up, commissions or
fees will be paid to any Affiliates.
9. The Affiliated Glass Manufacturers may provide technical,
engineering, mold design and similar services to each other in which case the
company receiving the service will pay the company providing the service per
diem costs (but not a mark-up, fees or
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<PAGE> 5
commissions) based on a pro rata allocation of the total compensation of the
employee or employees providing the services as well as reasonable out-of-pocket
expenses of the employee for travel and related items.
10. The Affiliated Glass Manufacturers may manufacture materials
used in the glass manufacturing business, such as molds, for each other in which
case the manufacturing company shall be reimbursed by the company for which the
materials were made for the manufacturing company's manufacturing cost plus a
reasonable mark-up consistent with industry standards.
11. The Affiliated Companies may consolidate functions and
employee positions among each other in order to reduce costs in which case each
company will bear its pro rata share of the actual costs (but not mark-ups, fees
or commissions) of such functions and employees (including total employee
compensation) based upon a reasonable determination of the percentage of use.
12. This Agreement shall not govern or regulate (a) transactions
between or among Members of the Consumers Group, (b) transactions between or
among Members of the Anchor Group or (c) transactions between or among
Affiliated Companies not a Member of the Consumers Group or a Member of the
Anchor Group.
13. Each Affiliated Company shall cause any Person that becomes a
Subsidiary of such Affiliated Company to execute and deliver an Addendum to this
Agreement in the form of Exhibit A hereto and deliver such Addendum to BTCC, the
Consumers Trustee and the New Anchor Trustee.
14. This Agreement shall remain in effect until payment in full
of all principal and interest under the Credit Agreement, the Consumers
Indenture and the Anchor Indenture and the termination of all commitments
thereunder.
15. This Agreement shall be construed and enforced in accordance
with the laws of the State of New York, without regard to conflicts of laws
principles thereof.
16. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in writing and
may be personally served, telecopied or sent by mail and shall be deemed to have
been given when delivered in person, upon receipt of telecopy or four Business
Days after depositing it in the mail, registered or certified, with postage
prepaid and properly addressed. For the purposes hereof, the addresses of the
parties hereto (as provided in this paragraph) shall be as set forth below (any
of which address may be changed by notice given in accordance with this
paragraph).
(a) In the case of New Anchor, at
Anchor Glass Container Corporation
One Anchor Plaza
4343 Anchor Plaza Parkway
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<PAGE> 6
Tampa, FL 33634-7513
Facsimile No.: (813) 882-7859
Attention: John J. Ghaznavi
(b) In the case of G&G, at
3140 William Flinn Highway
Allison Park, PA 15101
Facsimile No.: (412) 487-0390
Attention: John J. Ghaznavi
(c) In the case of Glenshaw, Hillsboro, IMTEC and
Consumers U.S., at:
c/o G & G Investments, Inc.
3140 William Flinn Highway
Allison Park, PA 15101
Facsimile No.: (412) 487-0390
Attention: John J. Ghaznavi
(d) In the case of Consumers Packaging, and Consumers
International, at:
Consumers Packaging Inc.
401 The West Mall
Suite 900
Etobicoke, Ontario M9C 5J7
Facsimile No.: (416) 232-3635
Attention: John J. Ghaznavi
(e) In the case of BTCC, at:
14 Wall Street, 3rd Floor
New York, NY 10005
Facsimile No.: (212) 618-2630
Attention: Basil Palmeri
(f) In the case of the Consumers Trustee:
101 Barclay Street
New York, NY 10286
Facsimile No: (212)815-5915
Attention: Corporate Trust Trustee Administration
(g) In the case of the New Anchor Trustee, at:
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<PAGE> 7
101 Barclay Street
New York, NY 10286
Facsimile No: (212)815-5915
Attention: Corporate Trust Trustee Administration
17. This Agreement supersedes all prior agreements as between the
parties with regard to the subject matter hereof other than the Credit
Agreement, the Consumer Indenture and the Anchor Indenture (including, without
limitation, the Affiliate Transactions Agreement, dated as of February 5, 1997).
All references in the Credit Agreement to the Affiliate Transactions Agreement
shall be deemed to be references to this Agreement.
18. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
19. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
20. A. Any legal action or proceeding with respect to this
Agreement may be brought in the courts of the State of New York or the United
States District Court for the Southern District of New York, and, by execution
and delivery of this Agreement, each of the parties to this Agreement hereby
irrevocably accepts for itself and in respect of its respective property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each of
the parties to this Agreement hereby further irrevocably waives any claim that
any such court lacks jurisdiction over such party and agrees not to plead or
claim in any legal action or proceeding with respect to this Agreement brought
in any of the aforesaid courts, that any such court lacks jurisdiction over such
party. Each of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its respective
address for notices pursuant to Paragraph 16, such service to become effective
30 days after such mailing. To the extent permitted by law, each of the parties
to this Agreement hereby irrevocably waives any objection to such service of
process and further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder that service of process was in any way
invalid or ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any party in any other
jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the courts referred to in Clause A above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
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<PAGE> 8
C. Each of the parties to this Agreement waives any right to a
trial by jury in any action or proceeding arising out of this Agreement or any
transactions related hereto.
19. No amendment, modification, termination or waiver of any term
or provision of this Agreement, shall be effective without the prior written
concurrence of the parties hereto, except as otherwise permitted in the Credit
Agreement, the Consumers Indenture and the Anchor Indenture.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Intercompany
Agreement as of the day and year first above written.
G & G INVESTMENTS, INC.
By: /s/ David T. Gutowski
-----------------------------------
Name: David T. Gutowski
Title:
GLENSHAW GLASS COMPANY
By: /s/ David T. Gutowski
-----------------------------------
Name: David T. Gutowski
Title:
HILLSBORO GLASS COMPANY
By: /s/ David T. Gutowski
-----------------------------------
Name: David T. Gutowski
Title:
I.M.T.E.C. ENTERPRISES, INC.
By: /s/ David T. Gutowski
-----------------------------------
Name: David T. Gutowski
Title:
CONSUMERS PACKAGING INC.
By: /s/ David Jack
-----------------------------------
Name: David Jack
Title: Vice-President
By: /s/ M. William Lightner, Jr.
-----------------------------------
Name: M. William Lightner, Jr.
Title: Vice President and
Chief Financial Officer
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<PAGE> 10
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ M. William Lightner, Jr.
-----------------------------------
Name: M. William Lightner, Jr.
Title: Vice President and
Chief Financial Officer
CONSUMERS INTERNATIONAL, INC.
By: /s/ M. William Lightner, Jr.
-----------------------------------
Name: M. William Lightner, Jr.
Title: President
By: /s/ David Jack
-----------------------------------
Name: David Jack
Title: Secretary-Treasurer
CONSUMERS U.S., INC.
By: /s/ M. William Lightner, Jr.
-----------------------------------
Name: M. William Lightner, Jr.
Title: Vice President and
Chief Financial Officer
BT COMMERCIAL CORPORATION,
for itself and as Agent
By: /s/ Rita Dagdelen-Keskinyan
-----------------------------------
Name: Rita Dagdelen-Keskinyan
Title: Senior Vice President
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<PAGE> 11
THE BANK OF NEW YORK,
as New Anchor Trustee
By: /s/ Paul J. Schmalzel
-----------------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
THE BANK OF NEW YORK,
as Consumers Trustee
By: /s/ Paul J. Schmalzel
-----------------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
<PAGE> 1
EXHIBIT 10.30
MANAGEMENT AGREEMENT
This Agreement dated as of the 5th day of February, 1997, by
and between
ANCHOR GLASS ACQUISITION CORPORATION, a Delaware corporation
("Anchor")
A N D
G & G INVESTMENTS, INC., a Delaware corporation ("G & G").
WHEREAS, G & G has agreed to provide Anchor with general
management and administrative services ("Services") for the consideration stated
herein and Anchor wishes to have access to the Services for an agreed-upon
period for the consideration stated herein; and
WHEREAS, the parties wish to set out the particulars of, and
the compensation to be paid to G & G in consideration for the Services;
NOW, THEREFORE, this Agreement witnesses that for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed by the parties as follows:
ARTICLE 1
DEFINITIONS
1. DEFINITIONS
Where used herein, the following terms shall have the
following meanings, respectively:
(a) "AFFILIATE" as applied to any Person, means any other
person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means (i) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise, or (ii) the
ownership of more than 10% of the voting securities of that Person, but does
not, for purposes of this Agreement, include Anchor;
(b) "AGREEMENT" means this Management Agreement dated as of
the ___ day of February, 1997 between Anchor and G & G, as the same may be
amended from time to time, and references to "hereof" and "hereunder" refer to
this Agreement as a whole and not to any section or article of this Agreement;
<PAGE> 2
(c) "BOARD" means the board of directors of Anchor as
constituted from time to time;
(d) "BUSINESS DAY" means any day excluding Saturday, Sunday or
any day which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized to or required
by law or other governmental order to close;
(e) "COSTS" means all reasonable out-of-pocket expenses
incurred by G & G and its Affiliates in connection with providing the Services,
including, in the event that an employee of G & G or an Affiliate is assigned to
work on a full-time basis for Anchor, the full amount of such employee's wages
and benefit costs during such period of full-time employment by Anchor;
(f) "CREDIT AGREEMENT" means the Credit Agreement of even date
herewith among Anchor, the financial institutions listed from time to time on
Schedule I thereto, Bankers Trust Company, as an issuing bank, BT Commercial
Corporation, as Co-Syndication Agent and Agent and PNC Bank as Co-Syndication
Agent and Issuing Bank.
(g) "EFFECTIVE DATE" means February 5, 1997.
(h) "INDENTURE" means an indenture relating to the sale of the
"Permanent Senior Notes" (as defined in the Credit Agreement").
(i) "SENIOR CREDIT AGREEMENT" means the Credit Agreement of
even date herewith among Anchor, the Lenders named therein and Bankers Trust
Company as Agent.
ARTICLE 2
OBJECTIVES AND SERVICES
2.1 OBJECTIVES
G & G will provide the Services described herein, in
accordance with the direction of the Board, for the purpose of assisting Anchor
in achieving the following objectives:
(a) meeting its financial obligations promptly and on a
continuing basis;
(b) improving share value and value components, such as
earnings per share and cash flow;
(c) ensuring the long-term operating and financial
strength of Anchor as an independent operating
entity; and
(d) optimizing the opportunities for the employees of
Anchor.
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<PAGE> 3
G & G will perform its obligations under this Agreement
reasonably, in good faith and with a view to the best interests of Anchor and do
all things and take all actions as may be commercially reasonable including,
without limitation, providing Anchor with reasonable access during normal
business hours to G & G, its personnel and other resources.
2.2 SERVICES
In performing this Agreement, G & G will render the following
Services from time to time:
(a) providing sales support, including advising with
respect to the reorganization of the sales force of
Anchor, making direct sales calls to customers and
assisting Anchor in seeking out appropriate sales
agency arrangements;
(b) assisting Anchor in building relationships with
creditors, suppliers and customers;
(c) assisting in improving procurement of raw materials
and services, including negotiating supply agreements
and dealing with consultants with a view to lowering
costs;
(d) financial management support, including reviewing
Anchor's systems and assisting Anchor in implementing
improvements to such systems relating to financial
reporting;
(e) technological support, including providing to Anchor,
as required, all technological enhancements derived
or obtained by G & G or its Affiliates and seeking
solutions to future technological requirements;
(f) operational support, including productivity
improvements and process design, quality control and
production scheduling;
(g) support in designing, funding and completing capital
expenditure requirements to improve operating
efficiency and profitability;
(h) assisting Anchor in recruiting qualified full-time
employees for Anchor to fill senior management
positions and training Anchor personnel so that
Anchor will be in a position to operate
independently; and
(i) such other support as may be reasonably required by
Anchor, having regard to the capabilities of G & G
and its Affiliates.
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<PAGE> 4
2.3 AFFILIATES
G & G acknowledges that it is wholly responsible for the
compliance by its employees, its Affiliates and the employees of its Affiliates
with all of the terms of this Agreement. G & G will deliver to Anchor promptly
after the Effective Date, undertakings by each of its Affiliates providing
Services to comply with Section 5.6 and to look exclusively to G & G to recover
its out-of-pocket expenses.
ARTICLE 3
MANAGERIAL FEE
3.1 SERVICES PROVIDED
G & G agrees to provide to Anchor the Services described in
Section 2.2. Further, G & G agrees to provide appropriate personnel to Anchor as
and when required for the proper operation of Anchor (such personnel to be
selected at G & G's sole discretion), to cooperate fully with Anchor's Board and
the management of Anchor, and, if requested, to report on a quarterly basis to
Anchor's Board regarding the services G & G has provided to Anchor.
3.2 REIMBURSEMENT OF COSTS AND MANAGERIAL FEE
(a) Anchor agrees to reimburse G & G in cash for all
out-of-pocket Costs incurred in providing the
Services together with a reasonable administrative
charge not to exceed 10% of such Costs. G & G shall
keep a record of all out-of-pocket Costs incurred by
G & G in providing the Services to Anchor in each
calendar quarter, and shall deliver such record,
together with a description of the out-of-pocket
Costs incurred during such period, to Anchor on or
before the tenth Business Day following each calendar
quarter following the Effective Date, during the term
of this Agreement. Such Costs shall be reimbursed by
Anchor promptly following receipt of G & G's
statement and any requested supporting documentation
reasonably requested by Anchor.
(b) Anchor agrees to pay to G & G the managerial fee (the
"Managerial Fee") as follows:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
The Effective Date of this Agreement to the first anniversary
of the Effective Date...................................................... $3,000,000
The first anniversary of the Effective Date to
the second anniversary of the Effective Date............................... $3,000,000
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
The second anniversary of the Effective Date to the third
anniversary of the Effective Date.......................................... $3,000,000
</TABLE>
(c) Subject to the last sentence of this Section 3.2(c),
the Managerial Fee shall be paid in equal quarterly
installments of $750,000 on or before the last day of
each calendar quarter during the term hereof
commencing with the calendar quarter ended March 31,
1997. Where this Agreement is in effect for less than
a full calendar quarter, the Managerial Fee shall be
calculated on the basis of the number of days in such
calendar quarter and the number of days in which this
Agreement was in effect. For so long as any of the
Credit Agreement, the Senior Credit Agreement and/or
the Indenture are in effect, the Managerial Fee shall
only be paid as and to the extent permitted therein,
and any amount not so permitted to be paid shall
accrue until so permitted to be paid.
ARTICLE 4
TERM OF AGREEMENT
4.1 TERM OF AGREEMENT
(a) The initial term of this Agreement shall begin on the
Effective Date and expire on the third anniversary of the
Effective Date. Thereafter, this Agreement shall be
automatically renewed for one year terms on the expiry of the
then-current term, unless either party provides, pursuant to
Section 5.7 hereof, written notice to the other party of its
intention not to renew this Agreement at least six months
prior to the expiry of the then-current term. Anchor and G & G
agree that such six month notice is reasonable.
(b) This Agreement may be terminated at any time prior to the end
of any term by notice in writing given by Anchor if:
(i) G & G becomes insolvent, makes any assignment under
any bankruptcy or insolvency law or if any creditor
commences proceedings under applicable bankruptcy or
insolvency laws against G & G and such action shall
not have been terminated within sixty (60) days from
the date of such assignment or commencement;
(ii) G & G becomes otherwise incapable of performing its
duties hereunder, or
(iii) G & G is no longer controlled in fact by J. J.
Ghaznavi.
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<PAGE> 6
ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 NO OTHER COMPENSATION ARRANGEMENTS
It is agreed to, by and between the parties hereto that other
than the specific compensation provided for in this Agreement, there are no
other compensation arrangements or Agreements concerning compensation currently
outstanding as between G & G and Anchor.
5.2 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance
with the laws of the State of Delaware without regard to the principles of
conflict of laws.
5.3 REMEDIES
In the event that either G & G or Anchor has defaulted in the
performance of any material obligation hereunder and such
default has not been cured within 45 days after written notice
thereof has been given, then:
(i) if the defaulting party is G & G, Anchor may
terminate this Agreement,
(ii) if the defaulting party is Anchor, G & G may
terminate this Agreement,
and the rights of the parties thereafter shall be limited to
the recovery of any amounts of money, including direct damages
for non-performance or gross negligence occurring during the
period prior to that termination.
5.5 CURRENCY
All references to dollar figures herein shall be to U.S.
dollars.
5.6 CONFIDENTIALITY
G & G will treat as confidential and not disclose to any third
party, except as may be reasonably considered to be in the best interests of
Anchor, or use for any purpose which would be detrimental to Anchor, any
confidential or proprietary information of Anchor.
5.7 NOTICES
Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in writing and
may be personally served,
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<PAGE> 7
telecopied, telexed or sent by mail and shall be deemed to have been given when
delivered in person, upon receipt of telecopy or telex against receipt of answer
back or four Business Days after depositing it in the mail, registered or
certified, with postage prepaid and properly addressed; provided that notices
shall not be effective until received. For the purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is delivered as provided in
this Section 5.7) shall be set forth below.
(a) in the case of Anchor, at
Anchor Glass Acquisition Corporation
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, FL 33634-7513
Facsimile No.: (813)-882-7859
Attention: Mark A. Kirk,
Senior Vice President and Chief Financial Officer
(b) in the case of G & G, at:
3140 William Flinn Highway
Allison Park, PA 15101
Facsimile No.: (412) 487-0390
Attention: Mr. John J. Ghaznavi,
Chairman and President of G & G
Any such notice, direction or other instrument, if delivered
personally, shall be deemed to have been given and received on the date on which
it was delivered and, if mailed, shall be deemed to have been given and received
on the third day (which is not a Saturday, Sunday or public holiday) after it
was mailed. Any such notice, direction or other instrument transmitted by fax or
other form of recorded communication shall be deemed to have been given and
received on the date of its transmission, provided that if such date is a
Saturday, Sunday or public holiday, or if it is transmitted or received after
the end of normal business hours, then it shall be deemed to have been given and
received at the opening of business on the next day following the transmission
thereof which is not a Saturday, Sunday or public holiday.
5.8 PRIOR AGREEMENTS
This Agreement supersedes all prior Agreements as between the
parties with regard to the subject matter hereof.
5.9 SEVERABILITY
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining
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<PAGE> 8
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
5.10 HEADINGS
Section and Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
5.11 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
5.12 CONSENT TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL
A. Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of Delaware or the United States District
Court for the District of Delaware, and, by execution and delivery of this
Agreement, each of the parties to this Agreement hereby irrevocably accepts for
itself and in respect of its respective property, generally and unconditionally,
the jurisdiction of the aforesaid courts. Each of the parties to this Agreement
hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such party, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Agreement brought in any of the
aforesaid courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service of process
in any such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to such party at its respective address for
notices pursuant to Section 5.7, such service to become effective 30 days after
such mailing. To the extent permitted by law, each of the parties to this
Agreement hereby irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to this
Agreement to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any party in any other
jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in clause A above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
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<PAGE> 9
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement or the transactions contemplated hereby or
thereby.
5.13 AMENDMENTS AND WAIVERS
No amendment, modification, termination or waiver of any term or
provision of this Agreement, shall be effective without the prior written
concurrence of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
ANCHOR GLASS ACQUISITION
CORPORATION
By: /s/ C. Kent May
-----------------------
G & G INVESTMENTS, INC.
By: /s/ John J. Ghaznavi
-----------------------
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<PAGE> 1
Exhibit 10.31
Anchor Glass Container Corporation
Executive/Key Employee Retention Plan
(as modified pursuant to Bankruptcy
Court Order of November 6, 1996)
ARTICLE 1
PURPOSE AND DEFINITIONS
1.1 Purpose. The purpose of the Anchor Glass Container Corporation
Executive/Key Employee Retention Plan ("Plan") is to protect a select
group of executives and key employees against an involuntary loss of
employment so as to retain such employees, and motivate them to enhance
the value of the underlying business of Anchor Glass Container Corporation
("Company"). The Plan is intended to qualify as an unfunded welfare plan
under Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
1.2 Definitions. The following words and phrases as used herein shall have the
following meanings, unless a different meaning is required by the context:
"Cause" shall mean any act or any failure to act on the part of a
Participant which constitutes:
(a) fraud, embezzlement, theft or dishonesty against the Company
or any of its affiliates;
(b) a willful or grossly negligent material violation of law in
connection with or in the course of the Participant's duties
or employment with the Company or any of its affiliates;
(c) a felony for which the Participant is convicted or pleads nolo
contendere
(d) willful or grossly negligent engagement in any activity
competitive with the business of the Company as to which the
Company has notified the Participant in writing and the
Participant has not ceased (other than for reasons beyond the
control of Executive) within 3 business days following such
notice his or her participation in such activity;
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<PAGE> 2
(e) a willful failure to follow reasonable directions or
instructions of a more senior officer which are consistent
with the Participant's position and responsibilities as of the
date of his or her initial participation in the Plan (as such
position and responsibilities may be changed from time to time
with the prior consent of the Participant), and such failure
shall have continued (other than for reasons beyond the
control of the Participant) for a period of 3 business days
after receipt of written notice thereof from the Company;
(f) willful or grossly negligent breach of any stated material
employment policy of the Company;
(g) willful and wrongful damage to material property of the
Company or any of its affiliates; or
(h) willful and wrongful disclosure of confidential information of
the Company or any of its affiliates.
No act or failure to act on the part of a Participant shall be deemed to
be "willful" if it was due primarily to an error in judgment or
negligence.
"Change in Control" shall mean the first to occur of the following events:
(a) the adoption of a resolution of the Board of Directors of the
Company of a plan of liquidation with respect to the Company,
(b) the appointment of a trustee for the Company in a proceeding
under Chapter 11 of the Bankruptcy Code,
(c) the filing of a liquidation case under Chapter 7 of the
Bankruptcy Code, or the conversion of a Chapter 11 proceeding
to a liquidation case under Chapter 7 of the Bankruptcy Code,
(d) the sale or other divestiture of all or substantially all of
the assets (excluding the sale of inventory or other assets in
the ordinary course of business) of the Company or of the
Company and its direct or indirect majority-owned
subsidiaries, or
(e) the acquisition by any person or affiliated group of persons
of more than 30% of the outstanding common stock of the
Company.
"Committee" shall mean the Administrative Committee with respect to the
Plan. The initial members of the Committee shall be Carl Young, Mark Kirk
and Mark Karrenbauer.
"Company" shall mean Anchor Glass Container Corporation, a Delaware
corporation.
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<PAGE> 3
"Executive or Key Employee" shall mean any person whose name is listed on
Schedule 1 attached hereto and any other person designated by the
Committee to be eligible for Plan participation.
"Good Reason" shall mean with respect to a Participant (i) a reduction in
the Participant's annual base salary (other than any reduction applicable
to management employees generally not exceeding 10%, or any reduction not
exceeding 5%, during any 12-month period), (ii) a material change in the
Participant's position, duties or responsibilities as an employee of the
Company without the Participant's prior consent, (iii) a material
reduction in the Participant's bonus opportunity (other than any reduction
applicable to similarly situated or bonus eligible employees generally),
(iv) a change in the Participant's principal work location by more than 75
miles and more than 50 miles from the Participant's principal place of
abode as of the date of such change in job location, (v) a material change
or reduction in the Participant's benefits under this Plan pursuant to an
amendment, modification, suspension or termination of the Plan pursuant to
Section 6.3 or (vi) any other event or condition set forth in the
Participation Letter (as defined in Section 2.2) with respect to the
Participant.
"Participant" shall mean any Executive who is entitled to participate in
the Plan in accordance with Section 2.2 and has not had such participation
terminated pursuant to Section 2.3.
"Plan Year" shall mean the calendar year.
"Targeted Benefit" shall mean the amount of benefit to which any
Participant would be entitled under the Plan pursuant to clause (i) of
Section 3.2(a), calculated by using the Monthly Pay Rate determined as of
the date of initial participation and the Monthly Factor applicable to the
Participant.
"Monthly Factor" shall mean, for any Participant, the monthly factor set
forth on Schedule 1 applicable to the Participant or the monthly factor
determined by the Committee for any Executive or Key Employee who is not
listed on Schedule 1.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. Each Executive and Key Employee listed on Schedule 1 hereto
shall be eligible to participate in the Plan upon the execution of the
Plan. The Committee may, in its sole discretion, designate additional
executives or key employees as being eligible for participation in the
Plan, and shall determine a Monthly Factor of not less than three (3) nor
more than nine (9) for such person. Notwithstanding anything to the
contrary, no person shall be designated by the Committee if the total
amount of Targeted Benefits payable under the Plan then exceeds one
million eight hundred thousand dollars ($1,800,000) or would exceed that
amount by reason of such designation.
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<PAGE> 4
2.2 Participation. The Committee shall as soon as practicable after the
execution of the Plan or after it has designated an executive or key
employee as being eligible for participation, as the case may be, prepare
and send a separate letter of participation ("Participation Letter") to
each such person. The Participation Letter shall set forth the prohibition
on duplicative severance benefits as set forth in Section 3.2(d) and any
additional terms and conditions of participation (beyond the provisions of
the Plan) as the Committee may, in its sole discretion, determine. An
Executive or Key Employee shall not become a Participant unless and until
he or she signs and agrees to the terms and conditions of his or her
Participation Letter and of the Plan, and explicitly waives the right to
receive any severance benefit under any other severance plan, contract or
arrangement for any period of time in which the Plan is in effect.
2.3 Termination of Participation. A Participant's participation in the Plan
shall automatically terminate, without notice to or consent of the
Executive, and the Executive shall not be treated as a Participant, upon
the earlier to occur of the following events:
(a) the Executive's termination of employment by the Company for
Cause, or
(b) the Executive's resignation other than for Good Reason.
ARTICLE 3
SEVERANCE AND BENEFITS
3.1 Involuntary Termination.
(a) Subject to a Participant's termination of participation pursuant to
Section 2.3 and the conditions set forth below, each Participant who is
terminated by the Company without Cause or terminates his or her own
employment with the Company for Good Reason shall be entitled to severance
pay and other benefits under the Plan in the amount set forth in Sections
3.2 and 3.3 below.
(b) Notwithstanding anything to the contrary contained herein, no benefits
shall be payable under the Plan to a Participant whose employment with the
Company is terminated by reason of or in connection with the sale or other
divestiture of all or substantially all of the assets of the Company (or
of the Company and its direct or indirect majority-owned subsidiaries) if
such Participant is offered employment by the purchaser or transferee of
the assets on terms and conditions no less favorable than the
Participant's terms and conditions of employment with the Company and the
purchaser or transferee adopts this Plan (or an identical plan) for the
benefit of the Participant and other Participants who are offered
employment with the purchaser or transferee. In the event a purchaser or
transferee shall adopt the Plan as described in the preceding sentence,
such entity shall thereafter be deemed to be the Company for all purposes
hereunder.
3.2 Amount of Severance Benefit.
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<PAGE> 5
(a) Subject to Subsections (e) and (f), the amount of severance benefit to
which any Participant is entitled under the Plan shall be equal to the sum
of (i) the Participant's Monthly Pay Rate (as defined in Subsection (b)
multiplied by the Monthly Factor applicable to the Participant and (ii)
the Participant's Weekly Pay Rate multiplied by the Participant's number
of years of service with the Company up to a maximum of twenty-six (26)
years.
(b) "Monthly Pay Rate' shall mean one-twelfth (1/12th) of the sum of the
Participant's actual regular salary and bonus paid for the twelve months
immediately preceding his or her date of termination of employment for all
services rendered to the Company. For Participants who are listed on
Schedule 1, "Monthly Pay Rate" shall mean one-twelfth (1/12th) of the
"Stay Pay Amount" shown on that Schedule, as the same may be adjusted for
future changes in salary.
(c) "Weekly Pay Rate" shall mean one-fifty second (1/52nd) of the
Participant's highest annual rate of regular salary in effect at any time
during the twelve months immediately preceding his or her date of
termination of employment for all services rendered to the Company.
(d) As long as the Plan is in effect, a Participant shall not be entitled
to any severance benefits under any other plan or policy of the Company or
under any other agreement between the Participant and the Company.
(e) Notwithstanding anything to the contrary continued herein, if a
Participant's employment with the Company is terminated by reason of or in
connection with the sale or other divestiture of all or substantially all
of the assets of the Company (or of the Company and its direct or indirect
majority-owned subsidiaries) to Ball-Foster Glass Container Co., L.L.C.
("Ball-Foster") under the purchase agreement by and between the Company
and Ball-Foster dated October 4, 1996 (as the same may be amended, the
"Asset Purchase Agreement"), or to Ball-Foster or any other purchaser
approved by the United States Bankruptcy Court for the District of
Delaware ("Bankruptcy Court") pursuant to an agreement which provides for
at least as much cash as the Asset Purchase Agreement, and Ball-Foster or
such other purchaser assumes the costs of the Plan (a "Qualified
Purchaser"), each such Participant who is listed on Schedule 1 shall be
entitled to the Benefits as set forth in such Schedule.
(f) Notwithstanding anything to the contrary contained herein, if a
Participant's employment with the Company is terminated by reason of or in
connection with the sale or other divestiture of all or substantially all
of the assets of the Company (or of the Company and its direct or indirect
majority-owned subsidiaries), or by reason of or in connection with any
other transaction providing for the restructuring of the Company with
Consumers Packaging Inc. or any other entity that is not a Qualified
Purchaser (as defined in Subsection (e)), or in the event there is no sale
or other transaction, then each such Participant who is listed on Schedule
2 shall be entitled to a benefit not to exceed the amount set forth on
such Schedule.
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<PAGE> 6
3.3 Other Benefits. Eligible Participants shall be entitled to continue
their participation in the Company's health, life insurance and disability
benefit plans (but not any qualified retirement plans), or receive with
respect to any such benefit an amount of cash equal to the cost of such
benefit in lieu of such continued participation, for a period following
their termination of employment equal to their period of severance
benefits under Section 3.4 (or the period over which the benefits would
have been paid in the absence of a Change in Control, if applicable),
except such coverage shall expire if the Participant becomes eligible for
coverage under a substantially comparable plan of a successor employer. In
the case of any welfare benefit plans, nothing herein shall be deemed to
restrict the right of the Company to amend or terminate any such plan in a
manner generally applicable to active employees, and Participants shall be
entitled to participate on the same basis (including payment of applicable
contributions) as active employees.
3.4 Frequency of Payment. The Company shall pay the severance benefits
provided over a period equal to the number of months and weeks for which
the benefit has been calculated under Section 3.2(a); provided, however,
that any severance benefit (or the remaining portion of any such benefit)
payable after a Change in Control shall be paid in a single lump sum in
cash, no later than 15 days following the earlier to occur of the
Participant's termination of employment, or the Change in Control. If the
severance payment is not timely made for any reason, the payment when made
shall include interest at the applicable federal rate (as defined in
Section 7872(f)(2) of the Internal Revenue Code 1986, as amended) plus 4%.
ARTICLE 4
CLAIMS
4.1 Claims Procedure. If any Participant has a claim for benefits which are
not being paid, such claimant may file with the Committee a written claim
setting forth the amount and nature of the claim, supporting facts, and
the claimant's address. The Committee shall notify each claimant of its
decision in writing by registered or certified mail within 30 days after
its receipt of a claim, unless otherwise agreed by the claimant. If a
claim is denied, the written notice of denial shall set forth the reasons
for such denial, refer to pertinent Plan provisions on which the denial is
based, describe any additional material or information necessary for the
claimant to realize the claim, and explain the claim review procedure
under the Plan.
4.2 Claims Review Procedure. A claimant whose claim has been denied or such
claimant's duly authorized representative may file, within 60 days after
notice of such denial is received by the claimant, a written request for
review of such claim by the Committee. If a request is so filed, the
Committee shall review the claim and notify the claimant in writing of its
decision within 30 days after receipt of such request. In special
circumstances, the Committee may extend for up to 30 additional days the
deadline for its decision. The notice of the final decision of the
Committee shall include the reason for its decision and specific
references to the Plan provisions on which the decision is based. The
decision of the Committee shall be final and binding on all parties.
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<PAGE> 7
4.3 ERISA Rights. A Participant may obtain copies of all Plan information upon
written request to the plan administrator. The plan administrator and
others who operate the Plan must do so prudently and in the interest of
the Participants. No employer or other person may fire or otherwise
discriminate against a Participant in any way to prevent him or her from
obtaining a severance benefit or exercising his or her rights under ERISA.
If such discrimination occurs, the Participant may seek assistance from
the U.S. Department of Labor or may file suit in a federal court.
A Participant is entitled to receive a written explanation of the reasons
for the denial of his or her claim, and to have the Committee review and
reconsider such claim. The Participant may file suit in a state or federal
court to challenge any such denial.
Under ERISA, there are steps a Participant can take to enforce the above
rights. For instance, if materials are requested from the Plan and are not
received within 30 days, the Participant may file suit in a federal court.
In such event, the court may require the plan administrator to provide the
materials and pay the Participant up to $100 a day until such materials
are received, unless due to reasons beyond the control of the plan
administrator. The court will decide who should pay court costs and legal
fees. The court may order either the Participant or the person sued by the
Participant to pay legal costs and fees. If a Participant has any
questions about this statement or about his or her rights under ERISA,
please contact the nearest Area Office of the U.S. Labor Management
Services Administration, Department of Labor.
4.4 Agent for Service of Legal Process. Service of legal process upon the Plan
shall be made upon any member of the Committee. If service by mail is
permitted, the address to be used for the Committee is set forth in
Section 5.2 below.
ARTICLE 5
ADMINISTRATION
5.1 Plan Sponsor. The Company is the plan sponsor. The address of the Company
is:
Anchor Glass Container Corporation
4343 Anchor Plaza Parkway
Tampa, Florida 33634
5.2 Plan Administrator. The Company shall be the plan administrator and shall
administer the Plan through the Committee. The address of the Plan
Administrator is:
Administrative Committee
Anchor Glass Container Corporation
4343 Anchor Plaza Parkway
Tampa, Florida 33634
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<PAGE> 8
There shall be three (3) members of the Committee, who shall be employees
of the Company, whether or not they are also Participants. Prior to a
Change in Control, the Company may remove any member of the Committee for
any reason whatsoever, and shall fill any vacancies occurring for any
reason in the membership of the Committee. Following a Change in Control,
a member of the Committee cannot be removed therefrom by the Company
except for any material breach of his or her fiduciary responsibilities or
upon his termination of employment with the Company and its affiliates. In
the event of a vacancy for any reason in the membership of the Committee
following a Change in Control, the remaining members of the Committee
shall appoint any person who is a Participant to fill the vacancy and
serve as a member of the Committee.
5.3 Quorum. A majority of the members of the Committee shall constitute a
quorum for any meeting of such committee held with respect to the Plan,
and the acts of a majority of the members of the Committee, whether at a
meeting or approved in writing without a meeting, shall be valid acts of
the Committee.
5.4 Duties. The Committee shall have the power and duty to do all things
necessary or convenient to effect the intent and purposes of the Plan,
whether or not such powers and duties are specifically set forth herein,
and, by way of amplification and not limitation of the foregoing, the
Committee shall have the power to:
(a) provide rules for the management, operation and administration
of the Plan, and, from time to time, amend or supplement such
rules;
(b) reasonably construe the Plan in good faith to the fullest
extent permitted by law, which shall be final and conclusive
upon all persons;
(c) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as
it shall deem appropriate in its sole discretion to carry the
same into effect;
(d) make reasonable determinations as to a Participant's
eligibility for benefits under the Plan, including
determinations as to Cause and Good Reason.
5.5 Binding Authority. The decisions of the Administrative Committee or its
duly authorized delegate within the powers conferred by the Plan shall be
final and conclusive for all purposes of the Plan, and shall not be
subject to any appeal or review other than pursuant to Section 4.2.
5.6 Exculpation. No member of the Committee shall be directly or indirectly
responsible or otherwise liable by reason of any action or default as a
member of that committee, or by reason of the exercise of or failure to
exercise any power or discretion as such member, except for any action,
default, exercise or failure to exercise resulting from such member's
gross negligence or willful misconduct. No member of the Committee shall
be liable in any way for the acts or defaults of any other member of the
Committee, or any of its advisors, agents or representatives.
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<PAGE> 9
5.7 Indemnification. The Company shall, indemnify and hold harmless each
member of the Committee against any and all expenses and liabilities
arising out of his or her own membership on the Committee, except for
expenses and liabilities arising out of a member's gross negligence or
willful misconduct.
5.8 Compensation and Expenses. Members of the Committee who are employees of
the Company shall not receive any compensation for their services rendered
as such members. The Company shall pay for all expenses of the Committee
reasonably incurred in connection with the Plan, including but not limited
to legal expenses.
5.9 Information. The Company shall furnish to the Committee in writing all
information the Committee may deem appropriate for the exercise of their
powers and duties in the administration of the Plan. Such information may
include, but shall not be limited to, the names of all Participants, their
earnings and their dates of birth, employment, retirement or death. Such
information shall be conclusive for all purposes of the Plan, and the
Committee shall be entitled to rely thereon without any investigation
thereof.
5.10 Self-Interest. No member of the Committee may act, vote or otherwise
influence a decision of the Committee specifically relating to his or her
benefits, if any, under the Plan.
ARTICLE 6
GENERAL PROVISIONS
6.1 Non-Property Interest. The Plan is unfunded and any liability of the
Company to any person with respect to benefits payable under the Plan
shall give rise to a claim against the general assets of the Company. Any
Participant who may have or claim any interest in or right to any
compensation, payment or benefit payable hereunder, shall rely solely upon
the unsecured promise of the Company for the payment thereof, and nothing
herein contained shall be construed to give to or vest in the Participant
or any other person now or at any time in the future, any right, title,
interest or claim in or to any specific asset, fund, reserve, account,
insurance or annuity policy or contract, or other property of any kind
whatsoever owned by the Company, or in which the Company may have any
right, title or interest now or at any time in the future.
6.2 Other Rights. The Plan shall not affect or impair the rights or
obligations of the Company or a Participant under any other written plan,
contract, arrangement, or pension, profit sharing or other compensation
plan, except as otherwise provided in Section 3.2(d).
6.3 Amendment or Termination. The Plan (including any Schedule) may be
amended, modified, suspended, or terminated by the Company at any time and
from time to time by action of its Board of Directors; provided, however,
that any such amendment , modification, suspension or termination which
would adversely affect the rights of any person who is then a Participant
shall be subject to the prior written consent of the Committee in its sole
discretion and shall not be effective as to any Participant until fifteen
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<PAGE> 10
(15) days after notice of such amendment, modification, suspension or
termination shall have been furnished in writing to the Participant;
provided further, that in no event shall the Company terminate the Plan or
amend the Plan to reduce benefits earlier than the second anniversary of
the date of execution hereof; provided further, that if there is a sale or
other divestiture of all or substantially all of the assets of the Company
(or of the Company and its direct or indirect majority owned subsidiaries)
and in connection therewith the purchaser or transferee adopts the Plan
for the benefit of the Participants who are offered employment with the
purchaser or transferee, then the Plan shall automatically terminate as of
the earlier to occur of (i) the second anniversary of the signing of the
agreement for the sale or transfer or (ii) the date which is eighteen
months after the closing of such transactions.
6.4 Severability. If any term or condition of the Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of
the Plan, with the exception of such invalid or unenforceable provision,
shall not be affected thereby and shall continue in effect and application
to its fullest extent. If, however, the Committee determines in its sole
discretion that any term or condition of the Plan which is invalid or
unenforceable is material to the interests of the Company, the Committee
may declare the Plan null and void in its entirety.
6.5 No Employment Rights. Neither the establishment of the Plan, any
provisions of the Plan, nor any action of a Committee shall be held or
construed to confer upon any employee the right to a continuation of
employment by the Company. Subject to any applicable employment agreement,
the Company reserves the right to dismiss any employee, or otherwise deal
with any employee to the same extent as though the Plan had not been
adopted.
6.6 Incapacity. If the Committee determines that a Participant is unable to
care for his or her affairs because of illness or accident, any benefit
due the Participant may be paid to the Participant's spouse or to any
other person deemed by the Committee to have incurred expense for such
Participant (including a duly appointed guardian, committee or other legal
representative), and any such payment shall be a complete discharge of the
Company's obligation hereunder.
6.7 Transferability of Rights. The Company shall have the unrestricted right
to transfer its obligations under the Plan with respect to one or more
Participants to any person, including, but not limited to, any purchaser
of all or any part of the Company's business. No Participant shall have
any right to commute, encumber, transfer or otherwise dispose of or
alienate any present or future right or expectancy which the Participant
may have at any time to receive payments of benefits hereunder, which
benefits and the right thereto are expressly declared to be non-assignable
and nontransferable, except to the extent required by law. Any attempt to
transfer or assign a benefit, or any rights granted hereunder, by a
Participant shall, in the sole discretion of the Committee (after
consideration of such facts as it deems pertinent), be grounds for
terminating any rights of the Participant to any portion of the Plan
benefits not previously paid.
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<PAGE> 11
6.8 Entire Document. As long as the Plan is in effect, the Plan shall,
supersede any and all prior practices, understandings, agreements,
descriptions or other non-written arrangements respecting severance, and
written employment or severance contracts signed by the Company.
6.9 Governing Law. The Plan shall be construed, administered, and enforced
according to the laws of the State of Delaware, except to the extent that
such laws are preempted by the federal laws of the United States of
America.
6.10 Effective Date. The Plan was authorized and adopted by the Board of
Directors as of, and shall be effective at September 12, 1996.
ANCHOR GLASS CONTAINER CORPORATION
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<PAGE> 12
SCHEDULE 1 TO
ANCHOR GLASS CONTAINER CORPORATION
EXECUTIVE RETENTION PLAN
MONTHLY TARGET
NAME POSITION FACTOR BENEFIT
- ---- -------- ------ -------
Mark Karrenbauer V.P. Human Resources 8 $ 87,680
Joe DeDominick V.P. MIS 7 $ 81,690
Rick Fisher Dir. Plant Acctg. 6 $ 39,600
Paul Keipper Dir. Accounting Services 6 $ 35,400
Jeff Gulbranson Dir. Treasury Oper. 6 $ 35,790
Gene Pool V.P./Assoc. Gen Counsel 6 $ 52,560
Ed Holden Dir. Risk Mgmt. & Ben. 5 $ 37,225
Suzanne Ennis Dir. EEO & Senior Counsel 6 $ 36,510
Jack Dearing Sr. Dir. Oper. Integration 6 $ 54,930
Tom Sooy Sr. Dir. Quality 5 $ 40,400
Ron Shirley V.P. Oper. Admin. 6 $ 50,280
John Day V.P. Sales 5 $ 53,650
Brad Tucker V.P. Sales (Liquor) 5 $ 45,375
Dan Colligan V.P. Sales (Food) 6 $ 46,770
Greg Sinatro V.P. Sales (Cons. & Food) 5 $ 52,750
Mike Wilkins Dir. Bus. Appl. & Prod. Serv. 4 $ 31,320
Jim Keenan Dir. Raw Materials 6 $ 32,700
Wally Schaffer Dir. Energy 6 $ 32,250
Sam Myers Dir. Bus. Mgmt. (Tactical Plan) 6 $ 30,210
Ed Dacus Dir. Design Eng. 6 $ 38,400
Sunil Ghedia Dir. Maintenance E & S 6 $ 31,740
Bob Metzger Dir. Environmental Affairs 6 $ 32,370
Don Headley Mgr. Machine Development 4 $ 24,800
Bill White Director MPI 4 $ 28,820
Lois Spruill Dir. Corp. Acctg. & Reporting 6 $ 41,760
Mary Britain Mgr. Retire & Benefits 6 $ 26,760
Lynn Owens Mgr. Labor Relations 4 $ 22,680
Susan Pritchard Mgr. Corp. Real Estate 4 $ 20,180
Gene Gavin General Manager 4 $ 33,400
Russ Barto General Manager 3 $ 26,355
Mike Sopp General Manager 4 $ 35,740
Steve Brock General Manager 4 $ 27,480
Paul Austel General Manager 4 $ 39,380
Warren Nobel General Manager 4 $ 36,920
-------------
$ 1,343,875
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<PAGE> 1
EXHIBIT 10.32
33188600-3
LEASE AGREEMENT - ANCHOR PLACE AT FOUNTAIN SQUARE
LANDLORD: FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership
TENANT: ANCHOR GLASS CONTAINER CORPORATION
RENTABLE
SQ. FT.: Approximately One Hundred Thousand Square Feet
TERM: Ten Years
<PAGE> 2
TABLE OF CONTENTS
Paragraph Page
1. Premises and Term .................................................. 5
2. Possession.......................................................... 6
3. Rental.............................................................. 7
4. Sales Tax and Real Estate Taxes..................................... 8
5. Use................................................................. 9
6. Acceptance of Premises.............................................. 9
7. Tenant's Care....................................................... 10
8. Destruction or Damage to Premises .................................. 12
9. Default by Tenant - Landlord's Remedies............................. 13
10. Landlord's Liability................................................ 17
11. Assignment and Subletting........................................... 17
12. Condemnation........................................................ 19
13. Inspections and Access to Premises.................................. 22
14. Subordination and Lease Amendment .................................. 22
15. Indemnity........................................................... 24
16. Tenant's Insurance.................................................. 24
17. Remedies Cumulative................................................. 25
18. Holding Over........................................................ 25
19. Entire Agreement - No Waiver........................................ 26
20. Waiver of Jury Trial................................................ 26
21. Headings............................................................ 26
22. Notices............................................................. 26
23. Heirs and Assigns - Parties......................................... 27
24. Attorneys' Fees..................................................... 28
25. Time of Essence..................................................... 28
26. Building Specifications............................................. 28
27. Standard Tenant Allowance........................................... 28
28. Arbitration......................................................... 28
29. Rules and Regulations............................................... 28
30. Broker and Indemnity................................................ 29
31. Space Planning...................................................... 29
32. Identification of Building, Road and Project........................ 29
33. Quiet Enjoyment..................................................... 29
34. Force Majeure....................................................... 30
35. Relationship of the Parties......................................... 30
36. Corporate Tenant.................................................... 30
37. Miscellaneous ...................................................... 30
38. Survey and Title Insurance.......................................... 30
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<PAGE> 3
39. Saving Provision.................................................... 31
40. Effectiveness of Lease.............................................. 31
41. Limited Partnership Landlord........................................ 31
42. Assignment of Voting Rights......................................... 31
43. Default by Landlord................................................. 31
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<PAGE> 4
Exhibit A: Description of the Premises
Exhibit B: Plans and Specifications
Exhibit C: Description of the Development
Exhibit D: Building Specifications
Exhibit E: Standard Tenant Allowance
Exhibit F: Tenant Improvement Critical Date Schedule
Exhibit G: Rent Formula
Exhibit B: Project Cost Budget
Exhibit 1: Building Option Agreement
Exhibit J: Standard of Maintenance for the Building
Exhibit K: List of Items for which there is no
Landlord's Lien
Exhibit L: Subordination, Non-Disturbance and
Attornment Agreement
Exhibit M: Land Option Agreement
Exhibit N: Option Agreement for Parking Easement
Exhibit O: Memorandum of Lease
Exhibit P: Collateral Assignment of Option Agreement
for Parking Easement
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<PAGE> 5
LEASE AGREEMENT - ANCHOR PLACE AT FOUNTAIN SQUARE
THIS LEASE is made this 31 day of March, 1988, by and between
FOUNTAIN ASSOCIATES I, LTD., a Florida limited partnership (the "Landlord"),
whose address is: c/o Wilson Management Company, 6200 Courtney Campbell
Causeway, Tampa, Florida 33607, and ANCHOR GLASS CONTAINER CORPORATION, a
Delaware corporation (the "Tenant"), whose address is: One Anchor Place, 1100
Anchor Street, Tampa, Florida 33607-1765.
1. PREMISES AND TERM
Landlord for and in consideration of the rents hereinafter reserved, of
the covenants, agreements and conditions hereinafter set forth, to be kept or
performed on the part of Tenant, hereby leases to Tenant, and Tenant hereby
rents and leases from Landlord the premises described in Exhibit A attached
hereto and incorporated herein by reference (the "Premises"), the two-story
atrium building (the "Building") containing approximately One Hundred Thousand
(100,000) square feet of rentable space located on the Premises and surface
parking spaces for use by Tenant for the term of this Lease. The parties agree
that between Four Hundred Fifteen (415) and Four Hundred Twenty-Three (423)
surface parking spaces are to be constructed. Landlord shall supply Tenant with
a copy of the Plans and Specifications for the improvements to be constructed on
the Premises by Landlord and Tenant shall initial the same indicating Tenant's
approval of the Plans and Specifications. The Plans and Specifications will be
attached to this Lease as Exhibit B and incorporated herein by reference. The
improvements to be constructed by Landlord shall be completed in substantial
accordance with the specifications set forth in Exhibit B attached hereto and
incorporated herein by reference and the other items of work and materials, if
any, as may be required under the terms of any work letter which may be executed
between Landlord and Tenant in connection with this Lease. Notwithstanding the
foregoing, Landlord shall have the right to make upgrades to the Plans and
Specifications which do not affect the structure of the Building provided that
such upgrades do not exceed the cost of Fifteen Thousand Dollars ($l5,000.00)
per occurrence and Two Hundred Thousand Dollars ($200,000.00) in the aggregate.
Landlord shall not have the right to make any downgrades to the Plans and
Specifications if such downgrades materially affect the quality of the
improvements.
The Landlord also grants to the Tenant the nonexclusive right to use the
areas in the FOUNTAIN SQUARE DEVELOPMENT which are designated by Landlord as
common areas to be used by all tenants and occupants of the FOUNTAIN SQUARE
DEVELOPMENT (the "Development") in common with Landlord and the tenants and
occupants of the Development (their agents, employees, and invitees), for a term
to commence on the 25th day of November, 1988, and to end at midnight on the
24th day of November, 1998, such period being the term of this Lease (the
"Term"). The
Development is more particularly described in Exhibit C attached hereto and
incorporated herein by reference. The date specified above for the commencement
of the Term, or, if Landlord cannot deliver the Premises for possession by
Tenant on such date, then the date when Landlord can deliver the Premises for
possession by Tenant is hereinafter referred to as the commencement date (the
"Commencement Date"). For the purposes of this Paragraph, the Premises shall be
deemed delivered
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<PAGE> 6
for possession by Tenant as soon as Landlord has substantially completed
Landlord's work as described in Exhibit D and Exhibit E attached hereto and
incorporated herein by reference. Landlord's architect shall determine whether
the Landlord's work has been substantially completed and if the inspector for
the lender who is providing financing for the improvements to be constructed on
the Premises informs the lender that the improvements have been substantially
completed and if the Landlord's architect issues a certificate that Landlord's
work has been substantially completed, then this shall be dispositive of the
issue. Landlord's work shall be deemed substantially complete notwithstanding
the fact that (a) minor or insubstantial details of Landlord's work, mechanical
adjustment, or decoration remain to be performed, or ( b) portions of Landlord's
work have not been completed because under good construction scheduling practice
such work should be done after still incomplete finishing or other work to be
done by or on behalf of Tenant is completed, or (c) upgrades not affecting the
structure of the Building and not exceeding the cost of Fifteen Thousand Dollars
($15,000.00) per occurrence and Two Hundred Thousand Dollars ($200,000.00) in
the aggregate have been made to the Landlord's work, or (d) downgrades not
materially affecting the quality of the improvements. By occupying the Premises
the Tenant shall be conclusively deemed to have accepted the same as complying
fully with all of Landlord's covenants and obligations set forth herein, subject
to the punch list items (the "Punch List Items") which will be identified by
Anchor prior to occupancy.
2. POSSESSION.
Notwithstanding the date of the commencement of the Term as set forth in
Paragraph 1 herein, if for any reason Landlord cannot deliver possession of the
Premises to Tenant on said date because the Premises are not ready for
occupancy, or for any other reason or cause, Landlord and its agents shall not
be subject to any liability therefor, nor shall such failure affect the validity
of this Lease or the obligations of Tenant (except that the Lease shall
terminate ten (l0) years from the Commencement Date) if Landlord delivers
possession of the Premises to Tenant on or before January 1, 1989. If Landlord
does not deliver the Premises to Tenant on or before January l, 1989, (the
"Completion Penalty Date") for reason other than Landlord being delayed as a
result of: (1) Tenant's failure to comply with the Tenant Improvement Critical
Date Schedule described in Exhibit F attached hereto and incorporated herein by
reference; or (2) reasons of Force Majeure as described in Paragraph 34 of this
Lease; then Landlord will be assessed a penalty (the "Late Completion Penalty")
in the amount of Two Thousand One Hundred Dollars ($2,100.00) per day for each
day that Landlord fails to deliver the Premises to Tenant after the Completion
Penalty Date. The Lease shall terminate ten (10) years from the Commencement
Date. The Late Completion Penalty shall be deducted from the Monthly Rental. The
required commencement date of November 25, 1988, and the Completion Penalty Date
of January 1, l989, shall be extended by the number of days that Landlord is
delayed in delivering possession of the Premises by virtue of (1) Tenant's
failure to comply with the Tenant Improvement Critical Date Schedule set forth
in Exhibit F attached hereto and incorporated herein by reference or (2)
Landlord's delay by reason of Force Majeure as described in Paragraph 34 of this
Lease. If Landlord is so delayed the expiration of the term of the Lease shall
be likewise extended by the number of days of such delay and Tenant shall occupy
the Premises for a ten year term from the extended required Commencement Date
unless earlier terminated as provided in this Lease. Notwithstanding the
foregoing, in the event Landlord cannot deliver possession of the Premises to
Tenant on or before May 31, 1989, Tenant may cancel this Lease by giving written
notice to Landlord within twenty (20) days, in which event the parties hereto
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<PAGE> 7
shall be discharged from all obligations hereunder. After the determination of
the Commencement Date, Tenant agrees, upon demand of Landlord, to execute,
acknowledge, and deliver to Landlord an instrument, in a form satisfactory to
Landlord, which sets forth the Commencement Date and the end of the Term and
acknowledges that the improvements constructed on the Premises have been
completed.
3. RENTAL
(a) Tenant shall pay to Wilson Management Company, managing agent
for Landlord, or to any successor thereto named by Landlord, at the address
described above or at such other place as Landlord may designate in writing,
without notice or demand and without deduction, abatement, counterclaim, or
set-off whatsoever, except as may be expressly noted and authorized under the
terms of this Lease, annual rental at the rate based on the formula set forth in
Exhibit G and Exhibit H both attached hereto and incorporated herein by
reference (the "Rent Formula") payable in lawful money of the United States in
equal monthly installments (the "Monthly Rental"). The Monthly Rental includes
among other items all Debt Service payable to the Lender as defined herein. The
first Monthly Rental and sales tax thereon as set forth in Paragraph 4 herein,
shall be paid by Tenant to Landlord on the Commencement Date. Notwithstanding
the foregoing, the Tenant may use a portion of the Rent credit as defined in
Paragraph 3(f) of this Lease to apply to the Monthly Rental. All subsequent
Monthly Rentals shall be due in advance on the first day of each calendar month
during the Term, beginning with the month next succeeding the First Month, as
defined herein, and with any sales, privilege or rental tax as provided in
Paragraph 4 herein. The term "Lease Year", as used herein, (i) shall mean the
twelve (12) month period beginning with the Commencement Date as defined in
Paragraph 1 hereof, and each twelve (12) month period thereafter occurring
during the Term of this Lease, and (ii) in the event the Lease expires or
terminates on a date other than the date set forth in Paragraph 1 hereof, then
the term "Lease Year" shall also mean the period from the end of the preceding
Lease Year to the date of said expiration or termination of this Lease.
Notwithstanding anything to the contrary contained herein, in the event the
Commencement Date is other than the first day of a calendar month, then Tenant
shall pay to Landlord on the Commencement Date a sum equal to the per diem
Monthly Rental for the month in which the Commencement Date shall occur (the
"First Month") multiplied by the number of days from the Commencement Date to
the last day of the First Month, both inclusive. In the event this Lease
terminates on a day, other than the date specified in Paragraph 1 hereof, the
Monthly Rental and any Additional Rental, as herein defined shall be equitably
adjusted.
(b) Tenant agrees that any other sums due Landlord from Tenant under
the terms of this Lease, except for the Monthly Rental, shall be considered as
additional rental from Tenant (the "Additional Rental"). As used herein the term
"Rent" shall include the Monthly Rental, Additional Rental and such other
payments as are set forth herein. Rent payments are deemed to be paid when
received by Landlord.
(c) It is understood and agreed that Tenant's obligation to pay the
Additional Rental shall, for the purposes of the default provision hereof,
entitle Landlord to all remedies provided herein and at law or equity on account
of Tenant's failure to pay Rent.
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<PAGE> 8
(d) Any delay or failure of Landlord in computing or billing for
Additional Rental shall not constitute a waiver or in any way impair the
continuing obligation of the Tenant to pay such Additional Rental.
(e) Landlord and Tenant agree that during the Term of this Lease,
Tenant will pay when due, any and all charges that Landlord is required to pay
in connection with the operation of the Premises including but not limited to
those charges under the Declaration of Protective Covenants, Building Standards
and Easements of Fountain Square. It is expressly acknowledged and agreed to by
the parties that Tenant will be allowed to use the common areas to be used by
all tenants and occupants of the Development (the "Common Areas").
(f) Notwithstanding the terms set forth in this paragraph, Landlord
agrees that tenant shall receive a credit for Monthly Rental of approximately
One Million and No/100 Dollars ($1,000,000.00) as adjusted in accordance with
Exhibit G attached hereto and incorporated herein by reference, which is to be
applied towards the Monthly Rental but not the Additional Rental due under this
Lease (the "Rent Credit"). The "Rent Credit" shall be amortized over the term of
the Lease in the event of a default by Tenant of the terms of the Lease. For
example, if Tenant defaults after the sixth year of the Lease then Tenant shall
pay Landlord the sum of Four Hundred Thousand Dollars ($400,000.00) for the Rent
Credit that was used but not amortized over the last four years of the Lease and
Tenant shall pay such other sums that are due to Landlord pursuant to the terms
of paragraph 9 of this Lease.
4. SALES TAX AND REAL ESTATE TAXES
Along with and in addition to each Monthly Rental payment and Additional
Rental payment under this Lease, Tenant shall pay to Landlord the sales or
privilege tax required by Florida Statutes Section 212.031 and any amendment or
replacements thereof. Tenant shall also pay as Additional Rental during the term
of this Lease all ad valorem and real estate taxes and/or assessments levied or
assessed by any lawful authority against the Premises or any improvements
thereto at least ten (10) days before such real estate taxes and/or assessments
are due. Landlord agrees to promptly furnish to Tenant all bills for ad valorem
and real estate taxes and/or assessments levied or assessed by any lawful
authority against the Premises. Tenant shall supply evidence satisfactory to
Landlord that such taxes and assessments have been paid. During the last Lease
Year Landlord shall estimate the taxes referred to in this Paragraph and Tenant
shall pay one-twelfth (1/12) thereof monthly in advance on the first day of each
calendar month during the Term. After the end of the last Lease Year or the
calendar year whichever occurs last, Landlord shall furnish Tenant a statement
of the actual taxes and there shall be an adjustment between Landlord and Tenant
with payment to or repayment by Landlord, as the case may require, to the end
that Landlord shall receive the entire amount of the taxes and assessments for
such Lease Year. If either fails to pay any balance due to the other party
within ten (10) days of receipt of such statement, then the party who is
entitled to receive such payments shall be entitled to all remedies provided at
law or in equity on account of such failure to pay the balance due.
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<PAGE> 9
5. USE
The Premises shall be used and occupied by Tenant solely for the purpose
of general business offices and for no other business or purpose without the
written consent of Landlord. Tenant's use of the Premises shall not violate the
Certificate of Occupancy for the Premises or for the Building, nor any
ordinance, law or regulation of any governmental body now in force. Tenant is
responsible for obtaining the proper permits for its proposed use of the
Premises and verifying that zoning will permit that type of use. Tenant agrees
to conduct its business in the manner and according to the generally acceptable
business principles of the business or profession in which Tenant is engaged.
Tenant further agrees that its use of the Premises will not (i) create a
nuisance, disturbance, or annoyance to Landlord or any other tenant of the
Development, or (ii) vitiate any insurance policies held by Landlord or Tenant.
6. ACCEPTANCE OF PREMISES
The taking of possession of the Premises by Tenant at the Commencement
Date shall be conclusive evidence as against the Tenant that Tenant accepts the
same "as is" subject to the satisfaction of the Punch List Items, and that the
Premises and the Building were in good and satisfactory condition for the use
intended at the time such possession was taken. Neither Landlord nor Landlord's
agents have made any representations or promises with respect to the physical
condition of the Building or the Premises, the rents, leases, expenses of
operation, or any other matter or thing affecting or relating to the Premises
except as herein expressly set forth, and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this Lease and the Building Option Agreement executed between
the parties of even date herewith more particularly described in Exhibit I ("The
Building Option Agreement"). Landlord and Tenant shall execute a memorandum of
the Building Option Agreement in recordable form which may at Tenant's sole
option be recorded in the official records of Hillsborough County, Florida at
Tenant's expense. Tenant will inspect the Premises and sign an Acceptance of
Premises on the Commencement Date and be thoroughly acquainted with the
condition of the Premises. Unless expressly stated herein to the contrary,
Landlord has no obligation to repair, improve, or add to the Premises prior to
Tenant's occupancy thereof and Tenant shall, at its sole cost and expenses and
in compliance with the provisions of Paragraph 7(b) hereof, be responsible for
any changes, alterations, repairs, or decorations to the Premises prior to its
occupancy thereof. Landlord agrees that it will cause the general contractor to
furnish a payment and performance bond with a multi obligee rider in favor of
Tenant, Landlord and the lender who is providing financing for improvements to
be constructed on the Premises ("Lender"), a surety in an amount acceptable to
the lender. Landlord shall negotiate all warranties and assign to Tenant at the
Commencement Date all warranties that are assignable with respect to any
improvements located on the Premises including but not limited to the Building.
During the construction of the Building, Landlord shall comply with the building
codes, regulations and laws in existence in the municipality, county and/or
state which has jurisdiction over Landlord's work.
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<PAGE> 10
7. TENANT'S CARE
(a) Tenant will, at Tenant's expense, keep the Premises and the
improvements constructed thereon and the fixtures and appurtenances therein,
including but not limited to the Building, the roof and structure of the
Building, the lighting, heating, plumbing, fixtures and air conditioning
equipment located in the Building in good order and repair, and in a clean and
sanitary condition, and shall perform all required maintenance as set forth in
Exhibit J and any other maintenance that is necessary to comply with this Lease
whether preventive or otherwise and all necessary repairs, ordinary and
extraordinary, foreseen and unforeseen, including all necessary replacements and
alterations required. All of the aforesaid maintenance and repairs and
replacements shall be of quality or class equal to the original work or
construction, and shall be made in accordance with the provisions of Paragraph
7(b) hereof. If Tenant fails after ten (10) days' notice thereof to proceed with
due diligence to make the repairs and replacements required to be made by
Tenant, the repairs may be made by Landlord, at the expense of Tenant and the
expenses thereof incurred by Landlord plus fifteen percent (l5%) for overhead,
shall be collectible by Landlord as Additional Rental after rendition of a bill
or statement therefor. There shall be no abatement of rent or rent allowance to
Tenant for diminution of rental value and no liability on the part of Landlord
by reason of inconvenience, annoyance or injury to business arising from
Landlord, Tenant or others making, or failing to make, any repairs, alterations,
additions or improvements in or to any portion of the Premises, or in or to
fixtures, appurtenances, or equipment thereof.
(b) Tenant will not, without Landlord's written consent, make
alterations, additions or improvements in or about the Premises, including, but
not limited to the Building and will not do anything to or on the Premises which
will increase the rate of fire insurance. Landlord shall not unreasonably
withhold its consent if the alternations, additions or improvements are located
in the Building and provided that such alterations, additions or improvements
are consistent with the high quality of the Premises and the Development. It is
expressly understood and agreed that Landlord is not requiring Tenant to make
any such improvements to the Premises, and no improvements by Tenant shall be
deemed improvements in accordance with an agreement between the parties, within
the meaning of the Florida Mechanics' Lien Law. All contractors, subcontractors,
mechanics, laborers, materialmen, and others who perform any work, labor or
services, or furnish any materials, or otherwise participate in the improvement
of the Premises shall be and are hereby given notice that Tenant is not
authorized to subject Landlord's interest in the Premises to any claim for
mechanics', laborers' and materialmen's liens, and all persons dealing directly
or indirectly with Tenant may not look to the Premises as security for payment.
Tenant shall save Landlord harmless from and against all expenses, liens, claims
or damages to either property or person which may or might arise by reason of
the making of any such additions, improvements, alterations and/or
installations. Tenant shall comply with the building codes, regulations and laws
now or hereafter to be made or enforced in the municipality, county and/or state
which have jurisdiction over such work. All alterations, additions or
improvements of a permanent nature made or installed by Tenant to the Premises
shall become the property of Landlord at the expiration of this Lease, unless
Landlord, in writing to Tenant no later than twenty (20) days prior to the end
of the Lease, elects to relinquish its right thereto. In such event, Tenant
shall remove the same at its sole cost and expense and shall repair any damage
to the Premises caused by said removal and shall restore the Building to its
original condition. Tenant further agrees to do the foregoing prior to the
expiration of the Term. Prior
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<PAGE> 11
to making any alterations Tenant (i) shall submit to Landlord detailed plans and
specifications (including layout, architectural, mechanical and structural
drawings) for each proposed alteration and shall not commence any such
alteration without first obtaining Landlord's written approval of such plans and
specifications, (ii) shall, at its expense, obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies, and
(iii) shall furnish to Landlord duplicate original policies of worker's
compensation (covering all persons to be employed by Tenant, and Tenant's
contractors and subcontractors in connection with such alteration) and
comprehensive public liability (including property damage coverage) insurance in
such form, with such companies, for such periods and in such amounts as Landlord
may require, naming Landlord and its agents as additional insured. Upon
completion of such alteration, Tenant, at Tenant's expense, shall obtain
certificates of final approval of such alteration required by any governmental
or quasi-governmental bodies and shall furnish Landlord with copies thereof. All
materials and equipment to be incorporated in the Premises as a result of all
alterations shall be new and first quality and shall be of a class equal to the
original work or construction; no such materials or equipment shall be subject
to any lien, encumbrance, chattel mortgage or title retention or security
agreement. Tenant shall not, at any time prior to or during the term, directly
or indirectly employ, or permit the employment of, any contractor, mechanic or
laborer in the Premises, whether in connection with any alteration or otherwise,
if such employment will interfere or cause any conflict with other contractors,
mechanics, or laborers engaged in the construction, maintenance or operation of
any part of the Development by Landlord, Tenant or others. In the event of any
such interference or conflict, Tenant, upon demand of Landlord, shall cause all
contractors, mechanics or laborers causing such interference or conflict to
leave the Development immediately. Landlord will use reasonable efforts to
attempt to schedule when contractors, mechanics or laborers will be present at
the Development so that there will not be interference or conflict with the
Tenants, contractors, mechanics or laborers. All alterations to which Landlord
has consented shall be at Tenant's sole cost and expense. Tenant shall not
employ any contractors, subcontractors, employees, mechanics or laborers without
Landlord's prior written consent which consent may be arbitrarily withheld by
Landlord.
(c) No later than seven (7) days after the last day of the Term,
Tenant will remove all Tenant's personal property and repair all injury done by
or in connection with installation or removal of said property and surrender the
Premises and all improvements located therein whether or not paid for by Tenant
(together with all keys to the improvements located on the Premises) in as good
a condition as they were at the beginning of the Term, wear and tear as
described below and damage covered by insurance proceeds which insurance
proceeds were received by Landlord or used to reduce the outstanding debt on the
Premises incurred by Landlord, excepted. Landlord and Tenant agree that it is
the intent of this Lease that Tenant return the improvements in as good a
condition as they were at the beginning of the Term provided that the wear and
tear that would result even if all periodic and preventive maintenance that is
expected to be performed in a first class office facility were timely performed
for the improvements. All property of Tenant remaining on the Premises seven (7)
days after expiration of the Term shall be deemed conclusively abandoned and may
be removed by Landlord, and Tenant shall reimburse Landlord for the cost of
removing the same, subject however, to Landlord's right to require Tenant to
remove any improvements or additions made to Premises by Tenant pursuant to the
preceding subparagraph (b).
(d) In doing any work related to the installation of Tenant's
furnishings, fixtures, or equipment in the Premises, Tenant will use only
contractors, subcontractors, employees, mechanics
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and laborers approved by Landlord. Tenant shall promptly remove any lien for
material or labor claimed against the Premises by such contractors,
subcontractors, employees, mechanics and laborers, if such claim should arise
and hereby indemnifies and holds Landlord harmless from and against any and all
costs, expenses or liabilities incurred by Landlord as a result of such liens.
(e) Tenant shall not install or operate in the Premises any
equipment whatsoever which will or may necessitate any changes, replacements or
additions to the water system, plumbing system, heating system, air-conditioning
system or the electrical system for the Premises without the prior written
consent of Landlord which consent may be arbitrarily withheld nor shall Tenant
employ any contractors, subcontractors, employees, mechanics or laborers to make
the change without Landlord's prior written consent which consent may be
arbitrarily withheld.
(f) Tenant agrees that all personal property brought into the
Premises by Tenant, its employee, licensees and invitees shall be at the sole
risk of Tenant, and Landlord shall not be liable for theft thereof or for any
damages thereto; such theft or damage being in the sole responsibility of
Tenant.
8. DESTRUCTION OR DAMAGE TO PREMISES
(a) If the Premises are totally destroyed (or are so substantially
damaged as to be untenantable) by storm, fire, earthquake, or other casualty,
Rent shall not be abated or be prorated from the date of such damage or
destruction; however, Landlord shall promptly determine whether the Premises can
be restored within a reasonable time period from the date of such casualty. In
the event the Landlord determines in its sole discretion that the Premises
cannot be restored within a reasonable time period from the date of such
casualty even if Tenant uses the insurance proceeds received pursuant to the
provisions of this Lease, this Lease may be terminated upon written notice from
Landlord to the Tenant given not more than forty-five (45) days following the
date of the casualty and Landlord shall receive all of the insurance proceeds.
If Landlord terminates this Lease under this Paragraph, Tenant shall surrender
possession of the Premises on the date of termination and Landlord shall refund
to Tenant all advance Rent and other payments or credits made by Tenant to or on
behalf of Landlord for the period following the termination date.
Notwithstanding the foregoing, Landlord shall have no right to terminate this
Lease in the event the cost of restoration is less than fifty percent (50%) of
the replacement cost of the improvements located on the Premises. In the event
that the cost to repair the damage will cost an amount less than fifty percent
(50%) of the replacement cost of the improvements located on the Premises or in
the event such notice of termination is not given, then this Lease shall remain
in full force and effect and Landlord shall make the net insurance proceeds
received available to Tenant for repair and restoration of the damaged property,
provided that (1) there is not then in existence an event of default under the
terms of the Lease, and (2) Landlord has approved Tenant's detailed plans and
specifications (including layout, architectural, mechanical and structural
drawings) for restoring the Premises and (3) Landlord has approved Tenant's
contractors, subcontractors, employees, mechanics and laborers who will be
restoring the Premises and (4) Tenant has deposited with Landlord or the Lender
prior to the commencement of the repair and new restoration an amount equal to
the difference of the cost to restore the
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Premises as reasonably determined by Landlord and the sums made available by
Landlord on account of such net insurance proceeds.
If the damage to the improvements on the Premises is so extensive that the
repair and restoration of the improvements on the Premises is impractical or if
applicable governmental regulations prohibit the reconstruction of the
improvements on the Premises as originally constructed and Tenant receives the
insurance proceeds then, Tenant, within a reasonable time after the insurance
proceeds are made available to Tenant, shall construct substitute improvements
on the Premises consistent with the then applicable government regulations and
with plans and specifications approved by Landlord in writing, which approval
shall not be unreasonably withheld or delayed and Tenant shall remit the balance
of the insurance proceeds to Landlord.
(b) If the improvements on the Premises are damaged but not rendered
wholly untenantable by any of the events set forth in subparagraph (a) above,
Rent shall not abate or be prorated; however, Tenant shall restore the
improvements on the Premises as quickly as practicable. Landlord shall make the
insurance proceeds available to Tenant to restore the improvements. on the
Premises provided that the conditions set forth in Paragraph 8(a) for use of the
insurance proceeds are satisfied prior to the commencement of the restoration.
(c) Landlord shall not be required to make any insurance proceeds
available for repair or replacement of any improvements installed in the
Premises by or for Tenant, other than the Building and the parking facilities,
nor shall Landlord be responsible for the replacement of Tenant's furniture and
furnishings. Tenant shall, at Tenant's sole cost and expense, repair and restore
such improvements to their original condition.
(d) In the event the Premises are damaged or destroyed and if the
following conditions are satisfied and if the net insurance proceeds which are
to repair or restore the Premises are not given to Tenant within twenty (20)
days after Tenant's written request then Tenant shall have the right to
terminate this Lease. The conditions that must be satisfied are the following:
(1) there is not then in existence an event of default under the terms of the
Lease, (2) Landlord has approved detailed Plans and Specifications (including
layout, architectural, mechanical and structural drawings) for restoring the
Premises, (3) Landlord has approved Tenant's contractors, subcontractors,
employees, mechanics or laborers who will be restoring the Premises and (4)
Tenant is willing to deposit with Landlord or the Lender prior to the
commencement of the repair and new restoration an amount equal to the difference
of the cost to restore the Premises as reasonably determined by Landlord and the
sums made available by Landlord on account of such net insurance proceeds.
9. DEFAULT BY TENANT - LANDLORD'S REMEDIES
(a) Upon the happening of any one or more of the following events,
Tenant shall be in default under the terms of this Lease:
(l) Tenant's failure to pay any installment of the 1 Monthly
Rental within three (3) days after the same becomes due and payable under this
Lease;
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(2) Tenant's failure to pay any Additional Rental within ten
(10) days after the same becomes due and payable under this lease.
(3) After the occurrence of the event described in
subparagraph a(l) or a(2) above twice in any twelve-month period, Tenant's
failure to pay any installment of Rent or any other sum due hereunder on or
before the date on which the same becomes due and payable;
(4) Tenant's failure to perform or observe some term or
condition of this Lease which, because of its character, would immediately
jeopardize Landlord's interest (such as, but without limitation, failure to
maintain insurance);
(5) Tenant's failure to perform or observe any other term or
condition contained in this Lease and Tenant's failure to commence within thirty
(30) days after notice from Landlord to Tenant thereof the curing of such term
or condition and Tenant's failure to promptly and diligently complete the curing
of same;
(6) The filing of a petition by or against Tenant for
adjudication as a debtor within the meaning of Chapter 7 or Chapter 13 or other
provisions of the Bankruptcy Act, as now or hereafter amended or supplemented,
or for reorganization or arrangement within the meaning of Chapter 11 of the
Bankruptcy Act, or the filing of any petition by or against Tenant under any
future bankruptcy act or insolvency law for the same or similar relief and the
failure to have such petition removed within thirty (30) days;
(7) The dissolution or liquidation, or the commencement of any
action or proceeding for the dissolution or liquidation, of Tenant, whether
instituted by or against Tenant or the appointment of a receiver or trustee, or
the commencement of any action or proceeding for the appointment of a receiver
or Trustee, of the property of Tenant;
(8) The taking possession of the property of Tenant by a
governmental officer or agency pursuant to statutory authority for the
dissolution, rehabilitation, reorganization or liquidation of Tenant;
(9) Tenant's making an assignment for the benefit of
creditors, whether voluntary or involuntary;
(10) Tenant's interest under this Lease being sold or taken
under execution or other legal process;
(11) Tenant's vacating or abandoning the Premises;
Notwithstanding anything contained herein, if the Lender grants Landlord a
longer grace period for any item described above except subparagraph (a)(l) and
(a)(2), then Tenant shall have the same grace period that is granted to
Landlord.
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(b) Upon Tenant's default or breach of the Lease as described in
subparagraph (a) above, Landlord, at its discretion, may then exercise any one
or more of the following options:
(1) Terminate this Lease, remove all persons and property from
the Premises by summary proceedings or otherwise, and take possession of the
Premises, all without prejudice to Landlord's right to collect from Tenant any
rent or other sum which became payable to Landlord prior to such termination,
together with all damages suffered by Landlord resulting from Tenant's default
hereunder;
(2) Landlord, as Tenant's agent, without termination of this
Lease, upon Tenant's default or breach of this Lease, as set forth in
subparagraph (a) above, may at Landlord's option, evidenced by written notice to
Tenant, terminate Tenant's right to possession and enter upon and rent the
Premises at the best price obtainable by reasonable effort, without
advertisement, and by private negotiations and for any term Landlord deems
proper. Tenant shall upon receipt of such notice surrender possession if the
Premises to Landlord and remove all of Tenant's property therefrom; and Landlord
may forthwith re-enter the Premises and repossess itself thereof; and remove all
persons and property therefrom, using such force as may be necessary without
being guilty of trespass, forcible entry or detainer or other tort. Tenant shall
be liable to Landlord for the deficiency, if any, between the amount of all Rent
reserved in this Lease and the net rent, if any, collected by Landlord in
reletting the Premises (the "Net Rent"), which deficiency shall be due and
payable by Tenant for the period in which Rent reserved in the Lease would have
been due and payable. Net Rent shall be computed by deducting from gross rents
collected all reasonable expenses and costs of whatever nature incurred by
Landlord in reletting, including, but not limited to attorneys' fees, broker's
commissions and the cost of renovating or remodeling the Premises.
(3) In the event Landlord elects to terminate this Lease as
hereinabove provided, Landlord may, in addition to any other remedies it may
have, recover from Tenant all damages Landlord may incur by reason of such
default, including the cost of recovering the Premises, reasonable attorneys'
fees, a pro rata portion of the Rent Credit described in Paragraph 3 and any
other cash concession (which shall be amortized over the Term of this Lease) and
including the worth at the time of such termination of the excess, if any, of
the amount of Rent reserved in this Lease for the remainder of the Term over the
then reasonable rental value of Premises for the remainder of the Term, all of
which amounts shall be immediately due and payable from Tenant to Landlord. The
term "reserved" as applied to Rent shall mean any and all payments to which
Landlord is entitled hereunder during the entire Term of this Lease.
(4) Landlord may declare the entire remaining unpaid Rent for
the Lease Year in which the default occurred and other charges due hereunder for
the Lease Year in which the default occurred to be immediately due and payable,
and take such action available to Landlord to recover and collect the same. On
the first day of each subsequent Lease Year, Landlord may declare the entire
remaining unpaid Rent for that Lease Year and other charges due hereunder for
that Lease Year to be immediately due and payable, and take such action
available to Landlord to recover and collect the same after Landlord uses
reasonable efforts to mitigate its damage.
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<PAGE> 16
(5) Landlord may exercise any and all rights and privileges
and pursue any remedy that Landlord may have under the laws of the State of
Florida.
(c) Any installment of Rent herein required to be paid by Tenant
which is not paid when due, shall bear interest at the lower of (i) four percent
(4%) over the prime rate announced by Southeast Bank, N.A. as its prime lending
rate (but not necessarily the best or lowest rate charged borrowing customers of
Southeast Bank, N.A. at its principal office) as such rates change from time to
time or (ii) the maximum rate of interest permitted by applicable law, from the
due date until paid, as a late charge for the purpose of reimbursing Landlord
for expenses incurred by reason of such failure by Tenant and not as penalty
therefore. The interest so charged shall be collectible as Additional Rental.
(d) All of Landlord's rights and remedies after a default by Tenant,
whether expressly stated above or whether available at law or in equity, shall
be deemed separate and cumulative, and the exercise of any one right or the
pursuit of any one remedy shall not preclude Landlord from exercising any other
right or pursuing any other remedy.
(e) Landlord shall have, upon default in payment of Rent by Tenant,
a lien in the principal amount of Rent in default, upon the furniture,
machinery, equipment, fixtures and property usually kept on the Premises other
than such furniture, machinery, equipment, fixtures and property that is leased
from third parties and other than those items set forth in Exhibit K attached
hereto and incorporate herein by reference, regardless of whether Tenant or
another has possession of the property mentioned. If in accordance with the
provisions of this Lease, Tenant assigns or sublets all or any part of the
Premises, Landlord also shall have a lien for rent on the described property of
the assignee or sublessee.
(f) All agreements, covenants, conditions and provisions to be
performed or observed by Tenant under this Lease shall be at its sole cost and
expense and without any abatement of Rent. If Tenant shall fail to pay any sum
of money other than Rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, Landlord may, but
shall not be obligated so to do, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or make any such other act on
Tenant's part to be made or performed as this Lease provides. All sums so paid
by Landlord and all necessary incidental costs shall be deemed Additional Rental
hereunder and shall be payable to Landlord on demand, together with interest
thereon at the lower of (i) four percent (4%) over the prime rate announced by
Southeast Bank, N.A. as its prime commercial lending rate (but not necessarily
the best or lowest charged borrowing customers of Southeast Bank, N.A. as such
rates change from time to time or (ii) the maximum rate of interest permitted by
applicable law, from the date of expenditure by Landlord to the date of
repayment by Tenant, and Landlord shall have (in addition to any other right or
remedy of Landlord) the same rights and remedies in the event of nonpayment
thereof by Tenant as in the case of default by Tenant in the payment of Rent.
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l0. LANDLORD'S LIABILITY
The term "Landlord" as used in this Lease shall mean only the owner or
mortgagee in possession for the time being of the Premises so that in the event
of sale of said Premises or leasehold interest or an assignment of this Lease,
Landlord and all of the general partners and limited partners of Landlord shall
be and are hereby entirely freed and relieved of all obligations of Landlord
subsequently accruing. It is specifically understood and agreed that there shall
be no personal liability of Landlord or any of the general partners or limited
partners of Landlord in respect of any covenant, condition or provisions of this
Lease; in the event of a breach or default by Landlord or any of its obligations
under this Lease, Tenant shall look solely to the equity of the Landlord in the
Premises for the satisfaction of Tenant's remedies. Notwithstanding the
foregoing, Landlord shall have personal liability during the period of time that
the Building is being constructed (the "Construction Period). In addition,
Tenant shall have the right to sue for specific performance and to sue for
injunctive relief during the Term of this Lease; however, Landlord, its general
partners and limited partners have no personal liability for any monetary award
to Tenant or expend any money to comply with a judgment of specific performance
to Tenant during the term of this Lease except during the Construction Period.
11. ASSIGNMENT AND SUBLETTING
Tenant shall not, without the prior written consent of Landlord which
consent may be arbitrarily withheld, assign all of this Lease except in the case
of a merger by Tenant with another entity provided that the surviving entity has
a minimum net worth at least equal to the net worth of Anchor Glass Container
Corporation as of December 31, l987, as reflected in its Annual Report; however
Tenant may, without the prior written consent of Landlord, sublet the unoccupied
space within the Premises. Tenant shall submit to Landlord a written request for
the consent of the Landlord to the assignment which request shall be accompanied
by the name of the assignee, a copy of the fully executed assignment which
assignment shall be solely conditioned upon Landlord's consent thereof except as
provided above, a description of the nature and character of the business of the
proposed assignee, the proposed use of the Premises, current financial
information on the assignee, and such additional information as Landlord may
reasonably request. Consent by Landlord to one assignment shall not destroy or
waive this provision, ant all later assignments shall likewise be made only upon
the prior written consent of Landlord. Subtenants or Assignees shall become
liable directly to Landlord for all obligations of Tenant hereunder without
relieving Tenant of its liability under this Lease except in those cases in
which Landlord has given its prior written consent to the assignment. In the
event that Tenant merges with another entity that has a minimum net worth as
described herein, the surviving entity shall remain liable for the term of this
Lease. It is expressly understood and agreed to that Tenant may not merge with
another entity unless the surviving entity will have a minimum net worth at
least equal to Anchor Glass Container Corporation's net worth as of December 31,
1987, as reflected in its Annual Report.
Tenant agrees that the instrument by which any assignment consented to by
Landlord or subletting is accomplished shall expressly provide that the assignee
or subtenant will perform and observe all the agreements, covenants, conditions
and provisions to be performed and observed
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by Tenant under this Lease as and when performance and observance is due and
that Landlord will have the right to enforce such agreements, covenants,
conditions and provisions directly against such assignee or subtenant. Tenant
shall in all cases remain responsible for the performance by any subtenant of
all such agreements, covenants, conditions and provisions. Any assignment or
subletting without an instrument containing the foregoing provision shall be
void and shall, at the option of the Landlord, constitute a default that
entitles Landlord to terminate this Lease.
In the event Tenant notifies Landlord of Tenant's intent to assign this
Lease, and if Tenant provides Landlord with the required information as stated
above, Landlord shall within thirty (30) days from receipt of such notice (i)
consent to such proposed assignment, or (ii) refuse such consent, or (iii) elect
to cancel this Lease. In the event of Landlord's election to cancel this Lease,
Tenant shall have ten (10) days from receipt of such notice in which to notify
Landlord of Tenant's acceptance of such cancellation or Tenant's desire to
remain in possession of the Premises under the terms and conditions and for the
remainder of the Term of this Lease. In the event Tenant fails to so notify
Landlord of Tenant's election to accept termination or to continue as Tenant
hereunder. such failure shall be deemed an election to terminate and such
termination shall be effective as of the end of the ten (10) days from the date
of Landlord's notice. In the event this Lease is either cancelled or an
assignment or sublease is made as herein provided, Tenant shall reimburse
Landlord for all of the necessary legal and accounting services required in
order to accomplish such cancellation or assignment.
The following are additional conditions and restrictions upon assignment
or subletting by Tenant:
(i) Tenant shall have no right to assign this Lease or sublet the
whole or any part of the Premises to any party who is dealing with or has dealt
with Landlord or Landlord's agents with respect to space available for rent in
the Development within six (6) months immediately preceding Tenant's notice.
(ii) Any sublease shall be expressly subject and subordinate to all
of the terms and provisions of this Lease;
(iii) Tenant agrees not to list or otherwise publicly advertise the
Premises for assignment or subletting at a rental rate less than (a) the rate of
the monthly rent then payable hereunder for the Premises or (b) the rate at
which Landlord is then offering comparable space in the Development (and
Landlord agrees, upon written request from Tenant, to advise Tenant of such
rate), whichever is higher; and
(iv) Tenant agrees not to offer to assign nor sublet to a party
which is already a tenant in the Development or to a subsidiary, an affiliate,
or a parent of a tenant in the Development.
(v) If Tenant shall assign all or a portion of the Premises for a
rental in excess of the total Rent stipulated herein, which is or may become due
and owing, then Tenant shall pay to Landlord as Additional Rental all of such
excess amount after deducting Tenant's reasonable out-of-pocket expenses paid to
third parties which expenses were incurred directly with the
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negotiation or execution of this assignment. In addition, Tenant shall also pay
to Landlord, as Additional Rental, all other profit, gain, or consideration
realized by Tenant in connection with the assignment after deducting Tenant's
reasonable out-of-pocket expenses paid to third parties which expenses were
incurred directly with the negotiation or execution of this Assignment or
Sublease.
(vi) Such subletting or assignment shall not cause Landlord any
cost, and if Landlord incurs any cost whatsoever, then Tenant agrees to pay the
same as Additional Rental.
(vii) With respect to subletting less than all the Premises, Tenant
at its sole cost and expense, shall provide and permit reasonable means of
ingress to and egress from the space sublet by Tenant.
If Landlord terminates this Lease as set forth herein, Landlord may, if it
elects, enter into a new lease covering the Premises with the intended assignee
on such terms and conditions as Landlord and such person may agree, or enter
into a new lease covering the Premises, with any other person; in such event,
Tenant shall not be entitled to any portion of the profit, if any, which
Landlord may realize on account of such termination and reletting, nor shall
Tenant be entitled to a finder's fee, broker's commission, or any such other
fee. From and after the date of such termination of this Lease, Tenant shall
have no further obligation to Landlord hereunder with respect to these Premises,
except for matters occurring or obligations arising hereunder prior to the date
of such termination.
If Tenant's interest in this Lease is assigned or if the Premises or any
part thereof are subject to, or occupied by, or used by, any one other than
Tenant, Landlord may, after default by Tenant, accept from any assignee,
sublessee or any one who claims a right to the interest of Tenant under this
Lease or who occupies any part or the whole of the Premises the payment of Rent
and/or the performance of any of the other obligations of Tenant under this
Lease, but such acceptance shall not be deemed to be a waiver by Landlord of the
breach by Tenant of the provisions of this Paragraph 11, nor a recognition by
Landlord that any such assignee, sublessee, claimant or occupant has succeeded
to the rights of Tenant hereunder, nor a release by Landlord of Tenant from
further performance by Tenant of the covenants on Tenant's part to be performed
under this Lease except as otherwise provided herein; provided, however, that
the net amount of rent collected from any such assignee, sublessee, claimant or
occupant shall be applied by Landlord to the Rent to be paid hereunder.
12. CONDEMNATION
If the temporary use of the whole or any part of the Premises shall be
taken at any time during the Term for any public or quasi-public purpose by any
lawful power or authority or by the exercise of the right of condemnation or
eminent domain or by agreement in lieu of condemnation between those authorized
to exercise such right, the Terms of the Lease shall not be affected in any way
and Tenant shall continue to pay Rent and Additional Rent hereunder and be
subject to the other provisions of this Paragraph and, except as hereinafter
provided, Tenant shall be entitled to receive any award or payment for such
temporary use during the Term but not after the Term, provided that the lender
who is financing the improvements (the "Lender") does not require that such
award or payment be applied to reduce the Lender's loan provided in this
paragraph. If such taking results in
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changes or alterations in the Premises which would necessitate an expenditure,
after repossession, to repair the Premises to their former condition and such
award or payment includes an amount to compensate for such expenditure and is
made prior to the expiration of this Lease, then the amount of such award or
payment specified as compensation for the expenses of such repair shall be
applied towards such repair, provided that (a) there is not then in existence a
default under this Lease, (b) Tenant shall deposit with Landlord or the Lender,
prior to the commencement of any such repair, an amount equal to the difference
between the cost to repair the Premises and the net proceeds from the
condemnation, and (c) Landlord has approved Tenant's detailed plans and
specifications (including layout, architectural, mechanical and structural
drawings) for restoring the Premises, and (d) Landlord has approved Tenant's
contractors, subcontractors, employees, mechanics and laborers who will be
restoring the Premises, and (e) the Lender does not require that such award or
payment be applied to reduce the outstanding balance of the Lender's loan.
If the whole of the Premises shall be condemned, or purchased in lieu of
condemnation, by any competent authority, for any public purpose, then, the Term
of this Lease shall cease and terminate from the time when the possession shall
be required for such use or purpose and the Rent including unearned prepaid
rent, if any, shall be apportioned accordingly.
(a) If any part of the Premises shall be taken or condemned or
purchased in lieu thereof by any competent authority for any public purpose,
provided the balance of the Premises remaining cannot be effectively utilized by
Tenant for office space even if the condemnation proceeds are used to restore or
repair the Premises, then Tenant shall have the option to cancel this Lease
(effective as of the time that possession shall be required for such public use
or purpose) by Tenant, giving Landlord written notice within twenty (20) days
after receipt of notice of the condemnation from Landlord or from the
governmental authorities, whichever occurs first, or in the absence of such
notice, within a reasonable time after the taking occurs. If Tenant is entitled
to exercise said option to terminate and does so, all rents shall be prorated to
the date Tenant is required to give up possession. In the event Tenant is not
entitled to cancel the Lease, or if it is entitled to do so but does not
exercise its option, Landlord shall make the net proceeds from the condemnation
available to Tenant for repair and restoration of the Premises, provided that
(a) there is not then in existence a default under this Lease, and (b) Tenant
shall deposit with Landlord or the Lender, prior to the commencement of any such
repair and restoration, an amount equal to the difference between the cost to
repair and/or restore the Premises and the net proceeds from the condemnation
and (c) Landlord has approved Tenant's detailed Plans and Specifications
(including layout, architectural, mechanical and structural drawings) for
restoring the Premises, and (d) Landlord has approved Tenant's contractors,
subcontractors, employees, mechanics and laborers who will be restoring the
Premises, and (e) the condemnation award is not used to acquire or construct
replacement parking as described below, and (f) the condemnation award is less
than fifty percent (50%) of the replacement costs of the improvements located on
the Premises, and (g) Lender does not require that such condemnation award or
payment be applied to reduce the outstanding balance of the Lender's loan.
Tenant shall be able to terminate this Lease if Tenant does not receive the
condemnation proceeds provided that (a) there is not then an existence of
default under this Lease, and (b) Tenant is willing to deposit with Landlord or
the Lender prior to the commencement of any such repair or restoration an amount
equal to the difference between the cost to repair and/or restore the Premises
and the net proceeds from the condemnation and (c) Landlord has approved
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Tenant's detailed Plans and Specifications for repairing and restoring the
Premises and (d) Landlord has approved Tenant's contractors, subcontractors,
employees, mechanics and laborers who will be repairing or restoring the
Premises and (e) the condemnation award is not used to acquire or construct
replacement parking as described below. In the event the Lease is not cancelled,
Tenant will be responsible for the Rent as heretofore set forth to the date of
such taking or purchase; after which date the Rent herein reserved shall be
reduced proportionately as the usable floor area of the remaining leased space
in the Building compares to the usable floor area of the leased space in the
Building before such taking or purchase. Notwithstanding the foregoing, the
parties agree that in the event the parking spaces located on the Premises are
taken by condemnation or purchase in lieu of condemnation, then Landlord shall
be entitled to the condemnation award for the parking spaces taken. Landlord
shall exercise its rights to purchase an easement for parking spaces under the
Option Agreement for Parking Easement described in Exhibit N within three (3)
months of the condemnation or purchase in lieu of condemnation. Landlord shall
provide replacement grade surface parking spaces or such other form of parking
as agreed to by Landlord and Tenant on the northern portion of the property that
is contiguous to the south boundary of the Building and if Landlord promptly
commences to provide such replacement parking and completes such replacement
parking within 180 days after receiving the proceeds that it is entitled to
receive from the competent authority, then Tenant shall not have the right to
cancel this Lease and the Rent shall not be reduced. Landlord covenants and
agrees that it will provide replacement grade surface parking or such other form
of parking as agreed to by Landlord and Tenant in a customary and usual
configuration which replacement parking shall be as convenient to the Building
as the existing parking that was taken by the condemnation or purchase in lieu
of condemnation. Landlord further covenants and agrees that the replacement
grade surface parking spaces or such other form of parking as agreed to by
Landlord and Tenant shall be of equal size, quality and workmanship as the
parking spaces that were taken by virtue of the condemnation or purchase in lieu
of condemnation. Landlord will replace such parking spaces that were taken in
the condemnation or purchase in lieu of condemnation at the rate of one parking
space for each parking space that is lost in the taking. For example, in the
event forty parking spaces were lost in the taking, then Landlord shall furnish
forty replacement parking spaces to Tenant. Landlord and Tenant agree that the
cost of providing replacement parking spaces shall be paid for as follows:
Landlord shall first use the condemnation proceeds allocated for the parking
spaces which were taken in the condemnation to purchase and construct the
replacement parking spaces. In the event that the condemnation proceeds are not
sufficient to cover the cost of acquiring the land and constructing replacement
grade surface parking spaces or such other form of parking as is agreed to by
Landlord and Tenant, then Landlord will pay the excess cost.
(b) Landlord agrees to notify Tenant of the pendency of any
condemnation proceeding that Landlord is aware of. Tenant shall have the right
to be present in any negotiations and proceedings concerning proposed
condemnation or purchase in lieu of condemnation. Landlord agrees to consult
with Tenant and Tenant's attorneys and experts and cooperate with them in
formulating a defense of such condemnation or purchase in lieu of condemnation.
(c) Landlord and Tenant hereby agree that any award or proceeds
resulting from a condemnation or purchase in lieu thereof of the whole or part
of the Premises shall belong solely to Landlord, and Tenant hereby waives any
right to make any claim therefor as the result of this
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Lease; provided, however, that Tenant shall not be prevented from pursuing any
claim that Tenant has under the laws of the State of Florida against the
condemning authority, so long as such claim will not diminish Landlord's award.
13. INSPECTIONS AND ACCESS TO PREMISES
Tenant is hereby given the right to inspect the Premises during the
construction of the improvements if Tenant gives reasonable notice to Landlord
provided that Tenant and its agents do not interfere with any contractor,
subcontractor, mechanic, laborer, materialman or any other person who is
performing any work, labor or services on the Premises during said construction
period provided that Tenant's mere inspection shall not be deemed acceptance of
the Premises. Tenant hereby releases Landlord and its agent and agrees to
indemnify and save Landlord and its agents harmless from and against any and all
claims, liabilities, damages, suits and expenses of all kinds or nature,
including reasonable attorney's fees and disbursements, which may be imposed
upon or incurred by or served against Landlord by reason of an injury to Tenant
or any agent of Tenant who is inspecting the improvements during the
construction period.
Landlord or Landlord's agents shall have the right to enter the Premises
and all improvements located thereon at all reasonable times subsequent to
reasonable notice to Tenant except in the case of an emergency in which case no
notice is required, to examine the Premises and all improvements located thereon
to determine whether Tenant has complied with the Standard of Maintenance for
the Building described in Exhibit J, to survey the Premises and all improvements
located thereon, to show to prospective purchasers, mortgagees or lessees of the
Premises, and to make such decoration, repairs, alterations, improvements or
additions as Landlord may deem necessary or desirable to the Premises or to any
part thereof or which Landlord may elect to perform following Tenant's failure
to make repairs or perform any work which Tenant is obligated to perform under
this Lease, or for the purpose of complying with laws, regulations or other
requirements of governmental authorities. Landlord shall be allowed to take all
material into and upon the Premises that may be required in connection with said
activity without the same constituting an eviction or constructive eviction of
Tenant in whole or in part and the Rent shall not abate while said activity is
being conducted, by reason of loss or interruption of the business of Tenant, or
otherwise. Nothing herein contained, however, shall be deemed or construed to
impose upon Landlord any obligation, responsibility or liability whatsoever, for
the care, supervision or repair of the Premises or any part thereof, other than
as herein provided.
14. SUBORDINATION AND LEASE AMENDMENT
This Lease shall be subject and subordinate to any mortgages which may now
or hereafter affect this Lease or the Premises and to all renewals, extensions,
supplements, amendments, modifications, consolidations and/or replacement of the
mortgages provided that Tenant is given the right of nondisturbance of all
rights and interest in the Lease as long as Tenant is not in default of the
Lease. Landlord and Tenant covenant and agree that they will use their best
efforts to have any lender who has a loan on the Property that is superior to
Tenant's interest under this Lease execute a subordination and nondisturbance
agreement substantially in the form set forth in Exhibit L attached hereto and
incorporated herein by reference. The subordination clause shall be
self-operative and no further instrument of subordination shall be required to
make the interest of any mortgagee
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of any mortgage superior to the interest of Tenant hereunder. However, in
confirmation of the subordination set forth in this Paragraph 14, Tenant shall,
at Landlord's request, execute and deliver such further instruments as may be
desired by any holder of a mortgage and this shall be a default of this Lease if
Tenant is unable to provide such certificate or certificates within ten (10)
days of Landlord's written request. In the event Landlord's mortgagee shall
reasonably require any changes in or additions to this Lease, Tenant hereby
agrees to amend this Lease to effect such changes or additions and Landlord
shall bear the full expense of the preparation and recording of the necessary
written instruments; provided, however, nothing in this Paragraph 14 shall
obligate Tenant to agree to any change in the amount of Rent required of Tenant
hereunder, or to any change in the term of this Lease.
At any time and from time to time but on not less than ten (10) days prior
written request by Landlord, Tenant will execute, acknowledge and deliver to
Landlord, promptly upon request, an estoppel certificate certifying:
(a) That this Lease is unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and stating the date and nature of each modification);
(b) The date, if any, to which rent and other sums payable hereunder
have been paid, and the amount of security deposit and prepaid rent, if any;
(c) That no notice has been received by Tenant of any default which
has not been cured except as to default specified in such certificate;
(d) That Landlord is not in default hereunder, except as to default
specified in such certificate, nor is there now any fact or condition which,
with notice or lapse of time or both, will become a default;
(e) Such other estoppel matters as may be reasonably requested by
Landlord or any actual or prospective purchaser or mortgage lender. Any such
certificate may be relied upon by any actual or prospective purchaser, mortgagee
or beneficiary under any deed or mortgage of the Premises or any part thereof;
Landlord agrees that Tenant may rely on a notice sent by Landlord
indicating that there is a new owner of the premises, Tenant agrees, at the
election and upon written demand of any owner of the Premises or the Building,
or of any mortgagee in possession of the Premises or the Building, to attorn,
from time to time, to any such owner or mortgagee, upon the then executory terms
and conditions of this Lease, for the remainder of the term originally demised
in this Lease, provided that such owner, lessor or mortgagee, as the case may
be, or receiver caused to be appointed by any of the foregoing, shall then be
entitled to possession of the Premises and agrees to grant Tenant the right of
nondisturbance as long as Tenant is not in default of the Lease. The provisions
of this subparagraph shall inure to the benefit of any such owner or mortgagee,
and shall be self-operative upon any such demand, and no further instrument
shall be required to give effect to said provisions. Tenant, however, upon
demand of any such owner or mortgagee, agrees to execute, from time to time,
instruments in confirmation of the foregoing provisions of this subparagraph,
satisfactory to
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<PAGE> 24
any such owner or mortgagee, acknowledging such attornment and setting forth the
terms and conditions of its tenancy. Nothing contained in this subparagraph
shall be construed to impair any right otherwise exercisable by any such owner
or mortgagee.
Landlord agrees that it will consult with Tenant in negotiating any
renewal, extension, supplement, amendment, modification, consolidation and/or
replacement of the existing mortgage if the Tenant's rent would increase as a
result of said renewal, extension, supplement, amendment, modification,
consolidation and/or replacement of the mortgage.
15. INDEMNITY
Tenant covenants and agrees to indemnify and save Landlord and its agents
harmless from and against any and all claims, liabilities, fines, damages,
penalties, suits, and expenses of all kinds or nature, including reasonable
attorneys' fees and disbursements, which may be imposed upon or incurred by or
asserted against Landlord by reason of or arising out of any damages or injuries
to goods, wares, merchandise and property, any work done in or about the
Premises or the improvements on the Premises by Tenant, or its agents,
licensees, invitees, or employees, or any negligence by tenant or its agents,
licensees, invitees, or employees, or any breach by Tenant of the terms and
conditions of this Lease, or any personal injury or loss of life in, upon, or
about the Premises, the improvements on the Premises or any part thereof,
including, but not limited to any Common Areas or parking lots used by the
occupants of the Premises arising for any reason whatsoever during the term of
this Lease by virtue of an act of Tenant, its agents, invitees, licensees, or
employees, except such as may be the result of the gross negligence or willful
default of Landlord, its agents, employees or contractors. The provisions of
this Paragraph 15 shall survive the termination of this Lease with respect to
any damages, death or injury occurring prior to termination.
16. TENANT'S INSURANCE
The Tenant covenants to provide on or before the Commencement Date and
keep in force during the Term of this Lease, a comprehensive general liability
insurance policy insuring the Landlord and Tenant against bodily injury,
property damage and personal injury. This policy shall be in the amount of Six
Million Dollars ($6,000,000) with respect to bodily injury and property damage.
The policies shall be written by a good and solvent insurance company qualified
to do business in the State of Florida and approved by Landlord and shall
include the Landlord as an additional named insured. Landlord agrees that it
will approve an insurance company that has a rating of A-, A, or A+ by A. M.
Best. A Certificate of Insurance complying with the requirements set forth above
shall be delivered to Landlord prior to the Commencement Date. Tenant shall also
deliver to Landlord upon, Landlord's written request, evidence of payment for
said insurance and all renewals thereto. Tenant shall renew said 25 policy prior
to the expiration date thereof from time to time, and furnish said renewals to
Landlord. Such policy and certificate of insurance shall contain an endorsement
that the insurer will not cancel or terminate or materially change the policy
without first giving Landlord thirty (30) days written notice.
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<PAGE> 25
Tenant shall keep the Building and all other improvements on the Premises
insured against loss by fire, lightning and other risks which at the time are
included under "extended coverage" endorsements and flood insurance if the
Premises is located in a flood zone or if required by Lender or not less than
the full replacement cost thereof as determined by Landlord. Such policy(ies)
shall include Landlord as an additional named insured and additional loss payee.
Tenant shall further deposit a certificate of insurance complying with the
requirements of this Paragraph, together with satisfactory evidence of the
payment of the required premium or premiums thereof with Landlord at or prior to
the date Tenant commences occupancy of the Premises. All policies shall be
written by a good and solvent insurance company qualified to do business in the
State of Florida and approved by Landlord. Landlord agrees that it will approve
an insurance company that has a rating of A-, A or A+ by A. M. Best. All
policies of insurance to be carried by Tenant and the certificate of insurance
shall contain an endorsement that the policies shall not be subject to
cancellation, termination or material change except after thirty (30) days prior
written notice to Landlord, and shall name any other person that Landlord
requests as the insured as their interest may appear. Tenant shall renew said
policies prior to the expiration date thereof from time to time, and furnish
said renewals to Landlord. The proceeds of any insurance shall be applied in
accordance with the terms of Paragraph 8 of this Lease to either (a) the
replacement, restoration or repair of the damaged improvements located on the
Premises; or (b) to Landlord to compensate Landlord for its loss.
Notwithstanding anything contained herein, if the Lender's insurance
requirements, including but not limited to evidence of payment of premiums,
amount of insurance and type of insurance are different, then Lender's
requirements shall be substituted in this paragraph with the exception that
Landlord shall also be named as an additional payee, or additional insured as
the case may be.
17. REMEDIES CUMULATIVE
The rights given to Landlord herein are in addition to any rights that may
be given to Landlord by a statute or under law.
18. HOLDING OVER
Tenant acknowledges that possession of the Premises must be surrendered to
Landlord at the expiration or sooner termination of the Term of this Lease.
Tenant agrees to indemnify and save Landlord harmless against all costs, claims,
loss or liability resulting from delay by Tenant in so surrendering the Premises
in the condition set forth in Paragraph 7(c) of this Lease, including without
limitation, any claims made by a succeeding tenant founded on such delay. The
parties recognize and agree that the damage to Landlord resulting from any
failure by Tenant to timely surrender possession of the Premises as aforesaid
will be extremely substantial, will exceed the amount of the Monthly Rental and
Additional Rental theretofore payable hereunder, and will be impossible to
accurately measure. Tenant therefore agrees that if possession of the Premises
is not surrendered to Landlord within 24 hours after the date of the expiration
or sooner termination of the Term of this Lease, then Tenant shall pay to
Landlord for each month and for each portion of any month during which Tenant
holds over in the Premises after the expiration or sooner termination of the
Term of this Lease, without the express written consent and approval of
Landlord, a sum equal to two times the aggregate of that portion of the Monthly
Rental and Additional Rental which was payable under this Lease during the last
month of the Term hereof. It is expressly understood and agreed to by the
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parties that Tenant will not be deemed in possession of the Premises solely as a
result of Tenant removing its personal property or repairing all injury done in
connection with installation or removal of said property within seven (7) days
after the last day of the term of this Lease. Nothing herein contained shall be
deemed to permit Tenant to retain possession of the Premises after the
expiration or sooner termination of the Term of this Lease. The aforesaid
provision of this Article shall survive the expiration or sooner termination the
term of this Lease.
19. ENTIRE AGREEMENT - NO WAIVER
This Lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties not embodied herein, shall be of any force or effect. The failure of
either party to insist in any instance on strict performance of any covenant or
condition hereof, or to exercise any option herein contained, shall not be
construed as a waiver of such covenant, condition or option in any other
instance. This Lease cannot be changed or terminated orally but only by an
agreement in writing signed by both parties hereto.
20. WAIVER OF JURY TRIAL
Landlord and Tenant each hereby waives all right to trial by jury in any
claim, action, proceeding or counterclaim by either party against the other on
any matters arising out of or in any way connected with the Lease, the
relationship of Landlord and Tenant and/or Tenant's use of occupancy of the
Premises.
21. HEADINGS
The headings in this Lease are included for convenience only and shall not
be taken into consideration in any construction or interpretation of this Lease
or any of its provisions.
22. NOTICES
(a) Any notice by either party to the other shall be valid only if
in writing and shall be deemed to be duly given only if delivered personally or
sent by courier service, by overnight delivery service, or by registered or
certified, postage prepaid, mail addressed to the following addresses:
To Tenant: Anchor Glass Container Corporation
One Anchor Place
1100 Anchor Street
Tampa, Florida 33607-1765
Attn: Mr. Vincent J. Naimoli
Chairman, Chief Executive
Officer and President
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<PAGE> 27
With a copy to: Holland and Knight
P.O. Box 1288
Tampa, Florida 33601
Attn: Jack S. Newsome, Esquire
To Landlord: Fountain Associates I, Ltd.
c/o Wilson Management Company
6200 Courtney Campbell Causeway
Tampa, Florida 33607
With a copy to: Annis, Mitchell, Cockey, Edwards &
Roehn, P.A.
One Tampa City Center, Suite 2100
Tampa, Florida 33602
Attn: Stephen J. Mitchell, Esq.
Or at such other address for either party as that party may designate by notice
to the other; notice shall be deemed given, if delivered personally, upon
delivery thereof, or if sent by courier service, overnight delivery service or
if mailed, upon the posting thereof.
(b) Tenant hereby appoints as its agent to receive service of all
dispossessory or distraint proceedings, the person in charge of Premises at the
time of occupying Premises; and if there is no person occupying same, then such
service may be made by attachment thereof on the main entrance of the Premises
or at the maintenance of the Building.
23. HEIRS AND ASSIGNS - PARTIES
(a) The provisions of this Lease shall bind and inure to the benefit
of the Landlord and Tenant, and their respective successors, heirs, legal
representatives, and assigns, it being understood that the term "Landlord" as
used in this Lease, means only the owner or the lessee for the time being of the
Premises, so that in the event of any sale or sales of said property or of any
lease thereof, the Landlord and the general partners and limited partners of
Landlord named herein shall be and hereby are entirely freed and relieved of all
covenants and obligations of Landlord hereunder accruing thereafter, and it
shall be deemed without further agreement that the purchaser, or the lessee, as
the case may be, has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder during the period such party has possession of
the Premises. Tenant shall be bound to any such succeeding party Landlord for
performance by Tenant of all the terms, covenants, and conditions of this Lease
and agrees to execute any attornment agreement not in conflict with the terms
and provisions of this Lease at the request of any such succeeding Landlord.
Landlord covenants and agrees that it will not sell the Premises or assign the
Lease (other than an assignment to the lender who is providing construction
financing) before Landlord's work as described in Exhibit D and Exhibit E of the
Lease is substantially completed.
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(b) The parties "Landlord", and "Tenant", and pronouns relating
thereto, as used herein, shall include male, female, singular and plural,
corporation, partnership or individual, as may fit the particular parties.
24. ATTORNEY'S FEES
If any Rent owing under this Lease is collected by or through an attorney
at law, Tenant shall pay as Additional Rental all reasonable attorneys' fees
incurred by Landlord as a result of any breach or default by Tenant under this
Lease.
25. TIME OF ESSENCE
Time is of the essence of this Lease.
26. BUILDING SPECIFICATIONS
Landlord at its sole cost and expense will design and construct the
Building in substantial accordance with the specifications described in Exhibit
D annexed hereto and made a part hereof. Any additions, changes or upgrades to
these specifications requiring payment will be paid for by Tenant within five
(5) days after Landlord submits a bill to Tenant for the additions, changes or
upgrades. Landlord shall also construct between four hundred fifteen (415) and
four hundred twenty three (23) surface grade parking spaces adjacent to the
Building for the purpose of accommodating Tenant, Tenant's invitees and
employees.
27. STANDARD TENANT ALLOWANCE
Landlord at its sole cost and expense will design and install the items
specified in Exhibit E attached hereto and incorporated herein by reference
which are worth approximately Nine Hundred Twelve Thousand and No/100 Dollars
($912,000.00). Tenant will receive a credit for those items listed on Exhibit E
that it does not use (the "Tenant Credit"). The Tenant Credit may be used by
Tenant to select other items to be installed in the Building or Tenant at
Tenant's option may receive a payment for the unused Tenant Credit provided that
this is permitted by the Lender.
28. ARBITRATION
In the event both parties agree, all claims and disputes arising out of
this Lease or the breach thereof shall be decided by arbitration in accordance
with the rules of the American Arbitration Association then existing unless the
parties mutually agree otherwise.
29. RULES AND REGULATIONS
Tenant shall observe and comply with such reasonable rules and regulations
as Landlord may prescribe upon written notice to Tenant for the safety, care and
cleanliness of the Building and Premises, and the comfort, quiet enjoyment and
convenience of other occupants of the Development.
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30. BROKER AND INDEMNITY
Tenant and Landlord each warrant and represent to the other party that it
has negotiated this Lease directly with the other party and has not authorized
or employed, or acted by implication to authorize or to employ, any real estate
broker or salesman to act for it in connection with this Lease. Tenant shall
hold Landlord harmless from and indemnify and defend Landlord against any and
all claims by any real estate broker or salesman, other than brokers dealt with
by Landlord, if any, and Landlord shall hold Tenant harmless from and indemnify
and defend Tenant against any and all claims by any real estate broker,
salesman, other than brokers dealt with by Tenant, for a commission or finder's
fee as a result of Tenant and Landlord entering into this Lease.
31. SPACE PLANNING
Landlord will provide basic space planning services which include
engineering and construction drawings for Building Standard Tenant Fitup
Requirements. If space programming and high finish design services are required,
Landlord will arrange for such services to Tenant at Tenant's expense. Tenant
shall pay for such services within (5) days after Landlord submits a bill to
Tenant for such services.
32. IDENTIFICATION OF BUILDING. ROAD AND PROJECT
The Building shall be the corporate headquarters of Tenant. Tenant shall
identify the Building as Anchor Place at Fountain Square or a name similar
thereto approved by Lender using the "Anchor" name by installing appropriate
signs on the Premises. In the event that Tenant merges with another entity, then
Tenant can change the name of the Building. The location and design of the signs
must be approved by Landlord prior to the installation of the signs. Landlord
will use the name of Anchor Place at Fountain Square or such other name after a
merger by Tenant that Tenant reasonably requests when referring to the Building.
Landlord will use its best efforts to name the road located in the Development
which connects Memorial Highway with Independence Parkway with a name that
includes the word "Anchor". Landlord shall cause the Developer of the Project to
not change the name of the Project now known as Fountain Square nor to rename
the Project after another tenant or any other person or entity as long as Tenant
occupies substantially all of the Premises.
33. QUIET ENJOYMENT
Provided Tenant has performed all of the terms, covenants, agreements and
conditions of this Lease, including the payment of Rent and all other sums due
hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises
against Landlord and all persons claiming, by through or under Landlord, for the
term herein described, subject to the provisions and conditions of this lease.
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34. FORCE MAJEURE
This Lease and the obligation of Tenant to pay Rent hereunder and perform
all of the other covenants and agreements hereunder on the part of Tenant to be
performed shall not be affected, impaired or excused because Landlord is unable
to fulfill any of its obligations under this Lease expressly or impliedly to be
performed by Landlord or if Landlord is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reason of catastrophic events, casualties and/or acts of God. Whenever
a period of time is herein prescribed for action to be taken by Landlord, there
shall be excluded from the computation for any such period of time, any delays
due in part or in whole by any of the aforementioned reasons.
35. RELATIONSHIP OF THE PARTIES
Nothing contained herein shall be deemed or construed by the parties
hereto, nor any third party, as creating the relationship of principal and agent
or of partnership or of joint venture between the parties hereto, it being
understood and agreed that neither the method of computation of rent, nor any
other provision contained herein, nor any acts of the parties herein, shall be
deemed to create any relationship between the parties hereto other than the
relationship of landlord and tenant.
36. CORPORATE TENANT
Each person executing this Lease on behalf of Tenant does hereby covenant
and warrant that (i) Tenant is duly incorporated and validly existing on the
laws of its state of incorporation, (ii) Tenant has and is qualified to do
business in Florida, (iii) Tenant has full corporate right and authority to
enter into this Lease and to perform all Tenant's obligations hereunder, and
(iv) each person (and both of the persons if more than one signs) signing this
Lease on behalf of the corporation is duly and validly authorized to do so.
37. MISCELLANEOUS
The following exhibits will also need to be executed simultaneously with
the execution of this Lease:
(a) Exhibit M: Land Option Agreement
Exhibit N: Option Agreement for Parking Easement
Exhibit O: Memorandum of Lease
Exhibit P: Collateral Assignment of Option Agreement for Parking
Easement
38. SURVEY AND TITLE INSURANCE
Contemporaneously with the execution of this Lease, Landlord will deliver
to Tenant a leasehold title insurance commitment for the Premises and a survey
of the Premises. The cost of the leasehold title insurance policy issued
pursuant to the terms of the aforedescribed title insurance commitment shall be
paid for by Tenant.
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39. SAVING PROVISION
If any provision of this Lease, or its application to any situation shall
be invalid or unenforceable to any extent, the remainder of this Lease, or the
application thereof to situations other than that as to which it is invalid or
unenforceable, shall not be affected thereby, and every provision of this Lease
shall be valid and enforceable to the fullest extent permitted by law.
40. EFFECTIVENESS OF LEASE
This Lease shall have no binding force or effect and shall neither confer
any rights nor impose any obligations, including brokerage obligations, on
either Landlord or Tenant unless and until both Landlord and Tenant shall
execute this Lease and executed counterparts of this Lease shall have been
delivered to both Landlord and Tenant.
41. LIMITED PARTNERSHIP LANDLORD
Each person executing this Lease on behalf of Landlord does hereby
covenant and warrant that (i) Landlord is duly organized and validly existing
under the laws of the State of Florida; (ii) Landlord has and is qualified to do
business in Florida; (iii) Landlord has full right and authority to enter into
this Lease and to perform all of Landlord's obligations hereunder; and (iv) each
person (and both of the persons if more than one signs) signing this Lease on
behalf of the limited partnership is duly and validly authorized to do so.
42. ASSIGNMENT OF VOTING RIGHTS
In consideration of the execution of this Lease for the Premises, Landlord
does hereby assign to Tenant all of its right in the Class A voting membership
in Fountain Square Property Owners Association, Inc. received by virtue of
Landlord's ownership in the Premises so long as Tenant is not in default of this
Lease. Notwithstanding the foregoing, it is expressly understood and agreed to
that the voting membership has or will be collaterally assigned to any Lender
that is providing financing for the improvements located on the Premises.
Fountain hereby covenants and agrees that this Assignment of voting right is
subordinate, subject and inferior to the rights of any Lender to exercise the
right to vote on any Fountain Square Property Owners Association, Inc. matter in
the event there is a default under the collateral assignment of voting rights
given to Lender with respect to the Premises.
43. DEFAULT BY LANDLORD
If Landlord files a voluntary petition in bankruptcy for adjudication as a
bankrupt or insolvent or Landlord files a petition or answer seeking or
acquiescing to any reorganization arrangement,
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composition, readjustment, or similar relief under any law or regulation
relating to bankruptcy, insolvency or other relief for debtors.
IN WITNESS WHEREOF. the parties have hereunto set their hands and seals.
as of the day and year first above written.
Signed, sealed and delivered TENANT:
in the presence of:
ANCHOR GLASS CONTAINER
CORPORATION
____________________________
Witness as to Tenant
By: /s/ R.D. Garrett
____________________________ ____________________________
Witness as to Tenant
Vice President
Its:________________________
LANDLORD:
FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership
____________________________ By: TWC SIXTY, INC., its
Witness as to Landlord General Partner
By: /s/ Jack Wilson
____________________________ ____________________________
Witness as to Landlord
004-20-1088-164 President
Its:________________________
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EXHIBIT 10.33
FIRST AMENDMENT To LEASE
THIS FIRST AMENDMENT TO LEASE (the "Agreement") is made effective as of
June 16, 1992, by and between FOUNTAIN ASSOCIATES I, LTD., a Florida limited
partnership ("Landlord"), and ANCHOR GLASS CONTAINER CORPORATION, a Delaware
corporation ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
(the "Lease") dated March 31, 1988, pursuant to which Landlord leased to Tenant
certain real property located in Hillsborough County, Florida, commonly known as
Anchor Place at Fountain Square;
WHEREAS, Landlord and Tenant now desire to modify and amend
the Lease as herein set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. Recitals. The recitals set forth above are true and correct and are
hereby incorporated into the text of this Agreement by this reference.
2. Defined Terms. All capitalized terms not defined in this Agreement
shall have the same definitions as set forth in the Lease.
3. Construction Complete. Landlord and Tenant hereby agree that
construction of the Building was substantially completed in accordance with the
terms of the Lease, that Tenant has fully accepted the Building and the
Premises, and that Landlord has no further duty or obligation under the terms
and provisions of the Lease with respect to the construction, equipping or
delivery to Tenant of the Building or the Premises.
4. Commencement Date: Term. Landlord and Tenant hereby agree that the Term
of the Lease shall be reduced so that the Term, as reduced, shall end at
midnight on June 16, 1997.
5. Surrender of Premises. The Lease is hereby modified and amended to add
the following provision:
a. At the termination of this Lease by lapse of time or otherwise,
or upon termination of Tenant's right of possession without terminating
this Lease, Tenant shall surrender possession of the Premises to Landlord
and deliver all keys to the Premises to Landlord and make known to
Landlord the combination of all locks or vaults
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then remaining in the Premises, and shall, subject to the following
subparagraphs, return the Premises and all equipment and fixtures of
Landlord therein to Landlord in as good condition as when Tenant
originally took possession, wear and tear as described below and damage
covered by insurance proceeds which insurance proceeds were received by
Landlord or used to reduce the outstanding debt on the Premises excepted,
failing which Landlord may restore the Premises and such equipment and
fixtures to such condition and Tenant shall pay the cost thereof to
Landlord on demand. Landlord and Tenant agree that it is the intent of
this Lease that Tenant return the improvements in as good a condition as
the improvements were at the beginning of the Term except for the wear and
tear that would result even if all periodic and preventative maintenance
that is expected to be performed in a first class office facility were
timely performed for the improvements.
b. At the sole option of Landlord, Tenant shall leave in place any
floor covering without compensation to Tenant, or Tenant shall remove any
floor covering and shall remove all fastenings, paper, glue, bases or
other vestiges and restore the floor surface to its previous condition, or
shall pay to Landlord upon demand the cost of restoring the floor surface
to such condition. Tenant shall also remove Tenant's furniture, machinery,
safes, trade fixtures and other items of movable personal property of
every kind and description from the Premises and restore any damage to the
Premises caused thereby, such removal and restoration to be performed
prior to the expiration of the Term or no later than three (3) days
following the earlier termination of this Lease or Tenant's right of
possession, whichever might be earlier (and upon prior written notice to
Landlord, in the event such removal occurs after termination of this Lease
or Tenant's right to possession).
c. All obligations of Tenant under this paragraph shall survive the
expiration of the Term or sooner termination of this Lease.
6. Tenant's Care. Paragraph 7(c) of the Lease is hereby amended by
deleting the phrase "No later than seven (7) day after the last day of the
Term."
7. Payment of Monthly Rental and Additional Rental. Landlord hereby
directs Tenant, and Tenant hereby agrees, to remit all Monthly Rental due on or
after the date of this Agreement by wire transfer, for receipt in the following
designated account by no later than 1:00 p.m. on the due date of each payment of
Monthly Rental, pursuant to the following wiring instructions:
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Citibank, N.A.
New York, NY
Account No. 4050-2339
ABA No. 021000089
Re: Anchor Glass Container 6/92 Operating Lease
Attn: EFL/CBL Credit -- Joe Gallagher, V.P.
(914) 899-7014
Landlord hereby directs Tenant until further written notice given by Landlord
(and Citicorp Leasing, Inc. for so long as Citicorp Leasing, Inc. holds an
indebtedness and thereafter by written notice given by only Landlord) (the
"Citicorp Indebtedness") secured by a mortgage on the Premises or the Building,
and Tenant hereby agrees, to remit all Additional Rental due or to be paid to
Landlord (other than the monthly administrative cost payable to the Landlord in
accordance with Exhibit G to the Lease, which amount shall be paid directly to
Landlord) on or before the due date by check to:
Citicorp Leasing, Inc.
450 Mamaroneck Avenue
Harrison, New York 10528
Attn: EFL/CBL Credit -- Joe Gallagher, V.P.
Tenant hereby agrees that all such payments of Monthly Rental and Additional
Rental shall be made as set forth above regardless of any and all claims or
rights of set-off, discount or abatement that Tenant may at any time have or
assert against Landlord, Tenant's obligation to pay Monthly Rental and
Additional Rental being a covenant independent of all of Landlord's duties and
obligations set forth in the Lease.
8. Rent Credit. Landlord and Tenant agree that all references to Rent
Credit shall be deleted in their entirety.
9. Default by Tenant. Subparagraph 9(a) shall be amended by deleting
subparagraph 9(a)(1) in its entirety and inserting the following in lieu
thereof:
(1) Tenant's failure to pay any installment of the Monthly Rental
within ten (10) days after the same becomes due and payable under the
Lease.
In addition to the events of default listed in Paragraph 9(a) of the
Lease, the following events of default are hereby added to Paragraph 9(a) as
subparagraphs (12), (13), (14) and (15):
(12) Tenant's default under any obligation of Tenant to Citicorp, a
Delaware corporation, or any of its subsidiaries, including Citicorp Leasing,
Inc., a Delaware corporation; and
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(13) Failure of Tenant at any time to maintain a Consolidated Debt to
Equity Ratio at the end of any fiscal quarter below the ratio described in that
certain Note Purchase Agreement dated as of June 28, 1991, among Tenant and the
purchasers named therein, as amended by Amendment No. 1. Copies of Section 9 of
the Note Purchase Agreements and Amendment No. 1 are attached hereto as Exhibit
"Q" and incorporated herein by reference.
(14) A Change of Control as defined below:
"Change of Control" means (A) a sale of all or substantially all of the
assets of Tenant to any entity other than Vitro Sociedad Anonima, a company
organized under the laws of the United States of Mexico ("Vitro") or a
subsidiary of Vitro or the liquidation or dissolution of the Tenant; (B) a
merger of Tenant and Tenant is not the surviving entity unless consented to in
writing by Citicorp Leasing, Inc.; (C) the failure of Vitro to own, beneficially
and of record, a majority of the issued and outstanding shares of voting stock
of the Tenant either directly or through one or more intermediate subsidiaries
of Vitro (in each case, a majority of the issued and outstanding shares of the
voting stock of which is owned, beneficially and of record, by its immediate
parent corporation); or (D) the failure of Vitro to be able to, or the
contractual cessation or surrender of the right to, designate for election a
majority of the members of the board of directors of the Tenant; provided,
however, that any pledge of voting stock of the Tenant or any such intermediate
subsidiary of Vitro by Vitro or any such intermediate subsidiary of Vitro shall
not be deemed to constitute a "Change in Control" under clause (C) or clause
(D), above, regardless of any change in the record ownership of such shares of
voting stock provided for under the provisions of a pledge agreement creating
such pledge unless and until (i) Vitro or such intermediate subsidiary, as the
case may be, ceases to be the beneficial owner of such shares of voting stock or
(ii) Vitro or such intermediate subsidiary ceases to have the right to direct
tho voting of such shares of voting stock in any election of members of the
board of directors of the Tenant, whether pursuant to a provision of any such
pledge agreement or otherwise.
(15) The Tenant shall fail to pay any principal of, premium or interest on
or any other amount payable in respect to any Debt that is outstanding in a
principal amount of at least $10,000,000.00 in the aggregate, when the same
becomes due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt (including, without
limitation, any mortgage securing the Citicorp Indebtedness) and shall continue
after the applicable grace
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period, if any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt (including, without limitation, the
Citicorp Indebtedness) shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase or defease such
Debt shall be required to be made.
"Debt", means and includes the aggregate amount of, without duplication:
(a) all obligations of Tenant for borrowed money; (b) all obligations of Tenant
evidenced by bonds, debentures, notes, or other similar instruments, and all
reimbursement or other obligations (contingent or otherwise) of Tenant in
respect of letters of credit, bankers' acceptances, or other financial products;
(c) all obligations of such Tenant to pay the deferred purchase price of assets
or services, exclusive of trade payables which, by their terms, are due and
payable within ninety (90) calendar days of the creation thereof; (d) all
obligations of Tenant in respect of capitalized leases; (e) all obligations or
liabilities of others secured by a lien on any asset owned by Tenant,
irrespective of whether such obligation or liability is assumed, to the extent
of the lesser of such obligation or liability or the fair market value of such
asset; and (f) any guaranties, director or indirect, of such Tenant of any debt
of another entity.
10. Landlord's Remedies. Paragraph 9(b) is hereby modified by deleting
subparagraphs (b)(1) through (b)(4), inclusive, and inserting the following:
"9(b)(1). In the event of Tenant's default or breach of the Lease as described
in Paragraph 9(a) of the Lease, due to the difficulty, inconvenience and
uncertainty of ascertaining actual damages for such default, Landlord and Tenant
hereby agree that Landlord, as Landlord's sole and exclusive remedy for such
default, shall be entitled to receive, and Tenant shall upon demand pay to
Citicorp Leasing, Inc., a Delaware corporation, the amount of twelve percent
(12%) of the existing Citicorp Indebtedness secured by a mortgage on the
Premises, which the parties agree is a fair estimation of the damages.
Notwithstanding the foregoing, Tenant shall also pay any amounts pursuant to any
liquidated damage provision contained in the Building Option Agreement dated
March 31, 1988, as amended by the First Amendment to Building Option Agreement
of even date herewith and as modified by that certain Agreement effective as of
June 16, 1992, all by and between Landlord and Tenant if the option or
Supplemental Option is not properly exercised and closed."
In addition, subparagraph 9(b)(5) shall be renumbered to 9(b)(2) and a new
9(b)(3) shall be added as follows:
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Except for the default described in paragraph 9(a)(1) above for which no
notice is required and no additional grace period is given, Tenant shall be
given a five (5) day grace period after written notice is given by Landlord to
Tenant to cure any default under the Lease before Landlord can exercise any
rights under Paragraph 9(b)(1) or 9(b)(2).
11. Hazardous Substances. The Lease is hereby modified and amended,
effective With the commencement Date of the Lease, to add the following
provision:
Tenant shall not cause or permit any Hazardous Substance to be used,
stored, generated, or disposed of on, in or about the Premises (other than
typical office supplies) in violation of applicable laws, rules and regulations,
without obtaining Landlord's prior written consent. If any Hazardous Substance
is used, stored, generated, or disposed of on, in, or about the Premises except
as permitted above, or if the Premises become contaminated in any manner as a
result of any breach of the foregoing covenant or any act or omission of Tenant
or any of its agents, employees, contractors, or invitees (all of which parties
shall be deemed to be included in the defined term, "Tenant"), Tenant shall
indemnify and hold Landlord harmless from any and all claims, demands, actions,
damages, fines, judgments, penalties, costs (including attorneys', consultants',
and experts' fees), liabilities, losses (including without limitation, any
decrease in value of the Premises, damages due to loss or restriction of
rentable or usable space, or any damages due to adverse impact on marketing of
the Building, and expenses arising during or after the term of the Lease and
arising as a result of such contamination. This indemnification includes,
without limitation, any and all costs incurred due to any investigation of the
site or any cleanup, removal, or restoration mandated by a federal, state, or
local agency or political subdivision. Without limitation of the foregoing, if
Tenant causes or permits the presence of any Hazardous Substance on, in, or
about the Premises that results in contamination, Tenant, at it. sole expense,
shall promptly take any and all necessary actions to return the Premises to the
same condition that existed prior to the presence of any such Hazardous
Substance on, in, or about the Premises. Tenant shall first obtain Landlord's
approval for any such remedial action. As used herein, the term "Hazardous
Substance" means any substance which is toxic, ignitable, reactive, or corrosive
and which is regulated by any local government, the State of Florida, or the
United States government. "Hazardous. Substance. includes any and all material
or substances which are defined as "hazardous
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waste", "extremely hazardous waste", or a "hazardous substance" pursuant to
state, federal or local governmental law. The provisions under the paragraph
shall survive the expiration or other termination of the Lease.
12. Assignment and Subletting. The first sentence of Paragraph 11 of
the Lease is hereby amended and restated so that said sentence, as amended
and restated, shall read as follows:
Tenant shall not, without the prior written consent of Landlord, which
consent may be arbitrarily withheld, assign all of this Lease; however,
Tenant may, without the prior written consent of Landlord, sublet the
unoccupied space within the Premises.
The balance of Paragraph 11 of the Lease shall remain unaltered and in full
force and effect.
13. Tenant's Insurance. Paragraph 16 of the Lease is hereby modified and
amended to provide that all insurance policies required therein shall name
Citicorp Leasing, Inc., a Delaware corporation as an additional insured and
shall otherwise meet the requirements of any first mortgage encumbering the
Premises.
14. Prime Rate. All references in the Lease to the "prime rate
announced by Southeast Bank, N.A., shall be replaced with the "Base Rate
announced publicly by Citibank, N.A. in New York, New York as its base
rate.
15. Condemnation. Paragraph 12(a) of the Lease is amended by
deleting the last eight sentences of Paragraph 12(a) beginning with the sentence
"Landlord shall exercise . . . n and ending with the sentence "In the event that
the condemnation proceeds . . ." and the following shall be inserted in lieu
thereof:
Landlord and Tenant have entered into that certain Letter Agreement
dated April 27, 1992, which Letter Agreement amends the Lease and which
Letter Agreement addresses, among other items, the understanding between
Landlord and Tenant regarding the condemnation of land and parking at the
Premises. A copy of the Letter Agreement is attached hereto as Schedule 1
and incorporated herein by reference. The parties agree that
notwithstanding any provision in the Lease to tho contrary the Tenant
shall not have the right to cancel the Lease and the rent shall not be
reduced by virtue of the condemnation of the parking spaces. The parties
also agree that notwithstanding any provision to the contrary, in the
event the design-build agreement referenced in the Letter Agreement is
entered into, then the fee to be paid to Landlord for the design and
construction of the parking deck in the amount of One Hundred Fifty
Thousand and No/100 Dollars
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($150,000.00) shall be paid one-fourth (%) at the commencement of
construction, one-half (~) over the next five months of construction, and
the remainder paid upon issuance of a certificate of occupancy for the
parking deck, or the issuance of a certificate of substantial completion,
whichever occurs first. In the event that the parties, in good faith after
using their best efforts, fail to negotiate and enter into the
design-build agreement on or before June 30, 1992, then Tenant shall pay
Landlord the amount of one Hundred Fifty Thousand Dollars ($150,000.00) on
or before August 31, 1992 in consideration of Landlord's good faith
negotiations and agreement to terminate its Option for Parking Easement in
accordance with the terms of the letter agreement and for other good and
valuable consideration, the receipt and sufficiency of which Tenant hereby
acknowledges.
16. Exhibit G. Exhibit G to the Lease is deleted in its entirety and
replaced with Exhibit G attached to this Agreement and incorporated herein by
reference.
17. No Further Modification. Except as expressly set forth herein, all
terms and provisions of the lease shall remain unaltered and in full force and
effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of
the date set forth above.
Signed, sealed and delivered
in the presence of: FOUNTAIN ASSOCIATES I, LTD., a
Florida limited partnership
By: TWC Sixty-One, Inc., a
Florida corporation,
General Partner
Name: By: James D. Swartz
ANCHOR GLASS CONTAINER
CORPORATION
By:/s/ Robert A. Thompson
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SCHEDULE "1"
April 27, 1992
Mr. Robert A. Thompson
Vice President and Treasurer
Anchor Glass Container Corporation
4343 Anchor Plaza Parkway
Tampa, Florida 33634
Dear Bob:
This letter confirms the understanding between Anchor Glass Container
Corporation (Anchor) and Fountain Associates I, Ltd. (FAI) regarding the process
of resolving the condemnation of land and parking at Anchor Plaza. The lease
between Anchor and FAI ("the Lease") is hereby modified to accord with the terms
set forth in this letter.
It is clear to Anchor and FAI that the parking replacement provided in the
existing agreement between the parties was based on a nominal amount of land
being taken for the Northwest Expressway. At the time of the initial agreement
between the parties, it was expected that the Hillsborough County Aviation
Authority property on the other side of the highway would be used for the road
expansion. Because that has not happened and, as the result, a substantial
portion of Anchor Plaza land will be taken, the originally contemplated parking
replacement solution is unacceptable. Therefore, a parking deck must be
constructed on Anchor Plaza property to replace the parking spaces lost.
Temporary Parking
Arrangement: It is understood that Anchor needs temporary parking from the
date the current parking is taken to the date of completion of
construction of the parking deck. FAI agrees to assist Anchor
in attempting to obtain an agreement with Fountain Square
Associates (FSA) for the temporary use of the land immediately
to the south of Anchor Plaza. A separate letter of agreement
to be sent to FSA is attached as Exhibit "A" which letter will
be sent to FSA as soon as it has been signed by Anchor and
returned to FAI. The proposed use of the land by Anchor will
be proposed to be in consideration of the extinguishment by
FAI of the Option Agreement for Parking Easement and the
extinguishment by Anchor of the Land Option Agreement. The
proposed term of the temporary parking agreement will be for
18 months beginning July 1, 1992. Anchor agrees to pay the
cost of preparation of the site for temporary parking in a
manner similar to the preparation of the site north of the
Colonial Penn Building for use as temporary parking
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Mr. Robert A. Thompson
Page Two
April 27. 1992
Temporary Parking
Arrangement:
(continued) by Chase. The cost of this preparation is estimated to be
$30,000.00. Anchor will bear the total cost of securing
the temporary parking and agrees to assume all of FAI's
obligations with regard to temporary parking, including
but not limited to, maintenance obligations, insurance
and repair of the temporary parking facility. If on or
before May 15, 1992 FSA has not agreed to allow its
property to be used for temporary parking on terms
acceptable to Anchor then Anchor will be responsible for
the provision of temporary parking.
Construction of
Parking Deck: Anchor will pay whatever costs, as further provided in the
Payment of Costs section of this letter amendment. FAI will
design and construct a parking deck together with all related
improvements, driveways, curbs, gutters, landscaping and other
parking space reconstruction ("Parking Deck") to replace
parking spaces to be taken by eminent domain. The Parking Deck
must be aesthetically compatible with the building and
facilities currently leased by Anchor from FAI and must be of
a first-class parking facility design. FAI shall coordinate
funding of the design and construction costs for the Parking
Deck from the proceeds of the eminent domain proceeding, the
lender and Anchor. It is agreed that FAI has the exclusive
right to cause the design and construction of the parking
deck. In order to set forth the rights and obligations of FAI
and Anchor with respect to the design, construction, and
funding of the Parking Deck, FAI and Anchor will enter into a
reasonable design-build agreement, which among other terms,
conditions and agreements will provide:
a) FAI will prepare preliminary plans and specifications and
budgets for the Parking Deck. The Parking Deck shall contain a
sufficient number of spaces which, when added to the usable
surface parking spaces remaining on the Anchor site after the
eminent domain proceedings, will comply with all applicable
laws and otherwise be not less than a total of 423 spaces. The
Parking deck will comply with all applicable codes, ordinances
and laws. Anchor shall have not less than fifteen
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Mr. Robert A. Thompson
Page Three
April 27, 1992
days to review and approve, or disapprove the preliminary
plans and specifications, and budgets. If disapproved the same
shall be redesigned to accommodate Anchor's reasonable
requests FAI estimates but does not guarantee initially that
the cost to design and construct the Parking Deck is
approximately $1,831,000.00. FAI estimates but does not
guarantee design of the Parking Deck will require
approximately three months (not including any time Anchor
takes for consideration of design and the budgeting process)
and construction will require eight months from the date the
final design is approved; provided that Anchor does not delay
the process and/or provided there are no other delays beyond
FAI's control.
b) After approval of the preliminary plans and specifications,
and budgets, FAI will prepare final plans and specifications,
and final price. Anchor will have not less than fifteen days
to review and approve, or disapprove, the final plans and
specifications and final price. FAI shall guarantee the final
price, as mutually agreed by Anchor and FAI.
c) All design work shall be prepared by Thompson, Ventulett,
Stainback and Associates, Inc. who is qualified to design a
facility of the type and scope represented by the Parking Deck
and shall be subject to the approval of Anchor. The Parking
Deck shall be constructed by a Florida certified general
contractor qualified to construct a facility of the type and
scope represented by the Parking Deck. The cost of design and
construction shall not exceed current market rates, except
that if FAI or an affiliate thereof is the general contractor,
it shall not be entitled to any fee except that to be paid to
FAI below.
d) Notwithstanding any provision to the contrary, if FAI
negotiates in good faith and uses its best efforts to
negotiate the design-build agreement and the parties are
unable to execute such design-build agreement on or before
June 30, 1992, then FAI will receive the sum of $150,000 on or
before August 31, 1992 in consideration of FAI's negotiations
ln good faith and agreeing to terminate its Option for Parking
Easement and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by
Anchor.
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Mr. Robert A. Thompson
Page Four
April 27, 1992
Approval of
First Union: First Union has agreed to allow use of the condemnation
proceeds for replacement parking facilities. First Union will
need to approve all provisions provided herein to the extent
such approval may be required.
Approval of
Citicorp: FAI and Anchor will use their best efforts to incorporate the
terms of this letter in connection with the proposed
refinancing by Citicorp of the First Union Mortgage.
Handling of
Condemnation
Proceeds: The condemnation authority has offered $1,343,600 for the
property being taken. There is a hearing at which the Order of
Taking wilt be entered. Within 20 days of this hearing, the
funds offered will be deposited with the court. The FAI
condemnation attorney is making arrangements for the money to
be deposited with First Union. A letter to First Union from
FAI regarding this matter is attached as Exhibit B. Additional
condemnation proceeds will be pursued, as described later in
this letter.
Payment of Costs: As described in the First Union documents, the condemnation
proceeds may be used for replacement parking facilities. This
will necessarily include temporary parking also. Ten percent
of the proceeds must be used to fund the pursuit of additional
condemnation proceeds in accordance with the employment
agreement attached as Exhibit C. Anchor will be obligated to
fund the difference between (i) the sum of the total cost of
replacement parking facilities and costs of pursuit of
additional condemnation proceeds; and (ii) the amount of net
condemnation proceeds. Anchor will also pay any and all costs
of escrow administration and disbursement costs required by
either First Union and/or Citicorp.
Pursuit of Additional
Condemnation
Proceeds: FAI and Anchor will cooperate in an effort to obtain full
compensation for all damages to the property described in the
Lease resulting from this
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condemnation. FAI has retained Marc I. Sachs of Brigham,
Moore, Gaylord, Wilson, Uleer, Schuster L Sechs to represent
FAI in this condemnation. FAI's employment
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Mr. Robert A. Thompson
Page Five
April 27, 1992
Pursuit of Additional
Condemnation
Proceeds: agreement with Brigham, Moore is attached as Exhibit C. Anchor
agrees to allow FAI to advance fees and costs to Brigham,
Moore from the condemning authorities' initial deposit in
accordance with Brigham, Moore's employment agreement. FAI
agrees to refund to Anchor at the conclusion of the
condemnation case all sums actually refunded to FAI by
Brigham, Moore pursuant to the attached employment agreement.
Anchor has retained Ellen Heil Kalmbacher of Holland Knight to
represent Anchor ln the condemnation proceeding. Anchor and
FAI are each entitled to seek reimbursement for their
attorney's fees and costs incurred in the condemnation in
accordance with Florida law.
Based on the unique nature of the relative positions of Anchor
and FAI in this matter, Anchor and FAI agree that FAI is due
compensation for its efforts in pursuit of additional
condemnation proceeds in excess of $1,343,600. Therefore,
additional condemnation proceeds in excess of $1,343,600 will
be distributed as follows:
First, until Anchor is reimbursed for all amounts
expended by Anchor for parking replacement, temporary
parking and pursuit of additional condemnation proceeds,
tSX to Anchor
and 5% to FAI.
Thereafter, 15% of additional condemnation proceeds will
be paid to FAI and 5X of such proceeds will be paid to
the bank in possession of the mortgage at the time of
payment. Such payment to the bank will be treated as a
principal reduction.
In no event shall FAI receive more than $150,000 of
those additional condemnation proceeds in excess of
$1,343,600.00.
If you agree with the terms set forth herein, please sign both execution copies
of this letter and return one to me.
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Sincerely,
Fountain Associates I, Ltd.
By: TWC Sixty-One, Inc., its general partner
By:
Jack Wilson
President
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Mr. Robert A. Thompson
Page Six
April 27, 1992
Agreed and accepted:
Anchor Glass Container
Corporation
By:
Robert A. Thompson
Vice President
Date:
JW/pim
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EXHIBIT G
Anchor Glass. Container Corporation
Determination of Monthly Rental
The Monthly Rental for the Premises that Anchor Glass Container
Corporation ( Tenant ) i. required to pay to Fountain Associates I, Ltd. (the
Landlord") (in the manner provided in Paragraph 7 of the First Amendment to
Lease) in advance on the first (1st) day of each and every calendar month during
the term is equal to the Monthly Debt Service that the Landlord is paying in
arrears to the Lender who has a loan secured by the Premises and such other
financing that may be placed on the Premises from time to time which is approved
by Tenant in it. Sole and absolute discretion. Thus, each payment of Monthly
Rental in advance shall equal the Monthly Debt Service due and payable in
arrears on the same date. For the purpose, of this exhibit, the term "Monthly
Debt Service" shall include interest payments, principal amortization payments,
all other required principal payments, all tax and insurance escrow payments,
and all financing costs attributable to any and all loans on the Premises
including but not limited to points, fees, appraisal costs, legal fees,
documentary stamp tax, intangible tax, and all other costs (such as Break Costs,
Increased Costs, Reserve Costs and any other costs described in the loan
documents) normally attributable to obtaining and servicing a loan. In the event
of a foreclosure of the Citicorp Leasing, Inc. ("Citicorp") loan, then Monthly
Rental shall be equal to the amounts which would have been Monthly Debt Service
if there had been no termination of the Citicorp loan.
In addition to the Monthly Rental, tho Tenant shall pay to Landlord all
Additional Rental payments required under the term. of the Lease including as
Additional Rental a monthly administrative cost of $2,083.34 for the first five
(5) years of the Lease and the sum of $2,500.00 thereafter.
In the event that additional financing is placed on the Premises from time
to time and Tenant has approved the same then Tenant shall be responsible for
providing to Landlord any funds necessary to obtain such financing in the event
such financing is insufficient to cover the amount so required.
The following is an example of the calculation of monthly rental for the
Premium based on the loan commitment received from Citicorp:
Assume that the total loan amount is $11,000,000.00. Assume further that
the LIBOR Rate of interest, as defined in the Citicorp loan document, is 4 1/2%
per annum during the entire term of the Lease. The interest rate that Landlord
would have to pay to Citicorp would be 6 1/2% since the interest rate is two
percent (2.0%) over the LIBOR Rate. Consequently, the Monthly Debt Service is
$59,583.34, assuming that no other costs associated with the definition of
Monthly Debt Service as described above are to be
17
<PAGE> 18
paid. Thus the monthly rental to be paid to Landlord (in the manner provided in
Paragraph 7 of the First Amendment to Lease) by Tenant is $559,583.34. In
addition, assuming no Additional Rental other than the monthly administration
costs, the Tenant still would be required to pay as Additional Rental the sum of
$2,083.33 per month during the first five (5) years of the term of the Lease and
$2,500.00 per month thereafter. Consequently, during the first five (5) years of
the term of the Lease, Tenant would pay Monthly Rental of $61,666.34 based on
the assumptions used in the above example.
1088-290-78911.02
18
<PAGE> 1
Exhibit 10.34
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (the "Agreement") is made effective as of
September 30, 1993, by and between FOUNTAIN ASSOCIATES I, LTD., a Florida
limited partnership ( "Landlord" ) and ANCHOR GLASS CONTAINER CORPORATION, a
Delaware Corporation ( "Tenant" ).
WHEREAS, pursuant to the Lease, dated March 31, 1988, as amended by the First
Amendment To Lease dated as of June 1, 1992, Landlord leased to Tenant certain
real property located in Hillsborough County, Florida, commonly known as Anchor
Place at Fountain Square;
WHEREAS, Landlord and Tenant now desire to amend the
provisions of the Lease as herein set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants herein set
forth and other good and valuable, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Default by Tenant. Subparagraph 13 of Paragraph 9(a) of the Lease,
as amended, is hereby further amended by:
(a) Changing the period at the end of the first sentence thereof
to a comma and adding the following text after such comma:
"Amendment No. 2, and Amendment No. 3."; and
(b) Deleting the second sentence thereof in its entirety and
replacing it with the following sentence: "Copies of Section
9, Certain Covenants of the Company, and Section 12.1,
Definitions, of the Note Purchase Agreement and Amendments No.
1, No. 2 and No. 3 to the Note Purchase Agreement are attached
hereto as Exhibit "Q" and incorporated herein by reference".
2. No Further Modification. Except as expressly set forth herein, all
terms and provisions of the Lease shall remain in full force and
effect.
<PAGE> 2
IN WITNESS HEREOF, Landlord and Tenant have executed this Agreement as of the
date set forth above.
Signed, sealed and delivered in the presence of:
_____________________________ FOUNTAIN ASSOCIATES I, LTD.,
Name:________________________ a Florida limited partnership
_____________________________ By: TWC Sixty-One, Inc.,
Name:________________________ a Florida Corporation,
General Partner
By: /s/ Jack Wilson
Name: Jack Wilson
Title: President
ANCHOR GLASS CONTAINER
_____________________________ CORPORATION,
Name:________________________ a Delaware Corporation
_____________________________ By: /s/ Robert A. Thompson
Name:________________________ Name: Robert A. Thompson
Title: Vice President and Treasurer
<PAGE> 1
Exhibit 10.35
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE (the "Agreement") is made effective as of February
22, 1995, by and between FOUNTAIN ASSOCIATES I, LTD., a Florida limited
partnership ("Landlord") and ANCHOR GLASS CONTAINER CORPORATION, a Delaware
Corporation ("Tenant").
WHEREAS, pursuant to the Lease, dated March 31, 1988, as amended by the First
Amendment To Lease dated as of June 16, 1992, and the Second Amendment To Lease
dated as of September 30, 1993, Landlord leased to Tenant certain real property
located in Hillsborough County, Florida, commonly known as Anchor Place at
Fountain Square;
WHEREAS, Landlord and Tenant now desire to amend the provisions of the Lease as
herein set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Default of Tenant. Subparagraph 13 of Paragraph 9(a) of the Lease,
as amended, is hereby further amended:
(a) Changing the period at the end of the first sentence thereof
to a comma and adding the following text after such comma:
"and as further amended by Amendment No. 4,"; and
(b) Adding to the end of the second sentence thereof the following
sentence. "A copy of Amendment No. 4 to the Note Purchase
Agreement is attached hereto as Exhibit "R" and is similarly
incorporated herein by reference."
2. No Further Modification. Except as expressly set forth herein, all
terms and provisions of the Lease shall remain in full force and
effect.
<PAGE> 2
IN WITNESS HEREOF, Landlord and Tenant have executed this Agreement as of the
date set forth above.
Signed, sealed and delivered in the presence of:
____________________________ FOUNTAIN ASSOCIATES I, LTD., a
Name:_______________________ Florida limited partnership
____________________________
By: TWC Sixty-One, Inc., a Florida
Name:_______________________ Corporation, General Partner
By: /s/ Jack Wilson
Name: Jack Wilson
Title:______________________
____________________________ ANCHOR GLASS CONTAINER
Name:_______________________ CORPORATION, a Delaware
Corporation
By:_________________________
Name:_______________________
____________________________ Title:______________________
Name:_______________________
<PAGE> 1
Exhibit 10.36
AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 31st day of March, 1996
by and between Fountain Associates I, Ltd., a Florida limited partnership (the
"Borrower"), Citicorp Leasing, Inc., a Delaware corporation (the "Lender") and
Anchor Glass Container Corporation, a Delaware corporation ("Anchor").
WHEREAS, Anchor is the lessee of certain property in Hillsborough County,
Florida known as Anchor Place at Fountain Square (the "Property") pursuant to
that certain Lease Agreement dated as of March 31, 1988 by and between Anchor
and the Borrower, as modified and amended by that certain First Amendment to
Lease dated as of June 16, 1992, as further modified and amended by that certain
Second Amendment to Lease dated as of September 30, 1993 and as further modified
and amended by that certain Third Amendment to Lease dated as of February 22,
1995 (the "Lease"); and
WHEREAS, the Borrower and Anchor are party to that certain Building Option
Agreement dated as of March 31, 1988 (the "Option"), as modified and amended by
the First Amendment to Building Option Agreement dated as of June 16, 1992 (the
"Option Amendment") and as further modified and amended by that certain
Agreement dated as of June 16, 1992 (the "June 16, 1992 Agreement", together
with the Option and Option Amendment, the "Option Agreement"); and
WHEREAS, effective as of June 16, 1992, the Lender purchased from First
Union National Bank of Florida, successor in interest to the Federal Deposit
Insurance Corporation as Receiver for Southeast Bank, N.A. a loan (the "Loan")
to the Borrower which financed the Borrower's acquisition of the Property; and
WHEREAS, the Borrower's obligation to repay the Loan is evidenced by that
certain Renewal First Mortgage Note dated as of June 16, 1992, as amended (the
"Note"); and
WHEREAS, to secure the Note, the Borrower executed and delivered that
certain Amended Mortgage and Security Agreement dated as of June 16, 1992 and
recorded in the real estate records of Hillsborough County, Florida in Book 6643
at Page 1536 (the "Mortgage") and that certain Amended Assignment of Leases and
Rents dated as of June 16, 1992 and recorded in the real estate records of
Hillsborough County, Florida in Book 6643 at Page 1571; and
WHEREAS, in connection with the purchase of the Loan, the Borrower, Anchor
and the Lender entered into that certain Confirmation and Modification of
Subordination Nondisturbance and Attornment Agreement dated as of June 16, 1992
and recorded in the real estate records of Hillsborough County, Florida in Book
6643 at Page 1588 (the "Nondisturbance Agreement"); and
WHEREAS, the Lease, the Option Agreement and the Nondisturbance Agreement
shall be referred to herein as the "Lease Documents" and the Note, the Mortgage
and the Assignment of Leases shall be referred to herein as the "Loan
Documents"; and
<PAGE> 2
WHEREAS, Anchor is in default under the Lease pursuant to Section 9(a)(13)
of the Lease (the "Lease Default"); and
WHEREAS, Anchor has requested that the Borrower waive the Lease Default
through September 15, 1996 and that the Lender consent to such waiver as is
required pursuant to Section 18 of the Nondisturbance Agreement; and
WHEREAS, the Borrower has agreed to waive the Lease Default through
September 15, 1996 and the Lender has consented to such waiver pursuant to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower, the Lender and Anchor hereby agree as follows:
Section 1. Amendments to Lease and Loan Documents.
The Lease Default is hereby waived through September 15, 1996; provided,
however, that the obligation of Anchor pursuant to Section 9(b)(1) of the Lease
to pay to the Lender twelve percent (12%) of the existing Citicorp indebtedness
under the Note to be applied to the balance due under the Note shall be deferred
until the earlier of (a) the maturity date of the Note, (b) the date of an
additional default under the Lease, (c) the date the Property is purchased by
Anchor or sold to a third party, or (d) the date New Financing (as defined in
the June 16, 1992 Agreement) is obtained. In addition, Anchor hereby confirms
its obligations under the Lease, the Option Agreement and the other Lease
Documents. For purposes of calculating the amount due under the Option
Agreement, the total amount of Citicorp Indebtedness (as defined in the Option
Agreement) shall be such indebtedness as reduced by the amount paid to Citicorp
pursuant to the proviso in the first sentence of this paragraph; provided,
however, that calculation of the Residual Value Guaranty Amount (as defined in
the Option Agreement) shall be eighty-eight percent of the total amount of any
Citicorp Indebtedness (as defined in the Option Agreement) without reduction of
the amount of such payment.
The Lease is hereby modified and amended to the extent necessary to
provide that the Monthly Rental (as defined in the Lease) shall be increased by
$25,373.40 for each of June, July, August and September, 1996.
To the extent the Lease Default created or caused any other default under
the other Lease Documents or Loan Documents, such defaults are hereby waived.
Section 2. Conditions to Effectiveness of Agreement.
This Agreement shall become effective as of the date hereof when, and only
when, the Lender shall have received, in form and substance satisfactory to it,
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<PAGE> 3
a. counterparts of this Agreement duly executed by the general partner of
the Borrower and Anchor;
b. a guaranty duly executed by Vitro S.A.; and
c. such other information, documents, instruments, approvals or opinions
as the Lender or the Lender's counsel may require.
Section 3. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
a. The Borrower is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Florida.
b. The execution, delivery and performance by the Borrower's general
partner of this Agreement, and the Loan Documents and Lease Documents, as
amended hereby, are within such partner's power, have been duly authorized by
all necessary corporate action and do not contravene (i) such partner's articles
of incorporation or by-laws, or (ii) any law or any contractual restriction
binding on or affecting such partner.
c. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Borrower of this Agreement or any
of the Lease Documents and Loan Documents, as amended hereby, to which the
Borrower is or will be a party.
d. This Agreement and each of the other Lease Documents and Loan
Documents, as amended hereby, to which the Borrower is a party, constitute
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms.
e. Except as provided in Section 3(f) below, to the best of Borrower's
knowledge without further inquiry, each of the representations and warranties of
the Borrower set forth in the Lease Documents and the Loan Documents is true and
correct as of the date hereof.
f. Each of the representations and warranties of the Borrower set forth in
Section 2.1 of the Mortgage is true and correct as of the date hereof.
Section 4. Representations and Warranties of Anchor.
Anchor represents and warrants as follows:
a. Anchor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
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<PAGE> 4
b. The execution, delivery and performance by Anchor of this Agreement,
and the Lease Documents, as amended hereby, are within Anchor's power, have been
duly authorized by all necessary corporate action and do not contravene (i)
Anchor's articles of incorporation or by-laws, or (ii) any law or any
contractual restriction binding on or affecting Anchor.
c. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by Anchor of this Agreement or any of
the Lease Documents, as amended hereby, to which Anchor is or will be a party.
d. This Agreement and each of the other Lease Documents, as amended
hereby, to which Anchor is a party, constitute legal, valid and binding
obligations of Anchor, enforceable against Anchor in accordance with their
respective terms.
e. Each of the representations and warranties of Anchor set forth in the
Lease Documents is true and correct as of the date hereof.
Section 5. Reference to and Effect on the Loan Documents.
a. The Borrower and Anchor hereby confirm and acknowledge that the amount
due to the Lender on account of the Loan on the date hereof is $10,149,357.83 in
principal indebtedness and $33,267.34 in accrued and unpaid interest. Neither
the Borrower nor Anchor has any knowledge of any challenge to the Lender's
claims arising under the Loan Documents or the effectiveness of the Loan
Documents.
b. The execution, delivery and effectiveness of this Agreement shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of the Lender under any of the Lease Documents or Loan Documents, nor
constitute a waiver of any provision of any of the Lease Documents or Loan
Documents. Except as expressly set forth herein, this Agreement shall not
constitute a modification of the Lease Documents or the Loan Documents or a
course of dealing with the Lender at variance with the Lease Documents or the
Loan Documents such as to require further notice by the Lender to require strict
compliance with the terms of the Lease Documents and the Loan Documents in the
future.
Section 6. Costs, Expenses and Taxes.
The Borrower agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution, delivery, and administration of this
Agreement and the other instruments and documents to be delivered hereunder
including legal fees and expenses incurred in connection with the execution and
delivery of this Agreement. In addition, the Borrower shall pay any and all
stamp and other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement and the other instruments and documents
to be delivered hereunder, and agrees to save the Lender harmless from and
against any and all liabilities with respect to, or resulting from any delay in
paying or omission to pay, such taxes.
-4-
<PAGE> 5
Section 7. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
Section 8. Governing Law.
This Amendment shall be governed by, and construed in accordance with, the
laws of Florida.
[the remainder of this page intentionally left blank]
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership
By: TWC Sixty, Inc., by its
General Partner
By: /s/ Jack Wilson
Its: President
ANCHOR GLASS CONTAINER
CORPORATION
By: /s/ Jeffrey G. Terryson
Its: Vice President,
Treasurer and Controller
CITICORP LEASING INC.
By: /s/ Edward S. Mundy
Its: Vice President
-6-
<PAGE> 1
Exhibit 10.37
AMENDED AND RESTATED AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") is made
effective as of the 12th day of September, 1996 by and between Fountain
Associates I, Ltd., a Florida limited partnership (the "Borrower"), Citicorp
Leasing, Inc., a Delaware corporation (the "Lender') and Anchor Glass Container
Corporation, a Delaware corporation ("Anchor").
WHEREAS, Anchor is the lessee of certain property in Hillsborough County,
Florida known as Anchor Place at Fountain Square (the "Property") pursuant to
that certain Lease Agreement dated as of March 31, 1988 by and between Anchor
and the Borrower, as modified and amended by that certain First Amendment to
Lease dated as of June 16, 1992, as further modified and amended by that certain
Second Amendment to Lease dated as of September 30, 1993, as further modified
and amended by that certain Third Amendment to Lease dated as of February 22,
1995 and as further modified and amended by the Original Agreement (as defined
below) (the "Lease"); and
WHEREAS, the Borrower and Anchor are party to that certain Building Option
Agreement dated as of March 31, 1988 (the "Option"), as modified and amended by
the First Amendment to Building Option Agreement dated as of June 16, 1992 (the
"Option Amendment"), as further modified and amended by that certain Agreement
dated as of June 16, 1992 (the "June 16, 1992 Agreement") and as further
modified and amended by the Original Agreement (the Original Agreement, together
with the Option, the Option Amendment and the June 16, 1992 Agreement, the
"Option Agreement"); and
WHEREAS, effective as of June 16, 1992, the Lender purchased from First
Union National Bank of Florida, successor in interest to the Federal Deposit
Insurance Corporation as Receiver for Southeast Bank, N.A. a loan (the "Loan")
to the Borrower which financed the Borrower's acquisition of the Property; and
WHEREAS, the Borrower's obligation to repay the Loan is evidenced by that
certain Renewal First Mortgage Note dated as of June 16, 1992, as amended (the
"Note"); and
WHEREAS, to secure the Note, the Borrower executed and delivered that
certain Amended Mortgage and Security Agreement dated as of June 16, 1992 and
recorded in the real estate records of Hillsborough County, Florida in Book 6643
at Page 1536 (the "Mortgage") and that certain Amended Assignment of Leases and
Rents dated as of June 16, 1992 and recorded in the real estate records of
Hillsborough County, Florida in Book 6643 at Page 1571; and
WHEREAS, in connection with the purchase of the Loan, the Borrower, Anchor
and the Lender entered into that certain Confirmation and Modification of
Subordination, Nondisturbance and Attornment Agreement dated as of June 16, 1992
and recorded in the real estate records of Hillsborough County, Florida in Book
6643 at Page 1588 (the "Nondisturbance Agreement"); and
<PAGE> 2
WHEREAS, the Lease, the Option Agreement and the Nondisturbance Agreement
shall be referred to herein as the "Lease Documents" and the Note, the Mortgage
and the Assignment of Leases shall be referred to herein as the "Loan
Documents"; and
WHEREAS, Anchor is in default under the Lease pursuant to Section 9(a)(13)
of the Lease (the "Lease Default"); and
WHEREAS, the Borrower, the Lender and Anchor entered into that certain
Agreement (the "Original Agreement") dated as of the 31st day of March, 1996
which provided for the waiver of the Lease Default through September 15, 1996;
and
WHEREAS, Anchor has requested that the Borrower waive the Lease Default
through January 15, 1997 and that the Lender consent to such waiver as is
required pursuant to Section 18 of the Nondisturbance Agreement; and
WHEREAS, the Borrower has agreed to waive the Lease Default through
January 15, 1997 and the Lender has consented to such waiver pursuant to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower, the Lender and Anchor hereby amend and restate the
Original Agreement in its entirety and hereby further agree as follows:
Section 1. Amendments to Lease and Loan Documents.
The Lease Default is hereby waived through January 15, 1997; provided,
however, that the obligation of Anchor pursuant to Section 9(b)(1) of the Lease
to pay to the Lender twelve percent (12%) of the existing Citicorp indebtedness
under the Note to be applied to the balance due under the Note shall be deferred
until the earlier of (a) the maturity date of the Note, (b) the date of an
additional default under the Lease, (c) the date the Property is purchased by
Anchor or sold to a third party, or (d) the date New Financing (as defined in
the June 16, 1992 Agreement) is obtained. In addition, Anchor hereby confirms
its obligations under the Lease, the Option Agreement and the other Lease
Documents. For purposes of calculating the amount due under the Option
Agreement, the total amount of Citicorp Indebtedness (as defined in the Option
Agreement) shall be such indebtedness as reduced by the amount paid to Citicorp
pursuant to the proviso in the first sentence of this paragraph; provided,
however, that calculation of the Residual Value Guaranty Amount (as defined in
the Option Agreement) shall be eighty-eight percent (88%) of the total amount of
any Citicorp Indebtedness (as defined in the Option Agreement) without reduction
of the amount of such payment.
-2-
<PAGE> 3
The Lease is hereby modified and amended to the extent necessary to
provide that the Monthly Rental (as defined in the Lease) shall be increased by
$25,373.40 for each of September, October, November, and December, 1996, and
January, 1997.
To the extent the Lease Default created or caused any other default under
the other Lease Documents or Loan Documents, such defaults are hereby waived.
Section 2. Conditions to Effectiveness of Agreement.
This Agreement shall become effective as of the date hereof when, and only
when, the Lender shall have received, in form and substance satisfactory to it,
a. counterparts of this Agreement July executed by the general partner of
the Borrower and Anchor;
b. the letter agreement among Vitro S.A., the Lender and Citibank, N.A.
substantially in the form of Exhibit A; and
c. such other information, documents, instruments, approvals or opinions
as the Lender or the Lender's counsel may require.
Section 3. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
a. The Borrower is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Florida.
b. The execution, delivery and performance by the Borrower's general
partner of this Agreement, and the Loan Documents and Lease Documents, as
amended hereby, are within such partner's power, have been duly authorized by
all necessary corporate action and do not contravene (i) such partner's articles
of incorporation or by-laws, or (ii) any law or any contractual restriction
binding on or affecting such partner.
c. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Borrower of this Agreement or any
of the Lease Documents and Loan Documents, as amended hereby, to which the
Borrower is or will be a party.
d. This Agreement and each of the other Lease Documents and Loan
Documents, as amended hereby, to which the Borrower is a party, constitute
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms.
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<PAGE> 4
e. Except as provided in Section 3(f) below, to the best of Borrower's
knowledge without further inquiry, each of the representations and warranties of
the Borrower set forth in Section 2.1 of the Mortgage is true and correct as of
the date hereof.
Section 4. Representations and Warranties of Anchor.
Anchor represents and warrants as follows:
a. Anchor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
b. The execution, delivery and performance by Anchor of this Agreement,
and the Lease Documents, as amended hereby, are within Anchor's power, have been
duly authorized by all necessary corporate action and do not contravene (i)
Anchor's articles of incorporation or by-laws, or (ii) any law or any
contractual restriction binding on or affecting Anchor.
c. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by Anchor of this Agreement or any of
the Lease Documents, as amended hereby, to which Anchor is or will be a party.
d. This Agreement and each of the other Lease Documents, as amended
hereby, to which Anchor is a party, constitute legal, valid and binding
obligations of Anchor, enforceable against Anchor in accordance with their
respective terms.
Section 5. Reference to and Effect on the Loan Documents.
a. The Borrower and Anchor hereby confirm and acknowledge that the amount
due to the Lender on account of the Loan on the date hereof is $10,149,357.83 in
principal indebtedness, plus accrued and unpaid interest and fees and expenses.
Neither the Borrower nor Anchor has any knowledge of any challenge to the
Lender's claims arising under the Loan Documents or the effectiveness of the
Loan Documents.
b. The execution, delivery and effectiveness of this Agreement shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of the Lender under any of the Lease Documents or Loan Documents, nor
constitute a waiver of any provision of any of the Lease Documents or Loan
Documents. Except as expressly set forth herein, this Agreement shall not
constitute a modification of the Lease Documents or the Loan Documents or a
course of dealing with the Lender at variance with the Lease Documents or the
Loan Documents such as to require further notice by the Lender to require strict
compliance with the terms of the Lease Documents and the Loan Documents in the
future.
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<PAGE> 5
Section 6. Costs, Expenses and Taxes.
Anchor agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution, delivery, and administration of this
Agreement and the other instruments and documents to be delivered hereunder
including legal fees and expenses incurred in connection with the execution and
delivery of this Agreement. In addition, the Anchor shall pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement and the other taxes payable or
determined to be payable in connection with the execution and delivery of this
Agreement and the other instruments and documents to be delivered hereunder, and
agrees to save the Lender harmless from and against any and all liabilities with
respect to, or resulting from any delay in paying or omission to pay, such
taxes.
Section 7. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
Section 8. Governing Law.
This Amendment shall be governed by, and construed in accordance with, the
laws of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership
By: TWC Sixty, Inc., by its
General Partner
By: /s/ Jack Wilson
---------------------------
Its: President
---------------------
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<PAGE> 6
ANCHOR GLASS CONTAINER
CORPORATION
By: /s/ Jeffrey G. Terryson
---------------------------
Its: Vice President
---------------------
CITICORP LEASING INC.
By: /s/ Edward S. Mundy
---------------------------
Its: Vice President
---------------------
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<PAGE> 1
Exhibit 10.38
SIXTH AMENDMENT TO LEASE AND SECOND AMENDMENT
TO OPTION AGREEMENT
THIS SIXTH AMENDMENT TO LEASE AND SECOND AMENDMENT TO OPTION AGREEMENT (the
"Amendment") dated as of the 5th day of February, 1997 by and between Fountain
Associates I, Ltd., a Florida limited partnership (the "Borrower"), Citicorp
Leasing, Inc., a Delaware corporation (the "Lender"), Anchor Glass Container
Corporation, a Delaware corporation ("Old Anchor") and Anchor Glass Acquisition
Corporation ("New Anchor").
WHEREAS, Old Anchor is the lessee of certain property in Hillsborough
County, Florida known as Anchor Place at Fountain Square (the "Property")
pursuant to that certain Lease Agreement dated as of March 31, 1988 by and
between Old Anchor and the Borrower, as modified and amended by that certain
First Amendment to Lease dated as of June 16, 1992, as further modified and
amended by that certain Second Amendment to Lease dated as of September 30,
1993, as further modified and amended by that certain Third Amendment to Lease
dated as of February 22, 1995, as further modified and amended by that certain
Agreement dated as of March 31, 1996, as further modified and amended by that
certain Amended and Restated Agreement dated as of September 12, 1996 ("Lease");
and
WHEREAS, the Borrower and Old Anchor are party to that certain Building
Option Agreement dated as of March 31, 1988 (the "Option"), as modified and
amended by the First Amendment to Building Option Agreement dated as of June 16,
1992 (the "Option Amendment"), as further modified and amended by that certain
Agreement dated as of June 16, 1992 (the "June 16, 1992 Agreement"), as further
modified and amended by that certain Agreement dated as of March 31, 1996 (the
"Agreement"), as further modified and amended by that certain Amended and
Restated Agreement dated as of September 12, 1996 (the "Amended and Restated
Agreement"; together with the Option, the Option Agreement, the June 16, 1992
Agreement and the Agreement, the "Option Agreement"); and
WHEREAS, effective as of June 16, 1992, the Lender purchased from First
Union National Bank of Florida, successor in interest to the Federal Deposit
Insurance Corporation as Receiver for Southeast Bank, N.A. a loan (the "Loan")
to the Borrower which financed the Borrower's acquisition of the Property; and
WHEREAS, the Borrower's obligation to repay the Loan is evidenced by that
certain Renewal First Mortgage Note dated as of June 16, 1992, as amended (the
"Note"); and
WHEREAS, to secure the Note, the Borrower executed and delivered that
certain Amended Mortgage and Security Agreement dated as of June 16, 1992 and
recorded in the real estate records of Hillsborough County, Florida in Book 6643
at page 1536 (the "Mortgage") and
<PAGE> 2
that certain Amended Assignment of Leases and Rents dated as of June 16, 1992
and recorded in the real estate records of Hillsborough County, Florida in Book
6643 at page 1571; and
WHEREAS, in connection with the purchase of the Loan, the Borrower, Old
Anchor and the Lender entered into that certain Confirmation and Modification of
Subordination, Nondisturbance and Attornment Agreement dated as of June 16, 1992
and recorded in the real estate records of Hillsborough County, Florida in Book
6643 at page 1588 (the "Nondisturbance Agreement"); and
WHEREAS, the Lease, the Option Agreement and the Nondisturbance Agreement
shall be referred to herein as the "Lease Documents" and the Note, the Mortgage
and the Assignment of Leases shall be referred to herein as the "Loan
Documents"; and
WHEREAS, in connection with the execution and delivery of the Agreement and
to secure Old Anchor's obligations under the Lease and the Option Agreement,
Vitro, S.A. ("Vitro"), executed and delivered to the Lender that certain
Guaranty Agreement dated as of March 31, 1996, as modified and amended by that
certain letter agreement dated September 11, 1996 (as amended, the "Guaranty");
and
WHEREAS, on September 13, 1996 and September 30, 1996, Old Anchor and
Anchor Recycling Corporation, respectively, filed their petitions for relief
pursuant to Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") which
cases are being jointly administered (case numbers 96- 1434 and 96-1516); and
WHEREAS, on December 18, 1996 Old Anchor entered into an Asset Purchase
Agreement (the "APA") which was approved by Order of the Bankruptcy Court
entered on December 20, 1996; and
WHEREAS, in connection with the APA, Old Anchor desires to assume the Lease
and the Option Agreement and to assign both such contracts to New Anchor; and
WHEREAS, as a condition to such assignment and assumption, the parties
hereto desire to modify and amend the Lease and the Option Agreement in the
manner set forth herein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower, the Lender, Old Anchor and New Anchor hereby agree
as follows:
Section 1. Amendments to Lease.
--------------------
a. The Lease is hereby modified and amended to the extent
necessary to permit Old Anchor to assume and assign the Lease to New Anchor
pursuant to Section 365 of the United States Bankruptcy Code and New Anchor
hereby assumes all of Old Anchor's obligations under the Lease, as modified
hereby, pursuant to Section 365 of the United States Bankruptcy Code. Hereafter,
all references to the "Tenant" in the Lease shall be to New Anchor.
2
<PAGE> 3
b. The Lease is hereby modified and amended to extend the Term
of the Lease so that the Term ends at midnight on February 1, 1998; provided,
however, that if New Anchor does not exercise the Option to purchase the
Property by the date for exercising such Option provided for under this
Agreement, the Term of the Lease shall only be extended to midnight on January
2, 1998.
c. Section 9(a) (13) of the Lease is hereby deleted in its
entirety and the following is substituted therefor:
"(i) Failure of Tenant to maintain a Consolidated Net Worth at
any time of not less than the amount described in Section 8.9 of that
certain Credit Agreement among Tenant, various financial institutions,
Bankers Trust Company, as Issuing Bank, BTCommercial Corporation, as
Agent and Co-Syndication Agent and PNC Bank, National Association, as
Co-Syndication Agent and Issuing Bank, dated as of February 5, 1997 (the
"BT Agreement"); or
(ii) Failure of Tenant to maintain an Interest Coverage Ratio
for any period of four consecutive fiscal quarters as described in
Section 8.11 of the BT Agreement.
Copies of Sections 8.9 and 8.11 of the BT Agreements are attached hereto
as Exhibit "Q" and incorporated herein by reference."
d. Section 9(a)(14) of the Lease is hereby deleted in its entirety
and the following is substituted therefore:
"(14) A Change in Control as defined below:
'Change in Control' means (A) a sale of all or substantially all of the
assets of Tenant to any entity other than Consumers Packaging Inc., a company
organized under the federal laws of Canada ("Parent") or the liquidation or
dissolution of the Tenant; (B) a merger of Tenant and Tenant is not the
surviving entity unless consented to in writing by Citicorp Leasing, Inc.;
(C)the failure of Parent to own, beneficially and of record, a majority of the
issues and outstanding shares of voting stock of the Tenant either directly or
through one or more intermediate subsidiaries of the Parent (in each case, a
majority of the issues and outstanding shares of the voting stock of which is
owned, beneficially and of record, by its immediate parent corporation); or (D)
the failure of the Parent to be able to, or the contractual cessation or
surrender of the right to, designate for election a majority of the members of
the board of directors of the Tenant; provided, however, that any pledge of
voting stock of the Tenant or any such intermediate subsidiary of the Parent by
the Parent or any such intermediate subsidiary of the Parent shall not be deemed
to constitute a "Change of Control" under clause (C) or clause (D), above,
regardless of any change in the record ownership of such shares of voting stock
provided for under the provisions of a pledge agreement creating such pledge
unless and until (i) the Parent of such intermediate subsidiary, as the case may
be, ceases to be the beneficial owner of such shares of voting stock or (ii) the
Parent or such intermediate subsidiary ceases to have the right to direct the
voting of such shares of voting stock
3
<PAGE> 4
in any election of members of the board of directors of the Tenant, whether
pursuant to a provision of any such pledge agreement or otherwise."
e. The Lease is hereby modified and amended to the extent necessary
to provide that the obligations of Old Anchor set forth in that certain Letter
Agreement dated as of April 27, 1992 heretofore have been satisfied.
f. The Lease is hereby modified and amended to the extent necessary
to provide that the Monthly Rental (as defined in the Lease) shall hereafter be
increased by $25,373.40 which increase has been included in the Monthly Rental
since September 12, 1996.
g. The Lease is hereby modified and amended to the extent necessary
to provide that any existing default under the Lease is hereby waived, including
the Lease Default (as defined in the Amended and Restated Agreement); provided,
however, that the obligation of the Tenant pursuant to Section 9(b)(1) of the
Lease to pay to the Lender twelve percent (12%) of the existing Citicorp
indebtedness under the Note to be applied to the balance due under the Note is
not waived but rather shall be deferred until the earlier of (a) the maturity
date of the Note, (b) the date of an additional default under the Lease, as
amended hereby, or (c) the date the Property is purchased by New Anchor or sold
to a third party.
Section 2. Amendments to Option Agreement.
-------------------------------
a. The Option Agreement is hereby modified and amended to the
extent necessary to permit Old Anchor to assume and assign the Option Agreement
to New Anchor pursuant to Section 365 of the United States Bankruptcy Code and
New Anchor hereby assumes all of Old Anchor's obligations under the Option
Agreement, as modified hereby, pursuant to Section 365 of the United States
Bankruptcy Code. Hereafter, all references to "Anchor" in the Option Agreement
shall be to New Anchor.
b. The Option Agreement is hereby modified and amended to the
extent necessary to provide that for purposes of calculating the amount due
under the Option Agreement, the total amount of Citicorp indebtedness (as
defined in the Option Agreement) shall be such indebtedness as reduced by the
amount paid to the Lender pursuant to Section 1(e) of this Amendment; provided,
however, that calculation of the Residual Value Guaranty Amount (as defined in
the Option Agreement) shall be eighty-eight percent (88%) of the total amount of
the Citicorp Indebtedness (as defined in the Option Agreement) without reduction
of the amount of such payment.
c. Section 2(a) of the Option Agreement is hereby deleted in its
entirety and the following is substituted therefore:
"(a) The term ("Term") of this Option, unless terminated
earlier as provided in Section 2(c) herein, shall expire on January 2,
1998, which date is one month prior to the last day of the term of that
certain Lease Agreement dated as of March 31, 1988, as amended, between
Fountain, as landlord, and New Anchor, as tenant, for the Property."
4
<PAGE> 5
d. Section 4 of the Option Agreement is hereby modified and
amended to provide that the closing and consummation of the sale and purchase of
the Property shall take place on or before February 1, 1998. Notwithstanding any
of the foregoing or any provision of the Option Agreement to the contrary, (i)
the parties agree that the closing with respect to the exercise of the Option
(as defined in the Option Agreement) shall not in any event occur prior to
January 2, 1998, and (ii) the Borrower shall not be obligated to close on a date
which is earlier than twenty (20) days after the Borrower received the Exercise
Notice.
e. Section 16(b) of the Option Agreement is hereby modified and
amended to delete the first sentence thereof and to substitute the following
therefor:
"Upon expiration or earlier termination of the Lease, if New Anchor has
not properly exercised the Option and consummated the acquisition of the
Property, then New Anchor shall pay to Citicorp Leasing, Inc., a
Delaware corporation ("Citicorp"), an amount (the "Residual Value
Guaranty Amount") equal to eighty- eight percent (88%) of the total
indebtedness encumbering the Property (the "Citicorp Indebtedness"),
which Residual Value Guaranty Amount shall be applied to the Citicorp
Indebtedness."
f. The Option Agreement is hereby modified and amended to provide
the following additional provisions:
20. Payments. The parties agree that the payments required
to be made under this Agreement to Fountain may be paid directly to
Citicorp Leasing, Inc. so long as any indebtedness is outstanding to
Citicorp Leasing, Inc. with the remainder being paid to Fountain after
the Citicorp Indebtedness is fully paid and that such payments will be
deemed proper payments made to Fountain.
21. Conflict. As long as the Citicorp Indebtedness is
outstanding, nothing contained herein shall eliminate or diminish the
rights of Citicorp Leasing, Inc. to receive payment described in the
loan documents executed by and between Fountain and Citicorp Leasing,
Inc. dated as of June 16, 1992 and nothing contained herein shall
eliminate or diminish the rights of Citicorp Leasing, Inc. under that
certain Lease Agreement dated March 31, 1988, as amended.
22. Subordination. This Agreement, and all rights of New
Anchor and Fountain contained herein shall, and are hereby deemed to be,
subject, subordinate and inferior in all respects to the mortgage
securing the Citicorp Indebtedness. In the event of a foreclosure of the
mortgage securing the Citicorp Indebtedness, all rights under this
Agreement afforded to New Anchor and Fountain, and each of them, shall,
at the option of Citicorp Leasing, Inc., be extinguished by such
foreclosure, and Citicorp Leasing, Inc. shall not be bound by Fountain's
obligations hereunder."
g. The June 16, 1992 Agreement is hereby deleted in its entirety.
5
<PAGE> 6
Section 3. Notices.
--------
The Lease Documents are hereby modified and amended to the extent
necessary to provide the following addresses for notices:
If to New Anchor: Anchor Glass Acquisition Corporation
4343 Anchor Plaza Parkway
Tampa, Florida 33634
Attn: John J. Glaznavi, Chairman
Telephone: (813) 884-0000
Telefax: (813) 882-7859
With a copy to: Eckert Seamans Cherin & Mellott
600 Grant Street
Pittsburgh, Pennsylvania 15219
Attn: C. Kent May, Esq.
Telephone: (412) 566-6000
Telefax: (412) 566-6099
If to the Borrower: Fountain Associates I, Ltd.
c/o Wilson Management Company
6200 Courtney Campbell Causeway
Tampa, Florida 33607
Telephone: (813) 281-8888
Telefax: (813) 281-5657
With a copy to: Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
One Tampa City Center, Suite 2100
Tampa, Florida 33602
Attn: Stephen J. Mitchell, Esq.
Telephone: (813) 229-3321
Telefax: (813) 223-9067
If to the Lender: Citicorp Leasing, Inc.
c/o Citibank, N.A.
599 Lexington Avenue
New York, New York 10043
Attn: Anthony Murphy
Telephone: (212) 559-9595
Telefax: (212) 893-0642
6
<PAGE> 7
With a copy to: Paul, Hastings, Janofsky & Walker LLP
Suite 2400
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Jesse H. Austin, III
Telephone: (404) 815-2208
Telefax: (404) 815-2424
Section 4. Conditions to Effectiveness of Amendment.
-----------------------------------------
This Amendment shall become effective as of the date hereof when, and
only when:
a. the Lender shall have received, in form and substance
satisfactory to it, counterparts of this Amendment duly executed by the general
partner of the Borrower, Old Anchor and New Anchor and such other information,
documents, instruments, approvals or opinions as the Lender or the Lender's
counsel may require;
b. the Lender shall have received, in form and substance
satisfactory to it, counterparts of that certain Sixth Amendment to Note,
Mortgage and Security Agreement and Related Loan Documents duly executed by the
Borrower, and such other information, documents, instruments, approvals or
opinions as the Lender or the Lender's counsel may require;
c. the Lender shall have received, in form and substance
satisfactory to it,counterparts of that certain Amended and Restated Guaranty
and Put Agreement duly executed by Vitro, and such other information, documents,
instruments, approvals or opinions as the Lender or the Lender's counsel may
require;
d. New Anchor shall have paid to the Lender a fee in the amount of
$100,000; and
e. Old Anchor shall have paid to the Lender or at the Lender's
direction the past due pre-petition rental payments in the amount of $90,204.68,
plus accrued and unpaid charges and other obligations in the amount of
$3,608.18, plus the fees and expenses of Paul, Hastings, Janofsky & Walker, LLP,
counsel to the Lender.
Section 5. Representations and Warranties of the Borrower.
-----------------------------------------------
The Borrower represents and warrants as follows:
a. The Borrower is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Florida.
b. The execution, delivery and performance by the Borrower's
general partner of this Amendment, and the Lease Documents, as amended hereby,
are within such partner's power, have been duly authorized by all necessary
corporate action and do not contravene (i) such partner's articles of
incorporation or by-laws, or (ii) any law or any contractual restriction binding
on or affecting such partner.
7
<PAGE> 8
c. Except for Bankruptcy Court approval, no authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by the Borrower of this Amendment or any of the Lease Documents, as
amended hereby, to which the Borrower is or will be a party.
d. This Amendment and each of the other Lease Documents, as
amended hereby, to which the Borrower is a party, constitute legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
Section 6. Representations and Warranties of Old Anchor.
---------------------------------------------
Old Anchor represents and warrants as follows:
a. Old Anchor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
b. The execution, delivery and performance by Anchor of this
Amendment, and the Lease Documents, as amended hereby, are within Old Anchor's
power, have been duly authorized by all necessary corporate action and do not
contravene (i) Anchor's articles of incorporation or by-laws, or (ii) any law or
any contractual restriction binding on or affecting Old Anchor.
c. Except for the Bankruptcy Court approval obtained on December
20, 1996, no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by Old Anchor of this Amendment or any
of the Lease Documents, as amended hereby, to which Old Anchor is or will be a
party.
Section 7. Representations and Warranties of New Anchor.
---------------------------------------------
New Anchor represents and warrants as follows:
a. New Anchor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
b. The execution, delivery and performance by New Anchor of this
Amendment, and the Lease Documents, as amended hereby, are within New Anchor's
power, have been duly authorized by all necessary company action and do not
contravene (i) New Anchor's organizational documents, or (ii) any law or any
contractual restriction binding on or affecting New Anchor.
c. This Amendment and each of the other Lease Documents, as
amended hereby, to which New Anchor is a party, constitute legal, valid and
binding obligations of New Anchor, enforceable against New Anchor in accordance
with their respective terms.
8
<PAGE> 9
Section 8. Reference to and Effect on the Loan Documents.
----------------------------------------------
a. The Borrower, Old Anchor and New Anchor hereby confirm and
acknowledge that the amount due to the Lender on account of the Loan on the date
hereof, after giving effect to payment of the past due rent and other amounts to
be paid as set forth in Section 5(b) hereof, is $10,149,357.83 in principal
indebtedness, plus accrued and unpaid interest and fees and expenses of
$61,453.33. Neither the Borrower, Old Anchor nor New Anchor has any knowledge of
any challenge to the Lender's claims arising under the Loan Documents or the
effectiveness of the Loan Documents.
b. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Lender under any of the Lease Documents or Loan
Documents, nor constitute a waiver of any provision of any of the Lease
Documents or Loan Documents. Except as expressly set forth herein, this
Amendment shall not constitute a modification of the Lease Documents or the Loan
Documents or a course of dealing with the Lender at variance with the Lease
Documents or the Loan Documents such as to require further notice by the Lender
to require strict compliance with the terms of the Lease Documents and the Loan
Documents in the future.
Section 9. Costs, Expenses and Taxes.
--------------------------
New Anchor agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution, delivery, and administration of this
Amendment and the other instruments and documents to be delivered hereunder
including legal fees and expenses incurred in connection with the execution and
delivery of this Amendment. In addition, New Anchor shall pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution and delivery of this Amendment and the other instruments and documents
to be delivered hereunder, and agree to save the Lender harmless from and
against any and all liabilities with respect to, or resulting from any delay in
paying or omission to pay, such taxes.
Section 10. Execution in Counterparts.
--------------------------
This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
Section 11. Governing Law.
--------------
This Amendment shall be governed by, and construed in accordance with,
the laws of Florida.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership
By: TWC Sixty, Inc., by its
General Partner
Witnesses:
/s/ (illegible) By: /s/ Debra F. Koehler
- ------------------------------- ------------------------
(illegible) Its: Sr. Vice President
- ------------------------------- ------------------------
ANCHOR GLASS CONTAINER
CORPORATION
/s/ (illegible) By: /s/ Robert D. McGrew
- ------------------------------- ------------------------
Director of Treasury Operations Its: Asst. Treasurer
- ------------------------------- ------------------------
CITICORP LEASING, INC.
/s/ Nancy (Last Name illegible) By: /s/ Anthony Murphy
- ------------------------------- ------------------------
Nancy (Last Name illegible) Its: Vice President
- ------------------------------- ------------------------
ANCHOR GLASS ACQUISITION
CORPORATION
Deborah Romansky By: /s/ M. William Lightnor, Jr.
- ------------------------------- ------------------------
Executive Assistant Its: Vice President
- ------------------------------- ------------------------
10
<PAGE> 1
Exhibit 10.39
EXHIBIT I
33088-2
BUILDING OPTION AGREEMENT
THIS BUILDING OPTION AGREEMENT ("Agreement") is made and entered into this
31 day of March, 1988, by and between FOUNTAIN ASSOCIATES I, LTD., a Florida
limited partnership, ("FOUNTAIN") and ANCHOR GLASS CONTAINER CORPORATION, a
Delaware corporation ("ANCHOR").
IN CONSIDERATION of Ten Dollars ($10.00), the mutual agreements set forth
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, FOUNTAIN and ANCHOR hereby agree
as follows:
1. Option. FOUNTAIN grants to ANCHOR an option (hereinafter "Option"),
which shall be exclusive for the "Term" (hereinafter defined), to purchase from
FOUNTAIN on the terms and conditions herein provided, the following property,
rights and interests (collectively, the "Property"):
(a) All of that certain land (hereinafter referred to as "Land") legally
described on attached Exhibit "A", and all rights appurtenant thereto;
(b) Density rights of 100,000 square foot of office space;
(c) Any and all improvements on the Land:
(d) Any and all rights in and to that certain Option for Parking Easement
by and between FOUNTAIN SQUARE ASSOCIATES and FOUNTAIN dated of even date
herewith, (the "Option for Parking Easement"), or if previously exercised the
easement rights described therein; and
(e) All right, title and interest of FOUNTAIN in and to all site plans,
surveys, soil and substrata studies, architectural drawings, plans and
specifications, engineering plans and studies, floor plans, landscape plans, and
other plans and studies of any kind that relate to the Property.
2. Option Term; Exercise; Termination.
(a) The term ("Term") of this Option unless terminated earlier as provided
for in paragraph 2(c) herein, shall expire ninety (90) days prior to the last
day of the ninth year of that certain Lease Agreement of even date herewith for
Anchor Place at Fountain Square entered into between FOUNTAIN and ANCHOR (the
"Lease").
(b) ANCHOR may exercise the option contained in this Agreement at any time
during the Term subsequent to the Commencement Date as defined in the Lease by
giving written notice (hereinafter "Exercise Notice") to that effect to FOUNTAIN
along with Fifty Thousand Dollars
<PAGE> 2
($50,000.00) in cash or cashier's check as non-refundable earnest money
("Earnest Money"), which Earnest Money shall be applied to the "Purchase Price"
(hereinafter defined).
(c) If ANCHOR does not give an Exercise Notice with respect to the
Property by the expiration of the Term or if ANCHOR is in default under the
terms of the Lease then this Agreement and the Option granted hereby shall
automatically terminate. In such event FOUNTAIN's remedies shall be as described
in Section 16 herein.
3. Purchase Price; Option Payment.
The total purchase price (hereinafter "Purchase Price"), for the Property
shall be the Actual Total Project Cost for the Building as determined pursuant
to the formula described in Exhibit "B" attached hereto and incorporated herein
by reference. FOUNTAIN will notify ANCHOR of the Actual Total Project Cost for
the Building as soon as that figure is available subsequent to issuance of the
Certificate of Occupancy on the Improvements and completion of the tenant
improvements. The actual amount shall be set forth in an Addendum to this
Agreement which Addendum shall be signed by both ANCHOR and FOUNTAIN.
Notwithstanding the foregoing, the Purchase Price shall be reduced by an amount
equal to the sum of all payments made by ANCHOR to third parties to pay a
portion of the Actual Total Project Cost and all principal payments made by
ANCHOR prior to or at the date of Closing to the lender that subsequent to the
execution of this Agreement finances the construction of improvements on the
Land ("Construction Lender") or provides permanent financing for the
improvements on the Land ("Permanent Lender"). The Construction Lender and
Permanent Lender are collectively referred to as "Lender", and the loan procured
by FOUNTAIN for financing the improvements on the Land is hereinafter referred
to as "Debt".
Notwithstanding any provision to the contrary, the Purchase Price shall
not be reduced by the use of loan proceeds received from the Permanent Lender to
pay off the Construction Lender.
The Purchase Price for the Property shall be payable at the "Closing"
(hereinafter defined) as follows:
(a) ANCHOR shall assume the balance, as of the date of Closing, of the
Debt;
(b) ANCHOR shall pay to FOUNTAIN, in cash or cashier's check, the
difference between the Purchase Price and the Debt assumed by ANCHOR plus or
minus net prorations described in this Agreement; and
(c) Notwithstanding the above, if the Debt cannot be assumed by ANCHOR due
to a change in the financial position of ANCHOR then in that event ANCHOR shall
pay to FOUNTAIN, in cash or cashier's check, the Purchase Price plus or minus
net prorations described in this Agreement.
4. Closing
<PAGE> 3
(a) The consummation of the sale and purchase of the Property (the
"Closing") shall take place within ninety (90) days (hereinafter "Exercise
Term") after ANCHOR gives the Exercise Notice or at any time within the Exercise
Term subsequent to receipt by FOUNTAIN of written notice from ANCHOR at least
twenty (20) days prior to the proposed closing date provided that (i) title is
shown to be good and marketable and in accordance with the provisions of this
Agreement or is otherwise accepted by ANCHOR, and (ii) all conditions precedent
to ANCHOR's and FOUNTAIN's obligation to close under this Agreement have been
satisfied.
(b) In the event the Closing does not occur before expiration of the Term
for any reason other than a default hereunder by FOUNTAIN then ANCHOR shall
forfeit the Earnest Money and all other money given to FOUNTAIN with respect to
this Agreement.
(c) The Closing shall take place at the offices of Annis, Mitchell,
Cockey, Edwards & Roehn, P.A., One Tampa City Center, Suite 2100, Tampa, Florida
33602.
5. Conveyance and Permitted Exceptions. At Closing, FOUNTAIN shall convey
to ANCHOR good and marketable fee simple title to the Property by a recordable
Special Warranty Deed (the "Deed"), subject to (i) taxes for the year of closing
and subsequent years, (ii) easements, restrictions and covenants of record
existing on the date of execution of this Agreement, (iii) restrictions
pertaining to the allocated density to be conveyed, and the requirements set
forth in Paragraph 17 hereof, (iv) documents to be executed in connection with
the Debt, (v) Declaration of Protective Covenants, Building Standards and
Easements of FOUNTAIN SQUARE (the "Declaration") recorded on or about the
execution of this Agreement, and all future supplements thereto made in
accordance with the terms of the Declaration, and (vi) any and all other
instruments placed of record subsequent hereto and approved in writing by
ANCHOR, and (vii) any lien on the Property which is security for any loan
assured by ANCHOR; (collectively the '"Permitted Exceptions"). The deed of
conveyance shall convey to ANCHOR the density rights provided for herein and
restrict the future development of the Property to such density.
6. Title Insurance.
(a) Not less than five (5) days prior to Closing, FOUNTAIN, at ANCHOR's
expense, shall deliver to ANCHOR a title commitment (hereinafter "Title
Commitment") of the Property as of a current date, issued by a title company
(hereinafter "Title Company) chosen by FOUNTAIN and reasonably acceptable to
ANCHOR. If the Title Commitment discloses encumbrances or exceptions to title
other than the Permitted Exceptions (such other exceptions being referred to as
"Unpermitted Exceptions"), FOUNTAIN, at its sole cost and expense, shall use its
best efforts to cause the Unpermitted Exceptions to be removed from the Title
Commitment prior to the Closing; provided, however, that except for the lien of
any mortgage or other encumbrance which may be removed by the payment of an
ascertainable sum (which, except for the Debt, shall be removed by the Closing),
FOUNTAIN shall not be required to expend more than $5,000.00 to remove any
Unpermitted Exceptions.
(b) If the Unpermitted Exceptions, if any, have not been so removed prior
to the Closing, ANCHOR, at its sole option and upon written notice to FOUNTAIN,
may elect to: (i) terminate
<PAGE> 4
the Agreement with respect to the Property and receive a refund of Earnest Money
and thereupon ANCHOR and FOUNTAIN shall be released as to one another of all
further obligations under this Agreement; or (ii) accept the conveyance of the
Property.
(c) FOUNTAIN, at ANCHOR's expense, shall furnish to ANCHOR, and the
consummation of a Closing shall be conditioned upon the issuance to ANCHOR by
the Title Company of, an ALTA Owner's Title Insurance Policy Form B (1970, as
amended) (hereinafter "Title Policy") in the amount of the Purchase Price,
insuring good and marketable fee simple title to the Property in ANCHOR, subject
only to the Permitted Exceptions and the exceptions, if any, which ANCHOR has
agreed to accept.
7. Survey. FOUNTAIN, at ANCHOR's expense, shall provide ANCHOR with a
current survey of the Property as soon as possible following the receipt of the
Exercise Notice, but in any event within thirty (30) days of the Exercise
Notice, certified in favor of ANCHOR and the Title Company by certification
substantially in the form annexed hereto as Exhibit "C" and prepared by a duly
registered surveyor licensed to do business in the State of Florida and who is
otherwise reasonably acceptable to ANCHOR. The survey shall reflect the
boundaries of the Property, all improvements thereon, if any, and all easements
to the Property. In the event the survey shows any title defect then FOUNTAIN
shall have the same right to cure such defect as provided in Paragraph 6 hereof.
8. Obligations of FOUNTAIN Prior to Closing. During the Term and until the
Closing of the Property, FOUNTAIN shall create or grant no easement or license
affecting any part of the Property, other than as may be established pursuant to
the Declaration, and shall refrain from creating or incurring a mortgage, lien,
or other encumbrance in any way affecting the Property other than the Permitted
Exceptions and the construction and permanent financing discussed herein, and
from committing any waste upon the Property, without ANCHOR's prior written
consent.
9. Documents and Instruments to be Furnished by FOUNTAIN at Closing. At
Closing, FOUNTAIN shall execute and deliver to ANCHOR the following documents:
(a) Special Warranty Deed (in recordable form) containing a provision
transferring to the Grantee density rights to 100,000 square feet of office
development space;
(b) No Lien and Possession Affidavit in the form attached hereto as
Exhibit "D";
(c) A Certificate of Exemption (FIRPTA Affidavit) in the form attached
hereto as Exhibit "E";
(d) Four copies of the "Closing Statement" (defined in Section 11 below)
executed by FOUNTAIN;
(e) Title insurance policy satisfying the requirements of paragraph 6
hereof; and
(f) A copy of most recent paid ad valorem tax bill.
<PAGE> 5
10. ANCHOR's Obligations at Closing. Provided that FOUNTAIN performs all
of its obligations under this Agreement, ANCHOR shall deliver to FOUNTAIN at the
Closing the following:
(a) The difference between the Purchase Price and Debt assumed at Closing,
plus or minus net prorations, in the form of a cashier's check made payable to
or wire transfer of immediately available bank funds to the Title Company.
(b) Four copies of the Closing Statement referred to in Section 11 below
executed by ANCHOR.
(c) Promissory Note in the amount of $1,000,000.00 as described in
paragraph 16 hereof.
(f) The Property has full, free and adequate access to and from public
highways and roads, and FOUNTAIN has no knowledge of any fact or condition which
would result in the termination of such access.
All of the foregoing representations and warranties shall be remade by
FOUNTAIN at and shall survive the Closing.
13. Representations and Warranties of ANCHOR. ANCHOR hereby represents,
warrants and covenants to FOUNTAIN:
(a) ANCHOR is a valid and existing corporation in good standing in the
State of its incorporation and is qualified to do business in Florida;
(b) The execution of this Agreement on behalf of ANCHOR and the
consummation of this Agreement by ANCHOR will not violate or be in breach of any
provisions of the articles of incorporation or bylaws of the corporation.
All of the foregoing representations and warranties shall be remade by
ANCHOR at and shall survive the Closing.
14. Broker. FOUNTAIN and ANCHOR represent and warrant to each other that,
it has not utilized the services of any real estate broker, salesperson or
finder in connection with this Agreement or the transaction contemplated hereby.
ANCHOR and FOUNTAIN each agree to indemnify, defend and hold the other harmless
from and against all claims for brokerage commissions and finder's fees arising
from or attributable to the acts or omissions of the indemnifying party or any
person or entity acting or purportedly acting on behalf of the indemnifying
party.
15. Condemnation. If prior to the Closing part of the Property shall be
taken by any governmental authority under its power of eminent domain, then
ANCHOR shall take title to the Property at the Closing without any abatement or
adjustment in the Purchase Price it being understood that in such event FOUNTAIN
would have to replace any condemned parking spaces pursuant to the terms of the
Lease. Notwithstanding any provision to the contrary, it is expressly
<PAGE> 6
understood and agreed to between the parties that FOUNTAIN shall have no
obligation to replace the surface parking spaces after the Closing.
All pre-closing requirements of ANCHOR, including, but not limited to,
Exercise Notice and delivery of Earnest Money, shall apply notwithstanding the
exercise of eminent domain.
16. Remedies.
(a) If ANCHOR gives an Exercise Notice and fails to keep or observe any
covenant, agreement or obligation to be kept or observed by ANCHOR under this
Agreement or the Lease, and FOUNTAIN is not in default thereunder, then FOUNTAIN
shall have the right to refuse to close by giving written notice to that effect
to ANCHOR, in which event the Earnest Money and all other money paid hereunder
by ANCHOR to FOUNTAIN shall be forfeited to FOUNTAIN as liquidated damages or
FOUNTAIN may seek specific performance of the terms of this Agreement in a court
of competent jurisdiction. In the vent FOUNTAIN fails to keep or observe any
covenant, agreement or obligation to be kept or observed by FOUNTAIN hereunder
and ANCHOR is not in default thereunder then ANCHOR shall have the right to the
immediate return of the Earnest Money or seek specific performance of the terms
of this Agreement in a court of competent jurisdiction.
(b) On the commencement date of the lease, ANCHOR shall execute a
promissory note in the amount of One Million Dollars ($1.000,000.00). in the
form attached hereto as Exhibit "F" (hereinafter "Promissory Note"), and ANCHOR
shall secure the Promissory Note with an unconditional, irrevocable letter of
credit issued by a bank acceptable to FOUNTAIN in the amount of One Million
Dollars ($1,000,000.00), in substantially the form annexed hereto as Exhibit "G"
or provide other collateral acceptable to FOUNTAIN and Lender. The Letter of
Credit shall be issued by a national bank acceptable to FOUNTAIN and have a
maturity date of one (1) year. If the Letter of Credit is not renewed for an
additional 1 year within thirty (30) days of the maturity date of the letter of
Credit FOUNTAIN may draw upon the Letter of Credit. The Promissory Note
evidences ANCHOR's promise to pay FOUNTAIN One Million Dollars ($1,000,000.00)
in the event the Property is not purchased by ANCHOR prior to the expiration of
the Term of this Agreement or such earlier termination of this Agreement as
provided for herein.
17. Right of First Refusal. Subsequent to closing by ANCHOR under the
terms of that certain Land Option Agreement by and between ANCHOR and Fountain
Square Associates of even date herewith ANCHOR expressly agrees that ANCHOR
shall not sell, convey or transfer except as to an encumbrance provided to any
institutional lender by ANCHOR to secure a loan and as to a transfer pursuant
thereto by virtue of a default under said loan, its right, title and interest in
the Property or any part thereof, unless ANCHOR shall have first made an offer
to sell its interest in the Property to FOUNTAIN in the manner hereinafter
prescribed, and the offer shall have been rejected in writing. The offer shall
be given to FOUNTAIN and shall consist of an offer to sell ANCHOR its interest
in the Property for the same price and upon the same terms as a prospective bona
fide purchaser shall have theretofore offered for the Property in writing. A
copy of the prospective bona fide purchaser's offer shall be attached to the
offer
<PAGE> 7
of ANCHOR. With thirty (30) days after the receipt of the offer, FOUNTAIN may,
at its option, elect to purchase, in its name or an entity owned or controlled
by it, all, but not less than all of the interest proposed to be sold by ANCHOR.
The election to purchase shall be exercised by the giving of written notice
thereof to ANCHOR. The purchase price shall be the purchase price set forth in
the prospective bona fide purchaser's written offer attached to the offer of
ANCHOR and shall be paid in the same manner set forth therein. The closing of a
purchase under this Paragraph shall take place at the principal office of Annis,
Mitchell, Cockey, Edwards, Roehn, P.A., Suite 2100, Tampa City Center Building,
Tampa, Florida or such other place designated by FOUNTAIN. The date of closing
shall be specified in writing in the written acceptance by FOUNTAIN to ANCHOR,
which closing date shall be the later of the date of closing set forth in the
prospective bona fide purchaser's written offer to purchase or thirty (30) days
after the last day on which FOUNTAIN may exercise its election to purchase. If
ANCHOR's offer to sell its interest in the Property is rejected in writing by
FOUNTAIN as to the entire interest sought to be sold, or if FOUNTAIN does not
accept the offer in writing within the thirty (30) day period, the offer shall
be deemed to have been rejected by FOUNTAIN, then ANCHOR may make a transfer to
the prospective bona fide purchaser only under the identical terms theretofore
stated to FOUNTAIN. If ANCHOR shall fail to make the transfer to the prospective
bona fide purchaser pursuant to the terms of the offer provide to FOUNTAIN, the
interest of ANCHOR sought to be sold shall again be subject to all the
restrictions of this Agreement.
18. Notices. Any notices required or permitted to be given hereunder shall
be deemed given when delivered personally or by Federal Express or by courier or
deposited in the United States mail, Postage prepaid, certified mail, return
receipt requested, addressed to ANCHOR or FOUNTAIN, as the case may be, as
follows:
If to FOUNTAIN: Mr. Jack Wilson
6200 Courtney Campbell
Causeway, Suite 600
Tampa, Florida 33607
With a copy to: Stephen J. Mitchell, Esquire
Annis, Mitchell, Cockey,
Edwards & Roehn, P.A.
P.O. Box 3433
Tampa, Florida 33601
If to ANCHOR: Mr. Vincent J. Naimoli,
Chairman, Chief Executive
Officer and President
Anchor Glass Container Corporation
One Anchor Place
1100 Anchor Street
Tampa, Florida 33607-1765
With a copy to: Jack S. Newsome, Esquire
<PAGE> 8
Holland and Knight
P. O. Box 1288
Tampa, Florida 33601
Either party to this Agreement may change its address for notice purposes
by giving notice thereof to the other party hereto, except that such change of
address notice shall not be deemed to have been given until actually received by
the addressee thereof.
19. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
party to this Agreement shall assign any of its rights or obligations hereunder
without the prior written consent of the other party, except that this Agreement
may be held by a successor corporation of ANCHOR through merger as long as the
financial strength of such entity is greater than or equal to ANCHOR's as it
exists as of the date hereof.
(b) This Agreement constitutes the entire agreement and understanding
between the parties hereto, and it is agreed that any change in, addition to,
amendment or modification of the terms hereof shall be of no effect unless
reduced to writing and signed by FOUNTAIN and ANCHOR.
(c) The captions used in connection with the Sections of this Agreement
are for convenience of reference only and shall not be deemed to construe or
limit the meaning or language of this Agreement.
(d) Time is of the essence of this Agreement and the performance of all
covenants, agreements and obligations hereunder. In the event that the last day
for performance of any obligation hereunder occurs on a Saturday, Sunday or
legal holiday, the time for performance shall be extended to the next following
business day.
(e) If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
provisions of this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
(f) Nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereto, any rights or remedies
whatsoever.
(g) This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
(h) The representations, warranties, provisions, covenants and agreements
contained in this Agreement shall survive the Closing of the sale and purchase
of the Property pursuant to this Agreement and shall not be merged into any deed
or document.
(i) In connection with any litigation between FOUNTAIN and ANCHOR,
including
<PAGE> 9
appellate proceedings, arising out of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys fees and costs from the other party.
(j) A memorandum of this option in the form annexed hereto as Exhibit "H"
may be recorded among the Public Records of Hillsborough County.
IN WITNESS WHEREOF, the Parties hereto have signed this Agreement on the
date and year noted above.
Witnesses: FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership
By: TWC SIXTY-ONE, INC., its
General Partner
By: /s/ Illegible
_________________________ __________________________
Its: President
_________________________
ANCHOR GLASS CONTAINER CORPORATION,
a Delaware corporation
By: /s/ Illegible
_________________________ ___________________________
Its: President
_________________________
<PAGE> 10
EXHIBITS
Exhibit "A" - Legal Description of the Land
Exhibit "B" - Total Project Cost
Exhibit "C" - Surveyor's Certificate
Exhibit "D" - No Lien Affidavit
Exhibit "E" - FIRPTA Affidavit
Exhibit "F" - Promissory Note
Exhibit "G" - Letter of Credit
Exhibit "H" - Memorandum of Option
<PAGE> 11
EXHIBIT A
DESCRIPTION: ANCHOR PARCEL
A tract of land lying ln the Northward 1/4 of Section 7, Township 29 South,
Range 18 East, Hillsborough County, Florida, being more particularly described
as follows:
From the Northwest corner of Section 7, Township 29 South, Range 18 East,
Hillsborough County, Florida, run thence S.00(degree)19'53"W., 109.28 feet,
along the West boundary line of the Northwest 1/4 of said Section 7; thence
S.89(degree)40'07"E., 30.00 feet to the East right-of-way line of GEORGE ROAD;
run thence N.39(degree)17'32"E., 25.52 feet, along intersection right-of-way
line for MEMORIAL HIGHWAY (STATE ROAD NO. S-576); thence S.89(degree)58'39"E.,
242.01 feet, along the South right-of-way line of MEMORIAL HIGHWAY (STATE ROAD
NO. 576); to the beginning of a curve to the right; thence Easterly, 298.44
feet, along the curved Southerly right-of-way line of said MEMORIAL HIGHWAY
(having a radius of 5682.58 feet, a central angle of 03(degree)00'33", and a
chord bearing and distance of S.88(degree)28'23"E., 298.41 feet) to a point of
reverse curvature; thence continue Easterly on a curve to the left, 37.40 feet
along the curved Southerly right of way line of said MEMORIAL HIGHWAY (having s
radius of 5776.58 feet, n central angle of 00(degree)22'15", and a chord bearing
and distance of S.87(degree)08'02"E., 37.40 feet) for a Point of Beginning; from
said Point of Beginning, run thence Easterly 204.61 feet, along the curved
Southerly right-of-way line of said MEMORIAL HIGHWAY (being a curve to the left,
having a radius of 5776.58 feet, a central angle of 02(degree)01'46", and a
chord bearing and distance of S.88(degree)20'03"E., 204.60 feet), to a point of
right-of-way change; thence S.00(degree)08'40"W., 12.00 feet, along the
right-of-way line on the South Side of said MEMORIAL Highway; thence Easterly,
49.60 feet, along the curved Southerly right-of-way line of said MEMORIAL
HIGHWAY (being a curve to the left, having a radius of 5788.58 feet, a central
angle of 00(degree)29'31", and a chord bearing and distance of
S.89(degree)36'53"E., 49.60 feet), to the end of said curve; thence
S.89(degree)51'39"E., 350.39 feet, along the South right-of-way line of said
Memorial HIGHWAY, thence S.48(degree)57'56"E., 94.63 feet, along intersection
right-of-way line, to the West right-of-way line of EISENHOWER BOULEVARD (STATE
ROAD NO. 589); thence S.00(degree)25'30"W., 312.40 feet, along the West
right-of-way line of said EISENHOWER BOULEVARD; thence N.89(degree)34'30"W., a
distance of 336.00 feet; thence N.00(degree)25'30"E., a distance of 21.00 feet;
thence N.79(degree)30'51"W., a distance of 31.48 feet; thence
N.89(degree)34'30"W., a distance of 369.26 feet; thence 77.16 feet along the arc
of a curve to the right, said curve having a radius of 469.00 feet and a chord
of 77.08 feet which bears N.14(degree)07'44"E. to a point of reverse curvature;
thence 170.69 feet along the arc of a curve to the left, said curve having a
radius of 531.00 feet and a chord of 169.95 feet which bears
N.09(degree)38'01"E.;. thence N.00(degree)25'30"E., a distance of 87.43 feet;
thence 36.20 feet along the arc of a curve to the right, said curve having a
radius of 43.00 feet and a chord of 35.14 feet which bears N.24(degree)32'41"E.
to the Point of Beginning; containing 5.81 acres, more or less.
<PAGE> 12
EXHIBIT B
Anchor Glass Container Corporation
Product Cost Budget
<TABLE>
<S> <C>
1. Land (5.81 Acres at $10.00 per Square Foot) $ 2,531,000
2. Design and Construction Cost $ 4,888,000
3. Tenant Fit-Up $ 912,000
4. Development Fees $ 653,000
5. Finance and Administration Expenses $ 875,000
6. Free Rent Period (Debt Service During
the Period in Which Tenant is not Paying
Monthly Rental) $ 1,000,000
7. Contingency $ 174,000
8. Tenant Extras $ 467.000
Total Project Cost $11,500.000
</TABLE>
The Total Project Cost Budget for Anchor Place at Fountain Square Project (the
"Project") is comprised of the general line items described above. Landlord has
and does hereby guarantee to Tenant that the actual cost items for the Project
as described in line items 2 (Design and Construction Costs) and 7 (Contingency)
will not exceed $5.062.000 plus the amount of net aggregate Change Orders issued
pursuant to the Lease. Any overruns in the aggregate of such line items other
than those overrun costs attributable to Change Orders or other Work Letters
authorized and approved by Tenant in accordance with the Lease will be paid for
by the Landlord.
In the event that the actual costs for line items 2 (Design and
Construction Costs) and 7 (Contingency) are less than the amount set forth
herein of 55,062,000 then savings ("Savings") will occur which Savings will be
shared as described herein by Landlord and Tenant. The Savings shall be
calculated by subtracting the actual invoiced costs of the work performed at the
Project (net of any discounts taken) and the share of savings due to the general
contractor of the Project from the $5.062.000. Under the general Contractors
Agreement the general contractor shall receive twenty-five percent (25%) of the
savings as defined therein. The Landlord will receive 12.5% of the Savings which
amount will be paid in cash to Landlord upon final determination of such cost
but in no event sooner than the Commencement Date under the Lease. The balance
of the Savings (which constitutes 87.5\ of the Savings) will be available to the
Tenant. For example, if the actual Design and Construction Costs are
$4.762.000.00, including the payment to the general contractor of his contracted
share of Savings. then the Savings amount to 5300,000 ($4.888,000 from line item
2 plus 5174,000 from line item 7 equal $5,062,000 less actual cost of 54,762,000
equals 5300,000). Fountain will receive $37.500 in cash as its 12.5 share of
Savings. The Savings of $300,000 attributable to the
<PAGE> 13
EXHIBIT _______
S U R V E Y O R 'S C E R T I F I C A T E
The undersigned hereby certifies to Chicago Title Insurance Company, the
joint venture company - Owner ), [Construction Lender], Annis, Mitchell, Cockey,
Edwards & Roehn, and Holland & Knight, that the attached survey dated ___, 1988,
of Legal Description, including the option parcel, as described thereon,
represents an actual survey made by me or by my representatives under my
directions and is certified in the State of Florida (Chapter 21 HH-6, Florida
Administrative Code), and said survey, within the meaning of said Standards:
1. was made on the ground and shown thereon as per the field notes and
shows the boundary lines, dimensions and area of land indicated thereon, for
each individual parcel indicated thereon;
2. shows the location and dimensions of all alleys, streets, roads,
rights-of-way, and easements of record as set forth in Schedule B, Sec ion 2 of
Chicago Title Insurance Company, Commitment Number__;
3. shows no unrecorded easements;
4. shows any visible easements, right-of-way or party walls, and shows
visible encroachments on adjoining premises, streets or alleys, by any
buildings, structures or other improvements, and shows visible encroachments on
the subject property by buildings, structures or other improvements situated on
adjoining premises, if any;
5. [The building site parcel] and [the option parcel], as shown, are
contiguous to each other in all respects and there are no overlaps, hiatus,
strips, or gores between the two parcels, and if taken as a tract, would
constitute one parcel of land:
6. shows ingress to and egress from the subject property as provided by
Eisenhower Boulevard and Memorial Highway, with the Property building site
parcel] being contiguous to the southern right-of-way boundary of Memorial
Highway and the western right-of-way boundary of Eisenhower Boulevard, and there
are no overlaps, hiatus, strips or gores between the boundaries of the Property
and the southern right-of-way boundary of Memorial Highway and the western
right-of-way boundary of Eisenhower Boulevard, which are paved, public rights of
way;
7. shows ingress to and egress from [the option parcel] as provided by
Eisenhower Boulevard, ______ Street and ______ Street with [the option parcel]
being contiguous to the western right-of-way boundary of Eisenhower Boulevard,
the northern right-of-way boundary of ______ Street and the eastern right-of-way
boundary of ______ Street and there are no overlaps, hiatus, strips or gores
between the boundaries of [the option parcel] and the western right-of-way
boundaries of Eisenhower Boulevard, the northern right-of-way boundary of ______
Street and the eastern right-of-way boundary of ______ Street, which are paved,
public
<PAGE> 14
rights-of-way; and
8. This property is located within Flood Zones "__ " and "__ " as shown by
FIRM (Flood Insurance Map), Community Panel 120112 0210 C, revised April 17,
1964, as published by the Federal Emergency Management Agency.
CERTIFIED BY:
____________________________________
By: ________________________________
Florida Registered Land Surveyor No. _
(SEAL)
Date: _______________________________
<PAGE> 15
the other sums as described in the term Monthly Debt Service defined in Exhibit
G to the Lease. In the event of an overrun of this line item the Tenant shall
have the option of funding such amounts, at Tenant's option, out of (i) Tenant
Savings, if available, (ii) line item 6 (Free Rent Period) with an appropriate
adjustment in the free rent allocation described in Paragraph 3(F) of the Lease,
or (iii) funds of Tenant other than loan proceeds.
The Tenant shall have the right to audit the payment of all costs used in
calculating Total Project Cost and any Savings generated therefrom.
004-20-1088-164
<PAGE> 16
EXHIBIT "D" TO BUILDING OPTION AGREEMENT
AFFIDAVIT (LIEN AND POSSESSION-PURCHASE)
STATE OF FLORIDA
COUNTY OF HILLSB0ROUGH
BEFORE ME, the undersigned authority, this day personally appeared , who,
being first duly sworn, says:
1. That the Affiant is the ______ of TWC SIXTY-ONE, INC., a Florida
corporation which is the general partner of FOUNTAIN ASSOCIATES I, LTD., a
Florida limited partnership (the "Partnership"), and is authorized to make this
Affidavit on its behalf.
2. That the Partnership, is the owner of certain real property located in
Hillsborough County, Florida, which is more particularly described on Exhibit A
attached hereto and made a part hereof.
3. There have been no improvements, alterations or repairs made by the
Partnership, to the subject property within the past ninety (90) days for which
the cost, or any part thereof, remain unpaid.
4. There are no mechanics', or materialmen's or laborers' liens against
the subject property, or any part thereof, which liens would have been created
or incurred by virtue of an obligation of the Partnership, and no contractor,
subcontractor, laborer, or materialman, engineer, land engineer or surveyor has
any lien or right to lien against said property, or any part thereof, by virtue
of any unpaid obligation created or incurred by the Partnership.
5. That there are no claims, demands, contract rights, liens or judgments
outstanding against said real property and that the Partnership is not indebted
to anyone for any such property except:
6. That there are no easements or claims of easements on the said real
property not shown on the Public Records of Hillsborough County, Florida.
7. That there are no outstanding rights or claims of any parties in
possession not shown on the Public Records of Hillsborough County, Florida, and
that there are no parties other than ANCHOR GLASS CONTAINER CORPORATION in
possession of or has a right to possess said real property.
<PAGE> 17
EXHIBIT "E" TO BUILDING OPTION AGREEMENTS
AFFIDAVIT - (FIRPTA-1445)
STATE OF FLORIDA
COUNTY OF HILLSB0ROUGH
BEFORE ME, the undersigned authority, personally appeared __________, who being
by me first duly sworn on oath say that:
(1) Section 1445 of the Internal Revenue Code of 1954, as amended
("Code"), provides that a transferee of a United States real property interest
(as defined in Section 897(c) of the Code) must withhold a tax equal to ten
percent (10%) of the amount realized on the transfer if the transferor is a
foreign person as defined in the Code.
(2) Affiant is the owner of such a United States real property interest
situate in Hillsborough County, Florida, more particularly described in Exhibit
A attached hereto.
(3) Affiant is not a foreign person as defined in the Code and Income Tax
Regulations promulgated thereunder.
(4) Affiant's United States taxpayer identification number is
____________.
(5) Affiant's address is ___________________.
(6) This Affidavit and/or the contents hereof may be disclosed to the
Internal Revenue Service by the transferee of the subject Property.
____________________________________
Sworn to and subscribed before me this ___ day of _________________, 19__.
________________________________________
Notary Public, State of Florida at Large
My Commission Expires: _________________
<PAGE> 18
EXHIBIT "F" TO BUILDING OPTION AGREEMENT
PROMISSORY NOTE
$1,000,000.00 Tampa, Florida
________, 1988
FOR VALUE RECEIVED the undersigned, ANCHOR GLASS CONTAINER CORPORATION,
a Delaware corporation, ("Maker"), jointly and severally, if more than one,
promises to pay, without grace, to the order of FOUNTAIN ASSOCIATES I, LTD., a
Florida limited partnership, or its successors or assigns, together with any
other holder hereof ("Holder"), at Bayport Plaza, Suite 600, 6200 Courtney
Campbell Causeway, Tampa, Florida, or such other place as Holder may from time
to time designate in writing, the principal sum of ONE MILLION AND NO/100
DOLLARS ($1,000,000.00), plus accrued interest, as hereafter provided, to be
paid in lawful money of the United States of America, as follows:
1) The outstanding principal indebtedness, shall only be due and
payable in the event Maker does not purchase the Property
during the Term (as defined in that certain Building Option
Agreement executed on March 30, 1988 between Maker and Holder,
hereinafter "Option Agreement: Building Parcel"), or any prior
termination of the Option Agreement: Building Parcel as
provided for therein, as a result of a default thereunder by
the Maker provided the Holder is not otherwise in default in
which event the principal indebtedness shall be due and
payable on the expiration date of the Term (as described in
Option Agreement: Building Parcel) or by virtue of the
occurrence of any event described in Paragraph 2(c) of the
Option Agreement: Building Parcel, (the "Maturity Date").
2) This Note shall not bear interest except upon default.
3) After maturity or acceleration, this Note shall bear interest
at the Default Interest Rate as provided herein until paid in
full.
This Note is executed pursuant to the terms and conditions of the Option
Agreement: Building Parcel and is secured by a Letter of Credit in the amount of
One Million Dollars ($1,000,000) of even date herewith, hereinafter referred to
as "Letter of Credit". The foregoing and all other agreements, instruments and
documents delivered in connection therewith and herewith are collectively
referred to as the "Option Documents."
This Note has been executed and delivered in, and its terms and provisions are
to be governed by and construed under the laws of, the State of Florida, except
as such laws may be modified by the laws of the United States of America and
regulations thereunder.
In no event shall Maker be obligated to pay interest or payments in the nature
of interest which would result in interest being charged at a rate of interest
in excess of the maximum rate
<PAGE> 19
contracted for by applicable law, as changed from time to time, which is
applicable to this Note (the "Maximum Rate"). That portion of any payment made
by Maker which results in the rate of interest being charged to exceed the
Maximum Rate ("excess sum") shall be credited as a payment of principal, or if
Maker so requests in writing, returned to Maker, or, if the indebtedness and
other obligations evidenced by this Note have been paid in full; returned to
Maker together with interest at the same rate as was paid by Maker during such
period. Any excess sum credited to principal shall be credited as of the date
paid to Holder. The Maximum Rate varies from time to time and from time to time
there may be no specific maximum rate. Holder shall have the right hereunder to
seek judicial determination of the applicable rate of interest, and during any
period of judicial determination (including all appeals) the withholding of
credit to principal or the withholding of payment to Maker of any proposed
excess sum shall not be deemed a breach of the obligations of -Holder hereunder.
In the exercise of Holder's right to seek judicial determination of the Maximum
Rate, Holder shall be deemed to have acted in good faith hereunder, it being the
intent of Holder to conform strictly to the limitations of applicable laws
governing the charging of interest.
The "Default Interest Rate" and, in the event no specific maximum rate is
applicable, the Maximum Rate hereunder shall be four (4) percentage points over
the prime rate of Southeast Bank, N.A., as announced from time to time at its
principal office in Miami, Florida.
Any payment of principal which is not paid when due, shall bear interest at the
Default Interest Rate from the due date until paid.
Time is of the essence hereunder. In the event that this Note is collected by
law or through attorneys at law, or under advice therefrom, Maker and any other
person liable for payment hereof hereby, severally and jointly, agree to pay all
costs of collection, including reasonable attorneys' fees (including charges for
paralegals) whether or not suit is brought, and whether incurred in connection
with collection, trial, appeal, bankruptcy or other creditors' proceedings or
otherwise.
Holder may accept partial payments or payments marked "payment in full or "in
satisfaction" or words to similar effect at any time. Acceptance of such
payments shall not affect or vary the duty of Maker to pay all obligations when
due hereunder, and endorser, guarantor, surety or other person now or hereafter
primarily or secondarily liable for the payment of this Note, whether by signing
this or another instrument.
In this Note, whenever the context so requires, the neuter gender includes the
feminine and/or masculine, as the case may be, and the singular number includes
the plural, and the plural number includes the singular.
Maker and any other person liable for the payment hereof respectively, hereby
(a) expressly waive presentment, demand for payment, notice of dishonor,
protest, notice of nonpayment or protest, all other forms of notice whatsoever,
and diligence in collection; (b) consent that Holder may, from time to time and
without notice to any of them or demand, (i) extend, rearrange, renew or
postpone any or all payments, (ii) release, exchange, add to or substitute all
or any part of the collateral for this Note, and/or (iii) release Maker (or any
co-maker) or any other person
<PAGE> 20
liable for payment hereof, without in any way modifying-, altering, releasing,
affecting or limiting their respective liability or the lien of any security
instrument; and (c) agree that Holder, in order to enforce payment of this Note
against any of them, shall not be required first to institute any suit or to
exhaust any of its remedies against Maker (or any co-maker) or against any other
person liable for payment hereof or to attempt to realize on any collateral for
this Note.
MAKER AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY EXECUTING THIS NOTE OR
ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR
OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO MAKER AND NO WAIVER OR LIMITATION OF
HOLDER'S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE UNLESS IN WRITING AND
MANUALLY SIGNED ON HOLDER'S BEHALF.
Maker acknowledges that the above paragraph has been expressly bargained for by
Holder as part of the loan evidenced hereby and that, but for Maker's agreement
and the agreement of any other person liable for payment hereof thereto, Holder
would not have extended the loan for the term and with the interest rate
provided herein.
IN WITNESS WHEREOF, Maker has executed this Note on the day and year first above
written.
ANCHOR GLASS CONTAINER CORPORATION,
a Delaware corporation
By:_______________________________
Its: President
(CORPORATE SEAL)
"MAKER"
<PAGE> 21
EXHIBIT "G" TO BUILDING OPTION AGREEMENT
IRREVOCABLE LETTER OF CREDIT NUMBER: ____________________
ADVISING BANK: APPLICANT:
Anchor Glass
Container Corporation
One Anchor Place
1100 Anchor Street
Tampa, Florida 33607-1765
BENEFICIARY: AMOUNT:
Fountain Associates I, Ltd., One Million Dollars
a Florida limited partnership ( $1,000,000,000.00)
c/o Mr. Jack Wilson
6200 Courtney Campbell Causeway EXPIRATION
Suite 600 DATE: _______, 198 _
Tampa, Florida 33607
Gentlemen:
We hereby establish in your favor, as Beneficiary, our Irrevocable Letter of
Credit Number ____ for the account of our client and applicant, Anchor Glass
Container Corporation, and authorize you to draw on us at sight up to an
aggregate amount of One Million Dollars ($1,000,000.00).
Documents required:
1. Draft drawn on us at sight.
2. Beneficiary's signed statement that Anchor Glass Container Corporation is
obligated to pay the amount of $1,000,000 pursuant to that certain
Building Option Agreement dated ______, 1988, by and between Fountain
Associates I, Ltd., a Florida limited partnership, and Anchor Glass
Container Corporation.
This Irrevocable Letter of Credit is assignable and fully transferable.
Except so far as expressly stated, this Irrevocable Letter of Credit is subject
to the Uniform Customs and Practices for Documentary Credits (1983 revision),
International Chamber of Commerce Publication, No. 400.
_____________________________________
Authorized Signature
<PAGE> 22
EXHIBIT "H" TO BUILDING OPTION AGREEMENT
MEMORANDUM OF BUILDING OPTION
Date of Option: _____________________
Owner: Owner's Mailing Address:
Fountain Associates I, Ltd.
c/o Wilson Management Company
6200 Courtney Campbell Causeway
Tampa, Florida 33607
Option Holder: Option Holder's Mailing Address:
Anchor Glass Container Corporation
One Anchor Place
1100 Anchor Street
Tampa, Florida 33607-1765
Property Description:
Those lands in Hillsborough County, Florida, described on attached Exhibit
"A".
Owner represents that Owner, on the date shown above, for the
consideration set forth in the Building Option Agreement, by and between Owner
and Option Holder, granted to Option Holder an exclusive option to purchase all
of the property for the price and upon the terms and conditions set forth in the
Agreement. The Agreement contains terms relating to use, purchase exercise
rights, condition of title, closing in the event of purchase, default, notice,
and other matters.
All persons, firms, or corporations dealing with the Property, or any
interest therein are charged with notice of the option and of all terms and
conditions of the option. Copies of the Agreement are held by both Owner and
Option Holder.
It is expressly acknowledged by both the Owner and Option Holder that
notice of the termination of the rights of the Option
This instrument prepared by and
return to:
Stephen J. Mitchell, Esquire
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
Post Office Box 3433
Tampa, Florida 33601
<PAGE> 23
Holder in the aforesaid Agreement may be evidenced solely by an affidavit,
signed and recorded by Owner wherein Owner recites that the Agreement is
terminated and of no further force and effect.
Signed in the presence of: Owner:
FOUNTAIN ASSOCIATES I, LTD.,
By: TWC SIXTY ONE, INC., its General Partner
_______________________________ By:_________________________________
Its President
_______________________________
Option Holder:
ANCHOR GLASS CONTAINER CORPORATION
_______________________________ By:_________________________________
Its President
_______________________________
STATE OF FLORIDA
COUNTY OF ____________
Execution of the foregoing instrument was acknowledged before me this
____________, 19__, by ___________________, as President of TWC SIXTY, ONE,
INC., a Florida corporation, on behalf of the corporation, as General Partner of
FOUNTAIN ASSOCIATES I, LTD.
______________________________________
Notary Public
My Commission Expires:
<PAGE> 24
STATE OF FLORIDA
COUNTY OF ____________
Execution of the foregoing instrument was acknowledged before me this
____________, 19__, by ___________________, as President of ANCHOR GLASS
CONTAINER CORPORATION, a Delaware corporation, on behalf of the corporation.
__________________________________
Notary Public
My Commission Expires:
<PAGE> 1
Exhibit 10.40
FIRST AMENDMENT TO
BUILDING OPTION AGREEMENT
THIS FIRST AMENDMENT TO BUILDING OPTION AGREEMENT (the "Amendment") is
made effective as of June 16, 1992, by and between FOUNTAIN ASSOCIATES I, LTD.,
a Florida limited partnership ("FOUNTAIN"), and ANCHOR GLASS CONTAINER
CORPORATION, a Delaware corporation ("ANCHOR").
W I T N E S S E T H:
WHEREAS, FOUNTAIN and ANCHOR entered into that certain Building Option
Agreement (the "Option Agreement") dated March 31, 1988, pursuant to which
FOUNTAIN granted ANCHOR an option to acquire certain real property located in
Hillsborough County, Florida, more particularly described therein;
WHEREAS, FOUNTAIN and ANCHOR now desire to modify and the amend the Option
Agreement as herein set forth:
NOW, THEREFORE, for and in consideration of the mutual covenants herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. Recitals. The recitals set forth above are true and correct and are
hereby incorporated into the text of this Amendment by this reference.
2. Defined Terms. All capitalized terms not defined in this Amendment
shall have the same definitions as set forth in the Option Agreement.
3. Definition of Property. Section 1(d) is hereby deleted in its entirety.
4. Option Term; Exercise; Termination. Section 2(a) and Section 2(c) of
the Option Agreement are both hereby amended and restated in their entirety so
that said Section 2(a), as amended and restated, shall read as follows:
(a) The term ("Term") of this Option, unless terminated
earlier as provided in Section 2(c) herein, shall expire on May 16, 1996,
which date is thirteen (13) months prior to the last day of the term of
that certain Lease Agreement dated March 31, 1988 by and between FOUNTAIN,
as landlord, and ANCHOR, as tenant, for the Property, as amended by that
certain First Amendment to Lease Agreement dated June 16, 1992.
and so that Section 2(c) as amended and restated, shall read as follows:
(c) If Anchor does not give an Exercise Notice with respect to
the Property by the expiration of the Term or if Anchor is in default
under the
<PAGE> 2
terms of the Lease beyond any applicable grace period, then the option
granted hereby shall automatically terminate and Anchor shall not have the
right to purchase the Property unless it has exercised its option prior to
the expiration of the Term or prior to the default of the Lease beyond any
applicable grace period whichever occurs first. In such event, Fountain's
remedy shall be as described in Section 16 herein.
5. Purchase Price. Section 3 of the Option Agreement is hereby modified
and amended to provide for a Purchase Price (as defined therein) in an amount
equal to the total amount of any indebtedness encumbering the Property on the
Closing date.
6. Closing. Section 4 of the Option Agreement is hereby modified and
amended to provide that consummation of the sale and purchase of the Property
shall take place within ninety (90) of any Exercise Notice delivered by ANCHOR
to FOUNTAIN on or prior to May 15, 1996, and within thirteen (13) months of any
Exercise Notice delivered by ANCHOR to FOUNTAIN on May 16, 1996. Notwithstanding
the foregoing, FOUNTAIN shall not be obligated to close on a date which is
earlier than twenty (20) days after FOUNTAIN receives the Exercise Notice.
7. Title Insurance. The first sentence in Section 6(a) shall be deleted in
its entirety and the following shall be inserted thereof: "Not less than five
(5) days prior to Closing, Anchor shall obtain a title commitment (hereinafter
"Title Commitment") written by First American Title Insurance Company or such
other title company as is chosen by Fountain and reasonably acceptable to Anchor
(hereinafter "Title Company")."
8. Remedies. Section 16(a) of the Option Agreement is hereby amended and
restated in its entirety so that said Section 16(a), as amended and restated,
shall read as follows:
(a) If ANCHOR gives an Exercise Notice and fails to keep or observe
any covenant, agreement or obligation to be kept or observed by ANCHOR
under this Agreement, and FOUNTAIN is not in default thereunder, then
FOUNTAIN shall have the right to refuse to close by giving written notice
to that effect to ANCHOR, in which event ANCHOR shall pay the Residual
Value Guaranty Amount as described in Section 16(b) and the earnest money
deposit shall be forfeited to FOUNTAIN as liquidated damages or FOUNTAIN
may seek specific performance of the terms of this Agreement in a court of
competent jurisdiction. In the event FOUNTAIN fails to keep or observe any
covenant, agreement or obligation to be kept or observed by FOUNTAIN
hereunder and ANCHOR is not in default thereunder, then ANCHOR shall have
the right to the immediate return of the earnest money or have the right
to seek specific performance under the terms of this Agreement in a court
of competent jurisdiction.
-2-
<PAGE> 3
9. Section 16(b) of the Option Agreement is hereby amended and restated in
its entirety so that said Section 16(b), as amended and restated shall read as
follows:
(b) Except as specifically provided in that certain Agreement by and
between ANCHOR and FOUNTAIN attached hereto as Schedule 1, upon expiration
or earlier termination of the Lease, if ANCHOR has not properly exercised
the Option and consummated the acquisition of the Property, then ANCHOR
shall pay to Citicorp Leasing, Inc., a Delaware corporation ("Citicorp"),
an amount (the "Residual Value Guaranty Amount") equal to eighty-eight
percent (88%) of the total indebtedness encumbering the Property (the
"Citicorp Indebtedness"), which Residual Value Guaranty Amount shall be
applied to the Citicorp Indebtedness. FOUNTAIN has the right to seek
specific performance of ANCHOR's obligation to pay the Residual Value
Guaranty Amount. If Anchor pays the Residual Value Guaranty Amount, and
the Property is sold, then the net proceeds of the sale, after payment of
all closing costs incurred by Fountain shall be applied as follows: first,
to pay off in full and satisfy the Citicorp Indebtedness; second, to
Fountain in an amount equal to three percent (3%) of the gross sales
proceeds as payment of the commission due Fountain in connection with such
sale plus out-of-pocket expenses incurred by Fountain in the marketing of
the Property; third, to Anchor to reimburse Anchor for the Residual Value
Guaranty Amount; and the remainder to Fountain.
10. No Further Amendment. Except as expressly set forth herein, all terms
and provisions of the Option Agreement shall remain unaltered and in full force
and effect.
IN WITNESS WHEREOF, FOUNTAIN and ANCHOR have executed this Amendment as of
the date set forth above.
Signed, sealed and delivered
in the presence of: FOUNTAIN ASSOCIATES I, LTD., a
Florida limited partnership
By: TWC Sixty-One, Inc., a
Florida corporation,
General Partner
Name: By: /s/ James D. Swartz
___________________________
Name: James D. Swartz
___________________________
Title: Executive Vice President
Name:
___________________________
-3-
<PAGE> 4
ANCHOR GLASS CONTAINER
CORPORATION, a Delaware
corporation
By:/s/ Robert A. Thompson
________________________________
Name: Name: Robert A. Thompson
___________________________
________________________________ Title: Vice-President and Treasurer
Name:___________________________
1088-290-77463.04
-4-
<PAGE> 1
Exhibit 10.43
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement") dated as of February 5, 1997,
Anchor Glass Acquisition Corporation, a corporation incorporated under the laws
of the State of Delaware (with its successors, the "Company") and Bankers Trust
Company (the "Initial Holder").
W I T N E S S E T H:
WHEREAS, the Company, certain lenders from time to time party
thereto, and Bankers Trust Company, as agent for such lenders, are parties to a
Credit Agreement dated as of February 5, 1997 (as the same shall be modified,
amended and supplemented and in effect from time to time, the "Credit
Agreement");
WHEREAS, as an inducement to Bankers Trust Company to have entered
into the Credit Agreement, the Company had agreed to issue the Warrants (as
hereinafter defined) to the Initial Holder upon the occurrence of certain
events;
WHEREAS, the Company has authorized the issuance of the Warrants
which are exercisable, pursuant to the terms and conditions thereof, for Class C
Common Stock (as hereinafter defined) of the Company during the Initial Period
and Class A Common Stock (as hereinafter defined) thereafter; and
WHEREAS, the Initial Holder now desires to subscribe for, and the
Company now desires to issue to the Initial Holder, upon the terms and
conditions set forth herein, the Warrants substantially in the form of Exhibit A
hereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
1.01 Definitions. Capitalized terms not otherwise defined herein are
used as defined in the Credit Agreement. The following terms, as used herein,
shall have the following respective meanings:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
<PAGE> 2
possession, directly or indirectly, of power to direct or cause the direction of
the management and policies of such Person (whether through ownership of
securities or partnership or other ownership interests, contract or otherwise),
provided that, in any event, any Person which owns, directly or indirectly, more
than 10% of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or more than 10% of the
partnership or other ownership interests of any Person (other than as a limited
partner of such other Person) will be deemed to control such corporation or
other Person. Notwithstanding the foregoing, none of the Initial Holder, any
Lender or any of their respective Affiliates shall be deemed to be an Affiliate
of the Company.
"Bank Holder" shall mean the Initial Holder and any other Holder
that is, or becomes, a "Lender," as such term is defined in the Credit Agreement
or is an Affiliate of a Lender.
"Business Day" shall mean any day other than a Saturday, Sunday or
any other day on which commercial banks are required by law or authorized to
close in New York City.
"Class A Common Stock" shall mean and include the Company's
authorized Class A Common Stock, $.10 par value, as constituted on the date
hereof.
"Class B Common Stock" shall mean and include the Company's
authorized Class B Common Stock, $.10 par value, as constituted on the date
hereof.
"Class C Common Stock" shall mean and include the Company's
authorized Class C Common Stock, $.1O par value, as constituted on the date
hereof during the Initial Period (as defined in the Company's Amended and
Restated Certificate of Incorporation ("Charter")) and thereafter, shall mean
and include the Company's Class A Common Stock in accordance with the terms of
the Charter.
"Commission" shall have the meaning provided in Section
4.07 hereof.
"Common Stock" shall mean and include (i) the Class A Common Stock,
the Class B Common Stock and the Class C Common Stock, (ii) all other classes of
the Company's authorized common stock of any class and (iii) any other class of
capital stock of the Company which is not by its terms restricted in amount or
timing to the entitlement to dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company.
"Company" shall have the meaning provided in the introductory
paragraph hereof.
2
<PAGE> 3
"Credit Agreement" shall have the meaning provided in the first
recital hereof.
"Demand Registration" shall have the meaning provided in Section
5.01(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder, all as the same
shall be in effect from time to time.
"Fully Diluted Common Stock" means, at any time, the then
outstanding Common Stock plus (without duplication) all shares of Common Stock
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all rights,
warrants, options, convertible securities or exchangeable securities or
indebtedness, or other rights exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock or securities exercisable for or
convertible or exchangeable into Common Stock then outstanding.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States.
"Holder" initially shall mean the Initial Holder and each other
holder of any Warrant or Warrant Share that is a direct or indirect transferee
of the Initial Holder or any other Holder unless, with respect to any such
Warrant or Warrant Share, such Warrant or Warrant Share is acquired in a public
distribution pursuant to a registration statement under the Securities Act or
pursuant to a transaction exempt from registration under the Securities Act if
securities sold in such transaction may be resold without subsequent
registration under the Securities Act.
"Initial Holder" shall have the meaning provided in the first
paragraph hereof.
"Participating Third Party Holders" has the meaning ascribed to such
term in Section 6.
"Person" shall mean any individual, firm, limited liability company
or partnership, joint venture, corporation, joint stock company, trust or
trustee, incorporated or unincorporated association, union, business
association, government (or any department, agency or political subdivision
thereof) or other entity of any kind, and shall include any successor (by merger
or otherwise) of such entity.
"Piggy-Back Registration" shall have the meaning provided in Section
5.02 hereof.
3
<PAGE> 4
"Preferred Stock" means the Series A 10% Convertible Preferred Stock
and the Series B 8% Convertible Preferred Stock of the Company.
"Prospectus" means the prospectus included in any registration
statement filed with the Commission pursuant to the terms hereof as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by any such
registration statement and all other amendments and supplements to the
prospectus, including post-effective amendments and all other material
incorporated by reference in such prospectus.
"Registrable Securities" shall mean any Warrants or Warrant Shares
except for Warrants or Warrant Shares (i) for which one or more registration
statements covering such Warrants or Warrant Shares has become effective under
the Securities Act and such Warrants or Warrant Shares have been disposed of
pursuant to such effective registration statement, (ii) which have been sold
under circumstances in which all of the applicable conditions of Rule 144 (or
any similar provisions then in force) under the Securities Act are met or (iii)
which may be sold pursuant to Rule 144(k) by the Holder thereof, (iv) the
Company has delivered a new certificate or other evidence of ownership for such
Warrants or Warrant Shares not bearing any legend relating to restrictions on
transfer and such Warrant Shares may be resold without subsequent registration
under the Securities Act without compliance with Rule 144 thereunder (or any
similar provisions then in force) or (v) such Warrants or Warrant Shares are no
longer outstanding, provided that for purposes of Piggy-Back Registration,
clauses (iii) and (iv) shall not apply to the definition of Registrable
Securities.
"Registration Expenses" shall have the meaning provided in Section
5.05 hereof.
"Regulation Y" shall mean the Regulation Y promulgated by the Board
of Governors of the Federal Reserve System or any successor regulation.
"Required Holders" shall mean the holders of more than 50% of all
Warrant Shares (assuming the full exercise of all Warrants).
"Sale" shall mean, as to any Security, any sale or other direct or
indirect transfer, assignment, distribution, encumbrance or other disposition,
either voluntary or involuntary, of such Security and shall include, without
limitation, any conversion of such Security if securities are to be issued in
such conversion for such Security in the name of any Person other than the
holder of such Security, and any disposition of such Security or of any interest
therein which would constitute a sale thereof within the meaning of the
Securities Act, other than any such disposition pursuant to an
4
<PAGE> 5
effective registration statement under the Securities Act or pursuant to Rule
144 thereunder and otherwise complying with all applicable state securities and
"blue sky" laws and "Sell" and "Sold" shall have corollary meanings.
"Satisfaction" means (a) the repayment in full of all Loans made
under the Credit Agreement and interest payable thereon (other than the
Conversion of the Bridge Loan), (b) the payment in full of all fees due and
payable to any Lender under the Credit Agreement and to BTCo under the
Commitment Letter and (c) the payment of all other amounts payable under the
Credit Agreement.
"Section 6 Notice" has the meaning ascribed to such term in Section 6.
"Section 6 Offer" has the meaning ascribed to such term in Section 6.
"Section 6 Offeree" has the meaning ascribed to such term in Section 6.
"Section 6 Offeror" has the meaning ascribed to such term in Section 6.
"Securities" means (a) the Common Stock, (b) the Warrants to be
issued hereunder, (c) the Warrant Shares issuable upon exercise of the Warrants,
(d) the Preferred Stock, and (e) any capital stock of the Company into which any
of the foregoing securities may be reclassified or for which they may be
exchanged.
"Securities Act" shall mean the Securities Act of 1933, as amended
and the rules and regulations promulgated thereunder, all as the same shall be
in effect from time to time.
"Securityholders" means, at any time, the Holders or any of the Section
6 Offerees.
"Shelf Registration" shall mean (i) a registration statement filed on
any appropriate form under Rule 415 promulgated under the Securities Act or any
successor rule or regulation or (ii) an amendment or supplement to any
then-effective shelf registration.
"Suspension Period" shall have the meaning provided in Section
5.01(b)(iii) hereof.
"Third Party" means a prospective purchaser of Securities in an
arms-length transaction from a Securityholder where such purchaser is not an
Affiliate of such Securityholder.
5
<PAGE> 6
"Underwritten Offering" means a Registration in which securities of
the Company are sold to an underwriter for reoffering to the public.
"Warrant" shall mean a Warrant substantially in the form of Exhibit
A hereto and issued pursuant to this Agreement, and any Warrant or Warrants
issued upon transfer thereof or in substitution therefor.
"Warrantholder" shall mean the holder of any Warrant.
"Warrant Share" shall mean any share of Class C Common Stock issued
or issuable upon exercise of any Warrant or any share of Common Stock into which
shares of Class C Common Stock are converted. For purposes of this Agreement, a
Warrant Share shall be "outstanding" from and after the date hereof until the
redemption or cancellation of such Warrant Share (or, if the related Warrant has
not been exercised, the expiration, repurchase or cancellation of such Warrant)
by the Company.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. Terms and Conditions of Issuance of Warrants.
2.01 Issuance of the Warrants. (a) In consideration of the premises
and other good and valuable consideration, the Company agrees to issue (i) on
the date hereof to the Initial Holder Warrants exercisable for the purchase of
1,405,229 shares of Class C Common Stock, (ii) on April 30, 1997, unless
Satisfaction has occurred prior to such date, to the Initial Holder Warrants
exercisable for the purchase of shares of Class C Common Stock representing 2.5%
of the Fully-Diluted Common Equity as of such date, (iii) on July 30, 1997,
unless Satisfaction has occurred prior to such date, to the Initial Holder
Warrants exercisable for the purchase of shares of Class C Common Stock
representing 2.5% of the Fully-Diluted Common Equity as of such date and (iv)
concurrently with the closing of any offering of Take-Out Securities, to the
Initial Holder Warrants exercisable for the purchase of shares of Class C Common
Stock representing a percentage of the Fully-Diluted Common Equity (not less
than zero) on such closing date equal to 50% of the difference between (l) 5% of
the Fully-Diluted Common Equity as of such closing date and (2) the percentage
of the Fully-Diluted Common Equity issued to purchasers of Demand Take-Out Notes
pursuant to Section 5.10(ii) of the Credit Agreement on or prior to such closing
date. The Company shall also issue to U.S. Holdco on any closing date referred
to in clause (a)(iv) above Class B Common Stock
6
<PAGE> 7
equal to the percentage of the Fully-Diluted Common Equity determined pursuant
to such clause (a)(iv).
(b) Notwithstanding anything to the contrary in Section 2.01(a) and
Section 5.10(ii) of the Credit Agreement, (i) in no event shall the Company be
required to issue shares of Common Stock or warrants exercisable for the
purchase Common Stock representing in the aggregate more than 10% of its
Fully-Diluted Common Equity pursuant to this Section 2.01 and Section 5.10(ii)
of the Credit Agreement and (ii) in the event that an issuance of Demand
Take-Out Notes occurs on or prior to July 30, 1997, which does not result in
Satisfaction, no Warrants to purchase Class C Common Stock shall be issued to
the Initial Holder and no Class B Common Stock shall be issued to U.S. Holdco,
in each case in connection with the closing for such issuance until the earlier
of (x) Satisfaction and (y) July 30, 1997, on which date additional Warrants
exercisable for the purchase of Class C Common Stock shall be issued (if
required) to the Initial Holder and shares of Class B Common Stock shall be
issued (if required) to U.S. Holdco pursuant to Section 2.01(a)(iv) only after
issuance in full of the Warrants to be issued pursuant to clauses Section
2.01(a)(ii) and (iii).
(c) The number of shares of Class C Common Shares for which any
Warrants are exercisable are subject to adjustment after the date of issuance of
any such Warrants in accordance with Section 4.1 of the Warrant.
Section 3. Representations and Warranties of the Company. The
Company represents and warrants to each Holder as follows:
3.01 Authorization. The Company has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants and to issue and deliver the Warrants and Warrant Shares; the
execution, delivery and performance by the Company of this Agreement and the
Warrants have been duly authorized by all necessary action; each of this
Agreement and the Warrants has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to creditors' rights generally and to
general equitable principles.
3.02 Valid Issuances. The Warrants, when issued and delivered
pursuant hereto, and the Warrant Shares when issued and delivered pursuant to
the Warrants, will be validly issued, fully paid and non-assessable, with no
liability on the part of the holders thereof, and are not subject to any
preemptive rights, rights of first refusal or rights of first offer.
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3.03 No Breach. None of the execution and delivery by the Company of
this Agreement and the Warrants, the consummation of the transactions herein or
therein contemplated, including the issuance and delivery of the Warrants and,
upon the exercise of the Warrants, the Warrant Shares, or compliance with the
terms and provisions hereof or thereof will conflict with or result in a breach
of or require any consent under, the Certificate of Incorporation or By-Laws of
the Company, or any applicable law or regulation, or any order, writ, injunction
or decree of any court or governmental authority or agency (although the Company
will need to comply with the applicable provisions of the Securities Act, the
Exchange Act and state securities law in connection with the exercise by the
Holders of their rights under Sections 5.01 and 5.02 hereof), or any agreement
or instrument to which the Company is a party or by which it is bound or to
which any of its properties or assets is subject, or constitute a default under
any such agreement or instrument or result in the creation or imposition of any
lien upon any of the revenues or assets of the Company pursuant to the terms of
any such agreement or instrument.
3.04 Approvals. Assuming the truth and accuracy of the Initial
Holder's representations and warranties contained in Section 7.01, no
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency, which have not already been
made or obtained, are necessary for the execution, delivery or performance by
the Company of this Agreement and the Warrants, the consummation of the
transactions contemplated herein and therein or the validity or enforceability
hereof or thereof, except for compliance by the Company with the applicable
provisions of the Securities Act, the Exchange Act and state securities laws in
connection with the exercise by the Holders of their rights under Sections 5.01
and 5.02 hereof.
3.05 Capitalization. The capitalization of the Company is as set
forth in Section 4.1 of the Credit Agreement. As of the date hereof, there are
no outstanding options or warrants to acquire, or any securities convertible
into, any shares of capital stock of the Company, except for the Preferred
Stock.
3.06 Offer of Warrants. Neither the Company nor any Person acting on
its behalf has directly or indirectly offered the Warrants or any part thereof
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than a Holder so as to cause the registration provisions of the
Securities Act to apply to the issuance and sale of the Warrants. Neither the
Company nor any Person acting on its behalf has taken or will take any action
which would subject the issuance and sale of the Warrants to the provisions of
Section 5 of the Securities Act, or to the provisions of any state securities
law requiring registration of securities, notification of the issuance or sale
thereof or confirmation of
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the availability of any exemption from such registration except pursuant to this
Agreement.
3.07 Approval under Section 203 of the General Corporation Law. The
issuance, exercise and sale of the Warrants and the issuance and sale of the
Warrant Shares have been approved prior to the date hereof by the Board of
Directors of the Company pursuant to the resolutions attached hereto as Exhibit
B which are in full force and effect, and no further action is required for the
issuance, exercise or sale of the Warrants or the Warrant Shares pursuant to
Section 203 of the General Corporation Law of the State of Delaware.
Section 4. Covenants.
4.01 Notice of Merger. Prior to the exercise of all of the Warrants,
the Company will give each Holder at least 30 days' prior written notice of any
merger or similar transaction in which the Company shall not be the surviving
corporation.
4.02 Inspection. The Company covenants and agrees that it will
permit each Holder and its representatives to examine and make extracts and
copies from the books and records of the Company during normal business hours to
the same extent that any stockholder of the Company has the right to do so under
the General Corporation Law of the State of Delaware.
4.03 Information. The Company covenants and agrees that it will
deliver to each Holder such financial statements and other information regarding
the Company or any of its subsidiaries that the Company is obligated to prepare
and deliver to its stockholders generally, in each case at the same time such
financial statements and other information are delivered to such stockholders.
4.04 Repurchase of Common Stock. The Company covenants and agrees
that it will not, without 30 days' prior notice to each affected Bank Holder, to
the extent that such Bank Holder is subject to the provisions of the Bank
Holding Company Act of 1956, as amended (including Regulation Y promulgated
thereunder), directly or indirectly, purchase, redeem, retire or otherwise
acquire any shares of capital stock of the Company if, as a result of such
purchase, redemption, retirement or other acquisition, any Bank Holder, together
with its Affiliates, will own, or be deemed to own, Warrant Shares representing
aggregate shares of any class of the Company then outstanding (assuming the full
exercise of all Warrants then held by such Bank Holder and its Affiliates) in
excess of those permitted for such Bank Holder or Affiliate under the Bank
Holding Company Act of 1956, as amended (including Regulation Y). In the event
that this Section 4.05 becomes applicable because of a transaction that the
Company proposes to enter into, each affected Bank Holder and the Company agree
to cooperate with one another to find a mutually acceptable alternative so that
such affected Bank Holder maintains the
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benefits of its equity interest in the Company on substantially the same basis
as set forth in this Agreement and the Warrant or Warrants held by such affected
Bank Holder. If such Bank Holder has provided the Company with a prior written
request not less than 10 days prior to any such transaction, such Bank Holder
shall be entitled to receive shares of non-voting stock of the Company having
identical terms, provisions and priorities as the Class C Common Stock (other
than as to voting), which shares shall be convertible into Class C Common Stock
on terms reasonably acceptable to such Bank Holder.
4.05 Regulatory Matters. Subject in all cases to applicable
requirements of law, the Company agrees to cooperate in good faith with and
assist any Bank Holder or any of the Bank Holder's Affiliates (at such Bank
Holder's or Affiliate's own cost and expense) as such Bank Holder may reasonably
request in connection with any United States regulatory issues that may arise
with respect to the Company. Anything herein or in the Warrants to the contrary
notwithstanding, in the event that any Bank Holder or any of such Bank Holder's
Affiliates shall determine that it is illegal or unduly burdensome, by reason of
regulatory restriction, for such Bank Holder or such Affiliate to continue to
hold some or all of the Warrants or its Warrant Shares or any other securities
of the Company held by it, such Bank Holder or such Affiliate, as the case may
be, may sell or otherwise dispose of that portion of its Warrants or Warrant
Shares, as the case may be, that such Bank Holder or such Affiliate determines
to be appropriate in light of such regulatory restrictions in as prompt and
orderly a manner as is reasonably necessary. Subject in all cases to applicable
requirements of law, the Company shall cooperate with and assist such Bank
Holder or such Affiliate, as the case may be, in disposing of such Warrants or
Warrant Shares, and (without limiting the foregoing) at the request of such Bank
Holder or such Affiliate, as the case may be, the Company shall provide (and
authorize such Bank Holder or such Affiliate, as the case may be, to provide)
financial and other information concerning the Company to any prospective
purchaser of the Warrants or Warrant Shares owned by such Bank Holder or such
Affiliate, as the case may be, subject to appropriate confidentiality
arrangements; provided, however, that the Company shall not be required to
provide non-public information to any prospective purchaser that the Company
reasonably determines may be inimical to the interests of the Company. The
provisions of this Section 4.06 shall inure solely to the benefit of such Bank
Holders and their Affiliates which are subject to the provisions of the Bank
Holding Company Act of 1956, as amended (including Regulation Y promulgated
thereunder) or any other law, rule or regulation governing the affairs of banks,
bank holding companies or their affiliates.
4.06 Rules 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such
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further action as the Initial Holder or the Required Holders may reasonably
request, all to the extent required from time to time to enable the Holders to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rules 144 and 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rules or regulations or regulations hereafter adopted by the Securities
and Exchange Commission or any successor entity (the "Commission"). Upon the
request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
Section 5. Demand Registration Rights.
5.01 Demand Registrations. (a) The Initial Holder, any Holder which
is an Affiliate of the Initial Holder or the Required Holders of Warrants or
Warrant Shares representing at least 600,000 Warrant Shares may make a written
request to the Company for registration of such Registrable Securities under the
Securities Act with the Commission for a public offering of Registrable
Securities (a "Demand Registration"), provided, however, that the Holders shall
have the right to only two Demand Registrations of all or any part of their
Registrable Securities. Whenever the Company shall receive a request for a
Demand Registration, the Company will promptly give written notice of such
registration to all Holders, use its reasonable best efforts to effect the
registration under the Securities Act of the Registrable Securities with respect
to which the Company has received written requests for inclusion therein within
25 Business Days after such notice is given; provided, however, that the Company
will not be required to take any action pursuant to this Section 5.01:
(i) if the Company has effected a registration pursuant to Sections
5.01 or 5.02 within the 180-day period preceding such request which permitted
Holders of Registrable Securities to register Registrable Securities;
(ii) if the Company shall at the time have effective a Shelf
Registration pursuant to which the Holder or Holders that requested registration
could effect the disposition of such Holder's or Holders' Registrable Securities
in the manner requested; or
(iii) during the pendency of any Suspension Period permitted under
Section 5.01(b);
provided further, however, that the Company will be permitted to satisfy its
obligations under this Section 5.01 by amending (to the extent permitted by
applicable law) any registration statement previously filed by the Company under
the Securities Act so that such registration statement (as amended) will permit
the disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable
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Securities for which a demand for registration has been made under this Section
5.01. If the Company so amends a previously filed registration statement, it
will be deemed to have effected a registration for purposes of this Section
5.01. All requests made pursuant to this Section 5.01(a) will specify the number
of shares of Registrable Securities to be registered and will also specify the
intended methods of disposition thereof.
(b) Effective Registration. (i) A registration initiated as a Demand
Registration shall not be deemed a Demand Registration until such registration
has become effective and (except in the case of a Shelf Registration) until the
Registrable Securities included in such registration have actually been sold;
provided, however, that a registration that does not become effective after the
Company has filed a registration statement with respect thereto solely by reason
of the refusal to proceed by the Holders shall be deemed to have been effected
by the Company unless the Holders shall have elected (without any obligation) to
pay, and in fact pay (within 30 days after the Company receives notice of such
refusal to proceed of the Holders), all reasonable Registration Expenses in
connection with such registration.
(ii) The Company may delay the filing of a registration statement
required hereunder if at the time of a request for registration under Section
5.01(a) above, the Company is a party to a transaction involving the purchase,
sale, conversion or issuance of securities of the Company which would be
prohibited pursuant to Regulation M promulgated by the Commission under the
Exchange Act during a distribution of the Registrable Securities to be
registered under such registration statement.
(iii) The Company may (x) delay the filing of a registration
statement required hereunder or (y) suspend the effectiveness of any
registration statement filed pursuant to a Demand Registration or, without
suspending such effectiveness, instruct the Holders that no sales of Registrable
Securities included in such registration statement may be made (and the Holders
shall forthwith discontinue disposition of any such Registrable Securities) if,
in the reasonable opinion of the Board of Directors of the Company, such
registration and offering would require public disclosure of any undisclosed
information regarding a material financing, acquisition, corporate
reorganization or other significant transaction involving the Company or any
Subsidiary of the Company, which disclosure would interfere with such
transaction.
(iv) Any delay in the filing of a registration statement pursuant to
clause (ii) or (iii) above or any period of suspension in the effectiveness of a
registration statement or during which any instruction to Holders that no sales
of Registrable Securities may be made pursuant to clause (iii) above shall be a
"Suspension Period". The Company shall promptly notify the Holders in writing of
any Suspension Period, the
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reasons therefor and the proposed length thereof. The Company shall use its
reasonable best efforts to provide such notice a reasonable number of days prior
to the commencement of a Suspension Period, provided that in any event the
Company shall provide such notice no later than the commencement of such
Suspension Period. The aggregate number of days covered by Suspension Periods
during the term of this Agreement shall not exceed 60 days and no more than two
Suspension Periods may be commenced in any 365 day period. The Company shall
give prompt written notice to the Holders of the termination of any Suspension
Period.
(c) No Right of Company or Other Person to Piggyback on Demand
Registrations. If any Person owning any securities of the Company (other than
any Holder) registers securities of the Company in a Demand Registration (in
accordance with the provisions of this Section 5.01(c)), such Person shall pay
the fees and expenses of counsel to such Person and its pro rata share of the
Registration Expenses if the Registration Expenses for such registration are not
paid by the Company for any reason. The Company covenants that it shall not
grant any registration rights to any Person which rights would, in the
reasonable judgment of the Initial Holder, conflict or be inconsistent with the
provisions of this Section 5.01(c), and in the event of such a conflict or
inconsistency, the terms of this Section 5.01(c) shall prevail.
(d) Selection of Underwriters and Counsel, Etc. The Company shall
not be required to provide an underwritten offering of the Registrable
Securities. If the Initial Holder, any Affiliate of the Initial Holder or the
Required Holders so elect, as the case may be, and the Company agrees to
participate in its sole discretion, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of an Underwritten
Offering. If a Demand Registration involves an Underwritten Offering, (i) the
Company shall have the right to select the investment banker or bankers and
manager or managers to administer the offering (provided that such investment
bankers and managers must be reasonably satisfactory to the Initial Holder, such
Affiliate thereof or the Required Holders, as the case may be,) and (ii) the
Initial Holder, such Affiliate thereof or the Required Holders, as the case may
be, shall have the right to select one counsel to represent the Holders
reasonably acceptable to the Company.
5.02 Piggy-Back Registration. If, at any time or from time to time
while any Warrants or Registrable Securities are outstanding, the Company
proposes to register any of its securities (whether for its own or others'
account) under the Securities Act (other than by a registration statement on
Form S-8 or Form S-4 or other form that does not include substantially the same
information as would be required in a form for the general registration of
securities or that would not be available for registration of Registrable
Securities), the Company shall
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promptly give written notice to the Holders of the Company's intention to effect
such registration. If, within 20 days after receipt of such notice, any Holder
submits a written request to the Company specifying the Registrable Securities
such Holder proposes to sell or otherwise dispose of(a "Piggy-Back
Registration"), the Company shall include the number of shares of Registrable
Securities specified in such Holder's request in such registration statement and
the Company shall use its reasonable best efforts to keep each such registration
statement in effect and to maintain compliance with each Federal and state law
and regulation for the period necessary for such Holder to effect the proposed
sale or other disposition. Any Holder participating in an underwritten offering
pursuant to this Section 5.02 shall, if required by the managing underwriter or
underwriters of such offering, enter into an underwriting agreement in a form
customary for underwritten offerings of the same general type as such offering.
Unless a Holder, or a person acting on behalf of a Holder, has
commenced a distribution thereunder, nothing in this Section 5.02 will create
any liability on the part of the Company to the Holders of Registrable
Securities if the Company for any reason should decide not to file a
registration statement proposed to be filed under the preceding paragraph or to
withdraw such registration statement subsequent to its filing, regardless of any
action whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
5.03 Reduction of Offering. Notwithstanding anything contained
herein, if the managing underwriter or underwriters of an offering described in
Section 5.01 or 5.02 hereof delivers a written opinion to the Holders that the
size of the offering that the Holders, the Company or any other Person intends
to make or the kind or combination of securities that the Holders, the Company
and any other Persons intend to include in such offering are such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then the amount of any
securities proposed to be offered shall be reduced or excluded from the offering
as follows:
(i) in the case of a Demand Registration, (x) all securities
proposed to be included in such offering by Persons other than the Holders
shall be reduced or excluded from such offering on a pro rata basis (or on
another basis agreed to by such other Persons) before any Registrable
Securities of the Holders are reduced or excluded from such offering, and
(y) in the event that any Registrable Securities of the Holders are
required to be reduced or excluded from such offering (which will only be
required after all securities of Persons other than the Holders have been
excluded entirely as provided in immediately preceding clause (x)), then
the number of Registrable Securities of
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<PAGE> 15
the Holders shall be reduced or excluded from such offering on a pro rata
basis;
(ii) in the case of a Piggy-Back Registration initiated by a Person
other than the Company, all securities (including Registrable Securities)
to be included in such offering by the Company, the Holders and the
holders of similar "piggyback" registration rights shall be reduced or
excluded from such offering on a pro rata basis before any securities of
the Persons initiating the Piggy-Back Registration are reduced or
excluded; and
(iii) in the case of a Piggy-Back Registration initiated by the
Company, all securities (including Registrable Securities) to be included
in such offering by the Holders and any other holders of similar
"piggy-back" registration rights shall be reduced or excluded from such
offering on a pro rata basis before any securities of the Company are
reduced or excluded.
5.04 Registration Procedures. Whenever any Holder or Holders request
that any Registrable Securities be registered pursuant to this Section 5, the
Company will use its reasonable best efforts to effect the registration and the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof as promptly as practicable, and in connection with any such
request:
(a) The Company will prepare and file with the Commission a
registration statement (including all exhibits and financial statements
required by the SEC to be filed therewith) on any form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and prepare and file with the
Commission such amendments, post-effective amendments and supplements to
such Registration Statement as may be requested by the holders of a
majority of the Registrable Securities or as may be necessary to keep the
Registration Statement effective for a period of not less than 180 days
(or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold or
withdrawn), or, if such Registration Statement relates to an Underwritten
Offering, or such longer period as in the opinion of counsel for the
underwriters a Prospectus is required by law to be delivered in connection
with sales of Registrable Securities by an underwriter or dealer; cause
the Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder with
respect to
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the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus; provided that, if
the Holders specify that such registration shall be a Shelf Registration
and the Company is eligible to use a registration statement on Form S-3,
the Company shall use its reasonable best efforts to effect such Shelf
Registration and to keep such Shelf Registration effective for a period of
not less than two years (or such shorter period which will terminate when
all Registrable Shares covered by such Shelf Registration have been sold
or may be resold without registration under the Securities Act pursuant to
Rule 144(k) or the equivalent thereunder).
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
the Holders requesting registration of Registrable Securities and each
underwriter, if any, of the Registrable Securities covered by such
registration statement copies of such registration statement as proposed
to be filed, and thereafter furnish to the Holders requesting registration
of Registrable Securities and the underwriters, if any, such number of
copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the Prospectus included in such
registration statement (including each preliminary prospectus) and such
other documents as the Holders requesting registration of Registrable
Securities or underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Holders;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, and (if requested) confirm such advice in
writing, as soon as practicable after notice thereof is received by the
Company (i) when the Registration Statement or any amendment thereto has
been filed or becomes effective, when the Prospectus or any amendment or
supplement to the Prospectus has been filed, and, to furnish such selling
holders and managing underwriters with copies thereof, (ii) of any request
by the Commission or any other federal or state governmental authority for
amendments or supplements to the Registration Statement or the Prospectus
or for additional information, (iii) if, at any time, the representations
and warranties of the Company contemplated by paragraph (n) below cease to
be true and correct in any material respect and (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction or the
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initiation or threatening of any proceeding for such purpose;
(d) After the filing of the registration statement, the Company will
promptly notify the Holders of any stop order issued or threatened by the
Commission suspending the effectiveness of the Registration Statement or
any order preventing or suspending the use of any preliminary or final
Prospectus or the initiation or threatening of any proceedings for such
purpose, and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;
(e) The Company will use its reasonable best efforts to (i) register
or qualify the Registrable Securities under such other securities or blue
sky laws of such jurisdictions in the United States as the Holders
requesting registration of Registrable Securities reasonably (in light of
such Holders' intended plan of distribution) requests and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and
things that may be reasonably necessary or advisable to enable the Holders
to consummate the disposition of the Registrable Securities owned by the
Holders, provided that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph (d), (B) subject itself to
taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(f) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an
Underwritten Offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and
the holders of a majority of the Registrable Securities being sold agree
should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or
best efforts underwritten) offering of the Registrable Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after being
notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(g) The Company will promptly notify the Holders, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of
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an event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and promptly make available to the Holders any such supplement
or amendment.
(h) The Company will make available for inspection by the Holders
requesting registration of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration statement
and any attorney, accountant or other professional retained by such
Holders or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause appropriate
officers, directors and employees of the Company to make available all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Holder agrees that information obtained by it
as a result of such inspections shall be deemed confidential and, upon the
reasonable request of the Company, shall execute a confidentiality
agreement with the Company in form and substance reasonably satisfactory
to the Company and the Holder, and shall not be used by it as the basis
for any market transactions in the securities of the Company or its
Affiliates unless and until such is made generally available to the
public.
(i) furnish to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, one executed copy and
as many conformed copies as they may reasonably request, of the
Registration Statement and any amendment or post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(j) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request (it being understood that
the Company consents to the use of the Prospectus or any
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amendment or supplement thereto by each of the selling holders of
Registrable Securities and the underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto) and such other
documents as such selling holder may reasonably request in order to
facilitate the disposition of the Registrable Securities by such holder;
(k) cooperate with the selling holders of Registrable Securities and
the managing underwriter or agent, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable
such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request;
(l) use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriters, if any, to consummate the disposition of such
Registrable Securities;
(m) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and
provide the applicable transfer agent with printed certificates for the
Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company;
(n) make such representations and warranties to the holders of
Registrable Securities being registered, and the underwriters or agents,
if any, in form, substance and scope as are customarily made by issuers in
primary underwritten public offerings;
(o) enter into such customary agreements (including underwriting
agreements) and take all such other appropriate actions as the holders of
at least a majority of any Registrable Securities being sold or the
managing underwriter or agent, if any, reasonably request in order to
expedite or facilitate the registration and disposition of such
Registrable Securities;
(p) obtain for delivery to the holders of Registrable Securities
being registered and to the underwriter or agent, if any, an opinion or
opinions from counsel for the Company in customary form, scope and
substance covered in opinions in comparable offerings, which counsel and
opinions shall be reasonably satisfactory to such holders, underwriters or
agents and their respective counsel;
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(q) obtain for delivery to the Company and the underwriter or agent,
if any, with copies to the holders of Registrable Securities, a cold
comfort letter from the Company's independent certified public accountants
in customary form and covering such matters of the type customarily
covered by cold comfort letters as the managing underwriter or the holders
of at least a majority of the Registrable Securities being sold reasonably
request, dated the effective date of the Registration Statement and
brought down to the Closing Date;
(r) cooperate with each seller of Registrable Securities and each
underwriter or agent, if any, participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD");
(s) use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
security holders, as soon as reasonably practicable (but not more than
fifteen months) after the effective date of the Registration Statement, an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;
(t) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such Registration
Statement from and after a date not later than the effective date of such
Registration Statement;
(u) use reasonable best efforts to cause all Registrable Securities
covered by the Registration Statement to be listed on each securities
exchange on which any of the Company's securities are then listed or
quoted and on each inter-dealer quotation system on which any of the
Company's securities are then quoted;
(v) make available for inspection by representatives of the sellers
of such Registrable Securities covered by such Registration Statement, by
any underwriter participating in any disposition to be effected pursuant
to such Registration Statement and by any attorney, accountant or other
agent retained by such sellers or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause the appropriate officers, directors and
employees of the Company and the independent public accountants who have
certified its financial statements to make themselves during normal
business hours available to discuss the business of the Company and to
make available all information reasonably requested by any such seller,
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underwriter, attorney, accountant or agent in connection with such
Registration Statement (subject to each party referred to in this clause
(v) entering into customary confidentiality agreements in a form
reasonably acceptable to the Company);
(w) use reasonable efforts to make available the senior executive
officers of the Company to participate in the customary "road show"
presentations that may be reasonably requested by the holders and the
managing underwriter in any Underwritten Offering; provided that the
participation of such senior executive officers shall not unreasonably
interfere with the conduct of their duties to the Company;
(x) The Company shall promptly, after the issuance of an earnings
release or upon the request of a holder, prepare a current report on Form
8-K with respect to such earnings release or a matter of disclosure as
requested by such holder and file with the SEC such Form 8-K.
The Company may require the Holders requesting registration of
Registrable Securities to promptly furnish in writing to the Company such
information regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
The Holders agree that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5.04(g) hereof,
the Holders will forthwith discontinue disposition of any Registrable Securities
registered pursuant to this Section 5 pursuant to the registration statement
covering such Registrable Securities until the Holders' receipt of the copies of
the supplemented or amended prospectus contemplated by Section 5.04(g) hereof,
and, if so directed by the Company, the Holders will deliver to the Company all
copies, other than permanent file copies then in such Holders' possession, of
the most recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event the Company shall give such notice, the
Company shall extend the period during which such registration statement shall
be maintained effective (including the period referred to in Section 5.04(a)
hereof) by the number of days during the period from and including the date of
the giving of notice pursuant to Section 5.04(e) hereof to the date when the
Company shall make available to the Holder a prospectus supplemented or amended
to conform with the requirements of Section 5.04(g) hereof.
5.05 Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement will be paid by the Company,
regardless of whether the Registration Statement becomes effective, including
without limitation (i) all registration and filing fees, and any other
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fees and expenses associated with filings required to be made with the SEC or
the NASD (including, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel as may be required by the rules and
regulations of the NASD), (ii) all fees and expenses of compliance with state
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications of
the Registrable Securities and determination of their eligibility for investment
under the laws of such jurisdictions as the managing underwriters or holders of
a majority of the Registrable Securities being sold may designate), (iii) all
printing, messenger, telephone and delivery expenses (including expenses of
printing certificates for the Registrable Securities in a form eligible for
deposit with The Depository Trust Company and of printing prospectuses), (iv)
all fees and disbursements of counsel for the Company and of all independent
certified public accountants of the Company (including the expenses of any
special audit and cold comfort letters required by or incident to such
performance), (v) Securities Act liability insurance if the Company so desires
or the underwriters so require in accordance with then customary underwriting
practice, (vi) all fees and expenses incurred in connection with the listing of
the Registrable Securities on any securities exchange or quotation of the
Registrable Securities on any inter-dealer quotation system, including all
rating agency fees, (vii) all reasonable fees and disbursements of one counsel
selected by the holders of a majority of the Registrable Securities being
registered, (viii) all fees and disbursements of underwriters customarily paid
by the issuers or sellers of securities, excluding underwriting discounts and
commissions and transfer taxes, if any, attributable to the sale of Registrable
Securities and the fees and expenses of counsel to the underwriters other than
as provided in clause (ii) above, (ix) all fees and expenses of accountants to
the holders of Registrable Securities being sold and (x) fees and expenses of
other Persons retained by the Company without limitation (all such expenses
being herein called "Registration Expenses"). The Company will, in any event,
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any audit and the fees and expenses of any Person, including
special experts, retained by the Company.
5.06 Indemnification and Contribution. (a) In connection with each
registration statement relating to the disposition of Registrable Securities,
the Company shall indemnify and hold harmless each of the Holders, each
underwriter of Registrable Securities, each partner, officer, director or
employee of each of the Holders or any such underwriter and each Person, if any,
who controls (within the meaning of either the Securities Act or the Exchange
Act) any of the Holders or any such underwriter against all losses, claims,
damages or liabilities, joint or several, to which any of the Holders, such
underwriter or any such Person may be subject arising out of or
22
<PAGE> 23
based upon (A) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement or the prospectus included therein
(or any supplement or amendment thereto) or a preliminary prospectus, or (B) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company shall reimburse each of the Holders and each of such other Persons
for any reasonable legal or other expenses incurred in connection with the
investigation or defense thereof (any such reimbursement to be made as such
expenses are incurred upon presentation of any requested documentation);
provided, however, that the Company shall not be liable in any such instance to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or omission or alleged untrue statement or
omission made in any such registration statement, preliminary prospectus, or
prospectus (or amendment or supplement) in reliance upon and in conformity with
information relating to any Person referred to above who would be indemnified by
the Company pursuant to this Section 5.06(a) furnished in writing to the Company
by such Person expressly for use therein. Notwithstanding the foregoing
provisions of this Section 5.06(a), the Company will not be liable to any Holder
of Registrable Securities (or any partner, officer, director or employee
thereof), any underwriter or any other Person, if any, who controls (within the
meaning of the Securities Act or the Exchange Act) any of the Holders or any
such underwriter, under the indemnification obligations in this Section 5.06(a)
for any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense that arises out of such Holder's or other Person's failure
to send or deliver a copy of the final Prospectus to the person asserting an
untrue statement or alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of the sale of the Registrable Securities
to such person if such statement or omission was corrected in such final
Prospectus and the Company had previously furnished copies thereof to such
Holder or such other Person in accordance with this Agreement.
(b) In connection with each registration relating to the disposition
of Registrable Securities, each Holder shall furnish to the Company in writing
such information, including the name and address of, and the amount of
Registrable Securities held by, such Holder, as the Company reasonably requests
for use in such Registration Statement or the related Prospectus shall severally
indemnify the Company, each director of the Company, each officer of the Company
who signs the registration statement and any Person who controls the Company
(within the meaning of either the Securities Act or the Exchange Act) to the
same extent as the indemnity from the Company provided in Section 5.06(a)
hereof, but only with respect to information relating to such Holder furnished
in writing to the Company by such Holder expressly for use in any such
registration statement, preliminary prospectus or prospectus (or amendment or
supplement). The maximum liability of any Holder under this Section 5.06(b)
shall
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<PAGE> 24
be limited to the aggregate amount of all sales proceeds actually received by
such Holder upon the sale of such Holder's Registrable Securities in connection
with such registration.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to subsections (a) or (b) of this Section 5.06,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it wishes, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under these
indemnification provisions for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof, unless in the reasonable judgment of any
indemnified party a conflict of interest is likely to exist, based on the
written opinion of counsel, between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party will be obligated to pay the reasonable fees and expenses of such
additional counsel. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its prior written consent (which
shall not be unreasonably withheld) but if settled with such consent, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement. No indemnifying party shall,
without the prior written consent (which shall not be unreasonably withheld) of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability arising out of such proceeding.
(d) If the indemnification provided for in this Section 5.06 is
unavailable to the indemnified parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and the respective Holder on
the other, in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and such Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one
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<PAGE> 25
hand and of the respective Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 5.06(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.06(d), (i) no Holder shall be
required to contribute any amount in excess of the amount of all sales proceeds
actually received by such Holder upon the sale of such Holder's Registrable
Securities in connection with such registration and (ii) no underwriter shall be
required to contribute any amount in excess of the amount of the underwriting
discount or commission applicable to the Registrable Securities underwritten by
it. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
5.07 Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company and the Holders and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and these registration rights.
5.08 Holdback Agreement. The Company and its Affiliates agree (i)
not to effect any public sale or distribution of any Registrable Securities or
any securities similar to the Registrable Securities, or any securities
convertible into or exchangeable or exercisable for Registrable Securities or
any securities similar to the Registrable Securities, during the 14 days prior
to, and during the 90-day period beginning on, the effective date of any
registration statement filed pursuant to Section 5.01 or 5.02 of this Agreement
with respect to an underwritten public offering of any such securities (except
as part of such registration statement where the Holders consents) or the
commencement of a public
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distribution of Registrable Securities; and (ii) that any agreement entered into
after the date of the agreement pursuant to which the Company issues or agrees
to issue any privately placed securities shall contain a provision under which
holders of such securities agree not to effect any public sale or distribution
of any such securities during the periods described in (i) above, in each case
including a sale pursuant to Rule 144 under the Securities Act (except as part
of any such registration, if permitted); provided, however, that the provisions
of this paragraph shall not prevent the (x) conversion or exchange of any
securities pursuant to their terms into or for other securities, (y) the
issuance of securities pursuant to the Company's employee benefit plans, (z)
sale or distribution of securities in connection with any merger or
consolidation by the Company, or the acquisition by the Company of the capital
stock or substantially all of the assets of any other Person.
5.09 Specific Enforcement. The Company and each of the Holders
acknowledge that remedies at law for the enforcement of this Section 5 may be
inadequate and intend that this Section 5 shall be specifically enforceable in
accordance with Section 8.04 hereof.
Section 6. Co-Sale.
6.01 Co-Sale. (a) Until five years from the Closing Date in respect
of Warrants and Warrant Shares held by Lenders and their Affiliates and three
years from the Closing Date in respect of Warrants and Warrant Shares held by
all other Persons, if any of Consumers Packaging, U.S. Holdco or any of their
Affiliates (all of the foregoing, the "Section 6 Offerees", and each of the
foregoing a party to this Agreement only for the purposes of this Section 6)
intend to sell, subject to Section 6.01(c), any of their Securities to, or
receive a bona fide offer for their Securities from, a Third Party (hereinafter
called the "Section 6 Offeror") which such Section 6 Offerees intend to
consummate or accept for a specified price payable in cash or otherwise and on
specified terms and conditions (hereinafter called the "Section 6 Offer"), then
such Section 6 Offerees shall promptly forward a notice (a "Section 6 Notice")
complying with Section 6(b) hereof to the Company and the Holders. Subject to
Section 6(c) hereof, the Section 6 Offerees shall not sell any of their
Securities to the Section 6 Offeror unless (i) the terms of the Section 6 Offer
are extended to the Holders with respect to the Warrants and the Warrant Shares,
(ii) if the Section 6 Offer, as extended, relates to less than all of the
Securities proposed to be sold by the Section 6 Offerees and the Holders and any
other Securityholders exercising a right to participate in such Section 6 Offer
(any "Participating Third Party Holders"), the Sale shall include a pro rata
portion of the Securities proposed to be Sold by each of such Securityholders
based on the same proportion that the Securities proposed to be Sold by the
Section 6 Offerees bears to the aggregate Securities owned by the Section 6
Offerees and (iii) the Section 6 Offerees shall bear all costs
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<PAGE> 27
and expenses incurred in connection with the consummation of the Sale of
Securities to the Section 6 Offeror (other than the costs and expenses
(including legal costs and expenses) directly incurred by each such Holder in
connection with its evaluation and review of such Sale of Securities).
(b) The Section 6 Notice shall set forth (i) the aggregate
percentage (and number) of the shares of Common Stock or other capital stock of
the Company represented by the Securities to which the Section 6 Offer relates
and the name or names of the Section 6 Offerees and any Participating Third
Party Holders to the extent the Company has knowledge; (ii) the name and address
of the Section 6 Offeror; (iii) the proposed amount and type of consideration
(including, if the consideration consists in whole or in part of non-cash
consideration, such information available to the Section 6 Offerees as may be
reasonably necessary for the Holders to properly analyze the economic value and
investment risk of such non-cash consideration) and the terms and conditions of
payment offered by the Section 6 Offeror; (iv) the percentage (and number) of
the shares of Common Stock or other capital stock of the Company held by each
Securityholder as of the close of business on the date of such Section 6 Notice;
and (v) that the Section 6 Offeror has been informed of the co-sale rights
provided for in this Section 6 and has agreed to purchase the Warrants or the
Warrant Shares (at each Holder's election) in accordance with the terms of this
Section 6. No Holder shall be required to make any representations and
warranties to any Person in connection with the exercise by such Holder of its
co-sale rights as provided in this Section 6 except as to (i) good title and the
absence of liens with respect to such Holder's Warrants or Warrant Shares, (ii)
the corporate or other existence of such Holder and (iii) the authority for and
the validity and binding effect of, and the absence of any conflicts under the
charter documents and material agreements of such Holder as to, any agreements
entered into by such Holder in connection with such co-sale rights. No Holder
shall be required to provide any indemnities in connection with the exercise of
such co-sale rights except for a breach of such representations and warranties
made by such Holder; provided that, notwithstanding the foregoing, each Holder
shall be obligated to join on a pro rata basis (based on such Holder's share of
the aggregate proceeds received in any such sale) in any indemnification that
all Section 6 Offerees and Participating Third Party Holders agree to provide in
connection with any such sale (other than any such obligations that relate
specifically to any representation or warranty made by a particular Section 6
Offeree or Participating Third Party Holder regarding such Person's title to and
ownership of Securities and such Person's authority, power and right (legally
and contractually) to enter into and consummate any such sale), provided that no
Holder shall be obligated in connection with any such sale to agree to indemnify
or hold harmless the Section 6 Offerors (taken together) with respect to an
amount in excess of the net cash proceeds paid to such Holder in connection with
any such sale.
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(c) This Section 6 right of co-sale shall only apply to a Sale of
Securities in a single or related series of transactions by Section 6 Offerees
which either (i) result in Consumer Packaging and its Affiliates owning less
than 50.1% of the Fully-Diluted Common Stock or (ii) represents 10% or more of
the Fully-Diluted Common Stock and shall not apply to any Warrants or Warrant
Shares previously sold pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 thereunder.
Section 7. Compliance with the Securities Act.
7.01 Representations and Warranties. Each Holder by its acceptance
of the Warrants represents and warrants as of the date hereof and as of the date
of any exercise of the Warrants held by such Holder as follows:
(a) Such Holder understands that the Company has not registered the
Warrants or the Warrant Shares under the Securities Act, is acquiring the
Warrants and the related Warrant Shares for its own account and not as
nominee or agent for any other Person and not for offer or sale in any
manner that would be in violation of the securities laws of the United
States of America or any state thereof, without prejudice, however, to its
right at all times to sell or otherwise dispose of all or any part of said
Warrants or Warrant Shares under a registration under the Securities Act
or any applicable state securities laws or under an exemption from such
registration available under such Act or any applicable state securities
laws.
(b) Such Holder is an "accredited" investor within the meaning of
Regulation D promulgated under the Securities Act.
7.02 Transfer Restriction, Legend. No Holder will sell, transfer or
otherwise dispose of any Warrant or Warrant Share other than to an Affiliate of
such Holders or in a transaction that complies with the registration
requirements of Section 5 of the Securities Act or pursuant to an exemption
(including, without limitation, sales under Rules 144 and 144A promulgated under
the Securities Act) therefrom. If any Holder desires to transfer any Warrant or
Warrant Shares other than pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144 or l44A, then such Holder shall
deliver, at such Holder's transfer, together with an opinion of counsel
reasonably satisfactory to the Company, to the effect that an exemption from
registration under the Securities Act is available. Each Warrant or certificate
or instrument (if any) representing the Warrant Shares issued upon exercise of
the Warrants (and each Warrant or certificate or instrument (if any)
representing the Warrant Shares issued to transferees of such Warrant or
certificate or instrument (if any)), unless at such time as the same is no
longer required under the applicable
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requirements of the Securities Act, shall bear the following
legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SAID ACT."
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A CERTAIN WARRANT AGREEMENT DATED
AS OF FEBRUARY 5, 1997, AS THE SAME MAY BE MODIFIED, AND NO TRANSFER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE FORM OF THE
WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE COMPANY. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
THE WARRANT AGREEMENT."
The foregoing legends will be removed by the Company (a) upon any sale of
Warrants or Warrant Shares in accordance with Rule 144 (or any successor
provision thereof) or pursuant to an effective registration statement, (b) at
any time after three years (or such shorter period specified in Rule 144(k) or
any successor provision thereof) from the Date of Issuance of any Warrant (as
defined in the Warrant) upon certification from the Holder that such Holder is
not an affiliate of the Company (as defined for purposes of such Rule 144 or any
such successor provision) and that, to the best of such Holder's knowledge, the
relevant Warrant or Warrant Shares were not acquired for purposes of Rule 144
from the Company or any affiliate of the Company within the past three years (or
such shorter period) or (c) upon receipt by the Company from the relevant Holder
of such certifications or legal opinions as it may reasonably request to enable
it to determine that such legend is no longer required in order to satisfy the
requirements of the Securities Act.
Section 8. Miscellaneous
8.01 Expenses. The Company agrees to pay all fees and disbursements
of the Initial Holder (including the reasonable fees and expenses of its
counsel) in connection with the purchase and sale of the Warrants as
contemplated by this Agreement or any amendments thereto and the fees and
disbursements of the Initial Holder (including the reasonable fees and expenses
of its counsel) in connection with the negotiation, execution, delivery and
enforcement of this Agreement, the Warrants or the Warrant Shares or any waiver
or consent hereunder or thereunder or any amendment hereof or thereof. In
addition, the Company agrees to pay any and all stamp, transfer and other
similar taxes payable or determined to be payable by any Bank Holder in
connection with the execution and delivery of this Agreement, any Warrants or
the
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issuance or transfer of the Warrants or Warrant Shares (other than any such
taxes in connection with a transfer of the Warrants to another Holder).
9.02 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof, or, as to any party, at
such other address as shall be designated by such party in a notice to the
Company given in accordance with this Section 9.02. All such communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
9.03 Exclusion. This Agreement and the Warrants shall be binding
upon, and inure solely to the benefit of the Company and the Holders, and no
other Person shall acquire or have any right under or by virtue of this
Agreement or the Warrants (other than any such Person to whom such Holders have
transferred an interest in the Warrants or the Warrant Shares pursuant to the
terms thereof and hereof).
9.04 Specific Performance. The Company acknowledges and agrees that
in the event of any breach of this Agreement or the Warrants by the Company, the
Holders would be irreparably harmed and could not be made whole by monetary
damages. The Company accordingly agrees (i) to waive the defense in any action
for specific performance that a remedy at law would be adequate, and (ii) that
the Holders, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement or the Warrants in any action instituted in the United States District
Court for the Southern District of New York, or, in the event such Court would
not have jurisdiction for such action, in any court of the United States or any
state thereof having subject matter jurisdiction for such action.
9.05 Warrantholder Not a Stockholder. Prior to the exercise of any
of its Warrants, no Warrantholder shall, except as specifically provided herein,
be entitled to any of the rights of, or be deemed to be, a stockholder in the
Company.
9.06 No Waivers. No failure or delay by any party in exercising any
rights, power or privilege hereunder or under the Warrants shall operate as a
waiver thereof 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 provided herein shall be
30
<PAGE> 31
cumulative and not exclusive of any rights or remedies provided
by law.
9.07 Amendments and Waivers. Any provision of this Agreement or the
Warrants may be amended or waived if, but only if, such amendment or waiver is
in writing and signed by the Company, the Required Holders and, until such time
as the Initial Holder (or any Affiliate thereof) no longer holds any Warrants or
Warrant Shares, the Initial Holder (or such Affiliates).
9.08 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Agreement and the Warrants shall be governed by and construed in accordance
with the laws of the State of New York. If any action or proceeding shall be
brought by the Holder in order to enforce any right or obligation in respect of
this Warrant, the Company hereby consents and will submit to the jurisdiction of
any state or federal court of competent jurisdiction in the State of New York,
and agrees that venue will be proper in any such court. THE PARTIES HERETO EACH
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT
OF THIS WARRANT AGREEMENT OR THE WARRANTS OR ANY OTHER AGREEMENTS OR
TRANSACTIONS RELATED HERETO OR THERETO.
9.09 Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatories thereto and hereto were upon the same instrument.
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<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
ANCHOR GLASS ACQUISITION
CORPORATION
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: Chief Executive
Officer
Address for Notices:
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634-7513
Telephone No.: (813) 884-0000
Telecopier No. : (813)782-7859
Attention: John J. Ghaznavi
BANKERS TRUST COMPANY
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
130 Liberty Street
New York, New York 10006
Telephone No.: (212) 250-7561
Telecopier No.: (212) 250-7351
Attention: Larry Benison
32
<PAGE> 1
Exhibit 10.44
- --------------------------------------------------------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
CONDITIONS SPECIFIED IN A CERTAIN WARRANT AGREEMENT DATED AS OF [__________], AS
THE SAME MAY BE MODIFIED, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. A COPY OF THE FORM OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF THE WARRANT AGREEMENT.
ANCHOR GLASS CONTAINER CORPORATION
Common Stock Purchase Warrant
Representing Right To Purchase [__________] shares of Class C Common
Stock of Anchor Glass Container Corporation (as such number may be adjusted as
provided herein).
No. 3
FOR VALUE RECEIVED, ANCHOR GLASS CONTAINER CORPORATION, a Delaware
Company (the "Company"), hereby certifies that [__________], or its registered
assigns (the "Holder"), is entitled, subject to the provisions of this Warrant,
to purchase from the Company, at any time or from time to time during the
Exercise Period (as hereinafter defined), up to a total of [__________] shares
(as such number of shares may be adjusted pursuant to Section 2 and/or 4 below,
the "Warrant Shares") of Class C Common Stock (as hereinafter defined), at a
price per share equal to the Exercise Price (as hereinafter defined). This
Warrant is issued to the Holder (together with such other warrants as may be
issued in exchange, transfer or replacement of this Warrant, the "Warrants") and
entitles the Holder to purchase the Warrant Shares (as hereinafter defined).
Section 1. Definitions. Terms defined in the Warrant Agreement (as
hereinafter defined) or in the Credit Agreement (as defined in the Warrant
Agreement) and not otherwise defined herein have, as used herein, the respective
meanings provided for therein. The following additional terms, as used herein,
have the following respective meanings:
"Additional Shares" means any shares of Common Stock other than (i)
the Warrant Shares, (ii) Common Stock outstanding on the Closing Date issued
pursuant to the Equity Financing Documents, and (iii) shares of Common Stock
issued upon the conversion of the Series A Preferred Stock and the Series B
Preferred Stock pursuant to the Certificates of
<PAGE> 2
Designation therefor as in effect on the Closing Date. The numbers of shares of
Common Stock specified in clauses (ii) and (iii) shall be appropriately adjusted
pursuant to Section 4 hereof to reflect any events specified therein.
"Convertible Securities" means rights to subscribe for, or any
rights or options to purchase, shares of Common Stock, or any stock or other
securities convertible into or exchangeable for shares of Common Stock (other
than the Class A Preferred Stock and the Class B Preferred Stock outstanding on
the Closing Date or, in the case of the Class A Preferred Stock, Stock Dividends
paid thereon in accordance with the Certificate of Designation therefor as in
effect on the Closing Date).
"Date of Issuance" shall have the meaning provided in Section 8
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Period" shall mean the period of time from April 17, 1997
until 5:00 P.M., local time in New York City, on April 17, 2007.
"Exercise Price" shall be $.10, which is deemed to be paid upon
issuance of the relevant Warrants by virtue of the making and maintaining of the
Bridge Loan.
"Majority Holders" means the Holder or Holders who hold in the
aggregate Warrants exercisable for a majority of Warrant Shares issuable upon
exercise of the outstanding Warrants.
"Trading Price" shall have the meaning provided in Section 4
hereof.
"Warrant Agreement" shall mean the Warrant Agreement, dated as of
[__________], between the Company and the Initial Holder, as such agreement
shall be modified, amended and supplemented and in effect from time to time.
Section 2. Exercise of Warrant; Cancellations of Warrant. This
Warrant may be exercised in whole or in part, at any time or from time to time,
during the Exercise Period, by presentation and surrender hereof to the Company
at its principal office at the address set forth on the signature page hereof
(or at such other address as the Company may after the date hereof notify the
Holder in writing), or at the office of its transfer agent or warrant agent, if
any, with the Purchase Form annexed hereto duly executed; provided, however,
that the Holder shall not be entitled to exercise this Warrant to the extent
that, as a result of such exercise, the Holder and its Affiliates, directly or
indirectly, would, in the Holder's sole judgment, own, control or have power to
vote a greater quantity of securities of any kind issued by the Company than the
Holder and its Affiliates shall be permitted to own, control or have power to
vote under any law or under any regulation, rule or other requirement of any
government authority at the time applicable to the Holder and its Affiliates
(including, without limitation, any applicable provision of Regulation Y).
Upon receipt by the Company of this Warrant and such Purchase Form,
the Holder shall be deemed to be the holder of record of the number of Warrant
Shares specified in such
2
<PAGE> 3
Purchase Form, notwithstanding that the transfer books of the Company shall then
be closed or that certificates (if any) representing the Warrant Shares shall
not then be actually delivered to the Holder. The Company shall pay any and all
documentary stamp or similar issue taxes payable in respect of the issuance of
the Warrant Shares (other than any such taxes in connection with a transfer of
Warrants to another Holder). If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares issuable hereunder.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company for other Warrants of different
denominations, entitling the Holder to purchase in the aggregate the same number
of Warrant Shares. The Holder of this Warrant shall be entitled, without
obtaining the consent of the Company, to transfer or assign its interest in (and
rights under) this Warrant in whole or in part to any Person or Persons, subject
to the provisions of Section 6 of the Warrant Agreement. Upon surrender of this
Warrant to the Company, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees named in such instrument of assignment and, if the Holder's entire
interest is not being assigned, in the name of the Holder, and this Warrant
shall promptly be canceled. This Warrant may be divided or combined with other
Warrants that carry the same rights upon presentation hereof at the office of
the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 4.1. Adjustment of Number of Warrant Shares. The number of
Warrant Shares purchasable pursuant hereto shall be subject to adjustment from
time to time on and after the Date of Issuance as hereinafter provided in this
Section 4.1.
(a) In case the Company shall at any time after the Date of Issuance
(i) declare or pay a dividend in shares of Common Stock or make a distribution
in shares of Common Stock, (ii) subdivide its outstanding shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issue any shares of its capital stock
or other assets in a reclassification or reorganization of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing entity), the securities
purchasable pursuant hereto shall be adjusted to the number of Warrant Shares
and amount of any other securities, cash or other property of the Company which
the Holder would have owned or have been entitled to receive after the happening
of any of the events described above, had this Warrant been exercised
immediately prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event, retroactive to the
record date, if any, for such event. Any Warrant Shares purchasable as a result
of such adjustment shall not be issued prior to the effective date of such
event.
3
<PAGE> 4
(b) If the Company at any time shall issue or sell, or be deemed to
have issued or sold any Additional Shares at a price less than the Trading Price
per share of Common Stock or any Convertible Securities (excluding any such
issuance for which the number of Warrant Shares purchasable hereunder shall have
been adjusted pursuant to subsection (a) of this Section 4.1), which are
exercisable, convertible or exchangeable for Additional Shares at an exercise,
conversion or exchange price less than the Trading Price per share of Common
Stock, or, if there is no Trading Price at such time, at a price per share less
than the Fair Market Value of the Common Stock at such time, then the number of
Warrant Shares purchasable hereunder after such issuance or sale, or deemed
issuance or sale shall be determined by multiplying the number of Warrant Shares
purchasable hereunder immediately prior to such issuance by a fraction, (i) the
denominator of which shall be the number of shares of "Common Stock Deemed
Outstanding" (as defined below) immediately prior to such issuance or sale, or
deemed issuance or sale plus the number of shares of Common Stock that the
maximum aggregate consideration received or receivable by the Company upon such
issuance or sale or deemed issuance or sale, as the case may be, of such
Additional Shares (including the issue price of any such Convertible Securities)
would purchase at the Trading Price in effect immediately prior to such issuance
or sale or deemed issuance or sale, as the case may be, or, if there is no
Trading Price at such time, at the Fair Market Value of the Common Stock at such
time, and (ii) the numerator of which is the number of shares of Common Stock
Deemed Outstanding immediately after such issuance or sale or deemed issuance or
sale, as the case may be. For purposes of this Section 4, the term "Common Stock
Deemed Outstanding" means, at any given time, the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of Common
Stock deemed to be outstanding pursuant to paragraphs (i) and (ii) of Section
4.2(a) hereof. Shares of Common Stock owned by or held for the account of the
Company or any Subsidiary on such date shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall become effective
immediately after such issuance. Such adjustment shall be made successively
whenever any such event shall occur; provided that no adjustment shall be made
for the issuance of Additional Shares upon the exercise, conversion or exchange
of any Convertible Securities if an adjustment has previously been made upon the
issuance of such Convertible Securities.
(c) If the Company at any time shall fix a record date for the
making of a distribution to all holders of its Common Stock (including any such
distribution to be made in connection with a consolidation or merger in which
the Company is to be the continuing Company) of evidences of its indebtedness,
cash or other assets (excluding dividends paid in or distributions of the
Company's capital stock for which the number of Warrant Shares that can be
purchased hereunder shall have been adjusted pursuant to subsection (a) of this
Section 4.1 or regular cash dividends payable out of earnings or surplus and
made in the ordinary course of business) the number of Warrant Shares that can
be purchased hereunder after such record date shall be determined by multiplying
the number of Warrant Shares that can be purchased hereunder immediately prior
to such record date by a fraction, of which the denominator shall be the Trading
Price per share of Common Stock on such record date, less the Fair Market Value
(as determined in the reasonable judgment of the board of directors of the
Company and described in a statement transmitted by telecopier, mailed by
certified mail, delivered in person or sent by a nationally recognized courier
or delivery service to the Holder) of the portion of the evidences of its
4
<PAGE> 5
indebtedness, cash or other assets so to be distributed to a holder of one share
of Common Stock, and the numerator shall be such Trading Price per share of
Common Stock. Such adjustment shall become effective immediately after such
record date. Such adjustment shall be made whenever such a record date is fixed;
and in the event that such distribution is not so made, the number of Warrant
Shares purchasable hereunder shall again be adjusted to be the number that was
in effect immediately prior to such record date.
(d) Determination of Trading Price. The "Trading Price" per
share of Common Stock on any record date shall mean, as to any security:
(i) such security's closing sales price on the principal
nationally recognized domestic securities exchange (including the Nasdaq Stock
Market - National Market tier) on which such security may, at the time, be
listed, or if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all exchanges on which
such security may, at the time, be listed, at the end of such day, or
(ii) if on any day such security is not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ Inter-Dealer
Quotation System (the "NASDAQ System") as of the close of trading in New York,
New York on such day, or
(iii) if on any day such security is not quoted in the NASDAQ
System, the average of the high and low bid and asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, as reported on the date of
the applicable issuance or sale or deemed issuance or sale, as the case may be,
provided that if such date is not a Trading Day, as reported on the Trading Day
immediately preceding such date. As used herein, the term "Trading Day" shall
mean any day on which trading takes place on the applicable securities exchange
or the NASDAQ System on which the Common Stock is listed or traded, as the case
may be.
(e) In the event that at any time, as a result of an adjustment made
pursuant to this Section 4.1, the Holder shall become entitled to receive any
securities of the Company other than shares of Common Stock, thereafter the
number of such other securities so receivable upon exercise of this Warrant
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Section 4.1.
(f) Whenever the number of Warrant Shares are adjusted as herein
provided, the Exercise Price payable upon exercise of this Warrant shall be
adjusted by multiplying such Exercise Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the number of Warrant Shares
immediately prior to such adjustment, and the denominator of which shall be the
number of Warrant Shares immediately thereafter, provided that in no event shall
the Exercise Price ever exceed $.10, which is deemed paid through the making of
the Bridge Loans.
5
<PAGE> 6
Section 4.2 (a) Effect of Certain Events on Adjustment of Number of
Warrant Shares. For purposes of determining the number of Warrant Shares
purchasable under Section 4 hereof (except in the case of securities and
transactions described in section 4.2 (c) hereof), the following will be
applicable:
(i) Warrants, Options or Other Rights. If the Company issues,
sells or grants any warrants, options or other rights to subscribe for, purchase
or otherwise acquire Common Stock or any stock, evidences of indebtedness or
other securities, directly or indirectly, convertible into or exchangeable for
Common Stock (such warrants, options or other rights being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") and the price per share of Common Stock
issuable upon exercise of such Options and/or upon conversion or exchange of
such Convertible Securities (the "Option Price") is less than the Trading Price
of the Common Stock at the time of the granting of such Options, or, if there is
no such Trading Price at such time, at a price per share less than the Fair
Market Value of the Common Stock at such time, then the total maximum number of
shares of Common Stock issuable upon exercise of such Options and/or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options will be deemed to be
outstanding and to have been issued and sold by the Company for the Option
Price. For purposes of this paragraph (i), the Option Price will be determined
by dividing (A) the total amount, if any, received or receivable by the Company
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon exercise
of all such Options, plus, in the case of Options that relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the issuance of all such Convertible Securities and
the conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the exercise of all such Options or upon the
conversion or exchange of all Convertible Securities issuable upon the exercise
of all such Options. Except as otherwise provided in paragraphs (iii) and (iv)
of this Section 4.2(a), no adjustment to the number of Warrant Shares will be
made when Convertible Securities are actually issued upon exercise of such
Options or when Common Stock is actually issued upon exercise of such Options or
the conversion or exchange of such Convertible Securities. For purposes of this
paragraph (i) and paragraph (ii) of Section 4.2(a) hereof, Fair Market Value
means an amount per share of Common Stock determined, in good faith, by the
Board of Directors; provided that, if the Majority Holders notify the Company in
writing, within thirty (30) days after the date of the notice described in
Section 4.7 hereof, that they disagree with the Fair Market Value of the Common
Stock as determined by the Board of Directors and that they desire a
determination of Fair Market Value in accordance with clauses (A) through (E) of
this paragraph (i), the following shall apply:
(A) the Majority Holders shall select a nationally recognized
investment banking firm which shall be identified in the notice described above;
(B) the Company within thirty (30) days thereafter shall
select a nationally recognized investment banking firm and notify the Majority
Holders;
6
<PAGE> 7
(C) the two investment banking firms shall each make a
determination of the Fair Market Value of the Common Stock and if the two
determinations differ by no more than five percent (5%) of the higher of the two
determinations, the Fair Market Value of the Common Stock shall be the average
of the two determinations;
(D) if the two determinations made under clause (C) differ by
more than five percent (5%) of the higher of the two determinations, the two
investment banking firms shall select a third nationally recognized investment
banking firm which will determine the Fair Market Value of the Common Stock
within the range of the two determinations made under clause (C); and
(E) the Company and the Majority Holders shall bear the costs
of their respective investment banking firms and, if applicable, the cost of the
third investment banking firm shall be borne by the Company or the Majority
Holders, as the case may be, whose determination made under clause C is the
furthest from the determination made under clause D.
(ii) Convertible Securities. If the Company issues or sells
(or otherwise creates) Convertible Securities (other than Convertible Securities
deemed to be outstanding and to have been issued and sold as described in
paragraph (i) of this Section 4.2(a) and in respect of which adjustment to the
number of Warrant Shares has been made in accordance with said paragraph), and
the price per share for which Common Stock is issuable upon conversion or
exchange of such Convertible Securities (the "Conversion Price") is less than
the Trading Price of the Common Stock at the time of issuance or sale or deemed
issuance or sale, or, if there is no such Trading Price of the Common Stock at
such time, at a price per share less than the Fair Market Value of the Common
Stock at such time, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities will be
deemed to be outstanding and to have been issued and sold by the Company for the
Conversion Price. For purposes of this paragraph (ii), the Conversion Price will
be determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (B) the
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. Except as otherwise provided in
paragraphs (iii) and (iv) of this Section 4.2, no adjustment to the number of
Warrant Shares will be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities.
(iii) Change in Option Price, Conversion Price or Conversion
Rate. If the Option Price provided for in any Options, the Conversion Price
provided for in any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock changes at any
time (other than under or by reason of provisions of the type set forth in this
Section 4 that are designed to protect against dilution and that have no more
favorable effect on the holder of such Options or Convertible Securities than
this Section 4 would have if this Section 4 were included in the instrument
representing such Options or Convertible Securities), then the number of Warrant
Shares purchasable at the time of such change will be readjusted at such time to
the number of Warrant Shares that would have been purchasable had
7
<PAGE> 8
such Options or Convertible Securities outstanding at the time of such change
provided for such changed Option Price, Conversion Price or conversion rate at
the time of the original grant, issuance or sale.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option, or the termination of any right
to convert or exchange any Convertible Security, without the exercise of such
Option or the right to convert or exchange such Convertible Security, the number
of Warrant Shares then purchasable will be adjusted at the time of such
expiration or termination to the number of Warrant Shares that would have been
purchasable had such Option or Convertible Security never been granted or
issued; provided that no such adjustment will affect any shares of Common Stock
issued upon conversion of Shares of Series A 10% Preferred Stock prior to the
date such adjustment is made.
(v) Calculation of Consideration. If any Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or
sold, as the case may be, for consideration that includes cash, then the amount
of cash consideration received and/or receivable by the Company will be deemed
to be the cash portion thereof. If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold, as the case
may be, for consideration part or all of which is other than cash, then the
amount of the consideration other than cash received and/or receivable by the
Company will be the fair value thereof, except where such consideration consists
of securities for which there is a Trading Price in which case the amount of
such consideration received and/or receivable by the Company will be the Trading
Price thereof, in each case determined as of the date that such Common Stock
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold, as the case may be. If any Common Stock, Options or Convertible
Securities are issued in connection with any merger, consolidation or other
business combination in which the Company is the surviving or resulting entity,
then the amount of consideration therefor will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving or
non-resulting entity or entities as is attributable to such Common Stock Options
or Convertible Securities, as the case may be. For purposes of this paragraph
(v) of Section 4.2(a), the determination of fair value and any attribution of
fair value to any Common Stock, Options or Convertible Securities shall be made
by the Board of Directors in good faith.
(vi) If the Company shall be a party to any transaction,
including without limitation, any merger consolidation, sale of all or
substantially all of the Company's assets, liquidation, or recaptalization of
the Common Stock (a "Transaction"), in which the Common Stock outstanding
immediately prior to the consummation of the Transaction shall be changed into,
or exchanged for, (A) different securities of the Company (B) common stock or
other securities of another Company, (C) interests in a noncorporate entity, or
(D) other property (including cash) of any combination of the foregoing, then,
as a condition of the consummation of any such Transaction, lawful and adequate
provision shall be made so that each holder of Warrants shall be entitled, upon
exercise of such Warrants, to receive an amount per Warrant Share so converted
equal to (Y) the aggregate amount of securities, interests, cash and/or other
property (payable in kind), as the case may be, into which or for which a share
of Common Stock
8
<PAGE> 9
was changed or exchanged in such Transaction times (Z) the number of shares of
Common Stock for which such Warrant Share was exercisable immediately prior to
such Transaction.
(c) Excluded Securities and Transactions. The following
securities and transactions shall be excluded from the operation of Sections
4.1 and 4.2:
(i) the existence and any exercise of Common Stock Purchase
Warrants (A) issued to Bankers Trust Company and/or its affiliates and (B)
issued in connection with the sale of the Company's debt securities, in each
case for shares of Class C Common Stock in an amount not to exceed in the
aggregate ten percent (10%) of the fully diluted common equity of the Company;
(ii) the existence of Three Million Three Hundred Sixty
Thousand (3,360,000) shares of the Series B 8% Cumulative Convertible Preferred
Stock of the Company issued and outstanding on the date hereof, the payment of
in-kind dividends on outstanding shares of the Series B 8% Cumulative
Convertible Preferred Stock, including dividends on outstanding shares received
as dividends, and the conversion of outstanding shares of Series B 8% Cumulative
Convertible Preferred Stock into Class B Common Stock;
(iii) the existence of Four Hundred Ninety Thousand Eight
Hundred Ninety Eight (490,898) shares of Class A Common Stock issued and
outstanding on the date hereof;
(iv) the existence of Two Hundred Thousand (200,000) shares of
Class B Common Stock issued and outstanding on the date hereof;
(v) the existence of Two Million Two Hundred and Thirty Nine
Thousand Three Hundred and Twenty (2,239,320) shares of the Series A 10%
Cumulative Convertible Preferred Stock of the Company issued and outstanding on
the date hereof, and the conversion of such outstanding shares into Class A
Common Stock;
(vi) any grant or exercise of options to purchase up to an
aggregate of Two Million Five Hundred Thousand (2,500,000) shares of Common
Stock pursuant to any employee stock plan or non-employee director stock plan
approved by the Board of Directors and, if required, by the stockholders of the
Company; and
(vii) the issuance of additional shares of Series A 10%
Preferred Stock to the Anchor Glass Container Corporation Service Retirement
Plan, the Pension Plan for Hourly Employees, Latchford Glass Company and
Associated Companies and/or the Anchor Glass Container Corporation Retirement
Plan for Salaried Employees pursuant to the Agreement between the PBGC and the
Company dated February 3, 1997.
Section 4.3. Other Events. If any event occurs as to which the
foregoing provisions of Section 4.1 or 4.2 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly and adequately protect
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<PAGE> 10
the purchase rights represented by the Warrants in accordance with the essential
intent and principles of such provisions, then such Board of Directors shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Board of Directors, to protect such purchase rights
as aforesaid.
Section 4.4. Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Warrant Shares, this
Warrant may continue to express the same price and number and kind of shares as
are stated on the front page hereof.
Section 4.5. Exceptions to Adjustment. Anything herein to the
contrary notwithstanding, the Company shall not be required to make any
adjustment of the number of Warrant Shares issuable hereunder in the case of the
issuance of the Warrants or the issuance of shares of the Warrant Shares.
Section 4.6. Treasury Shares. The number of shares of the Common
Stock outstanding at any time shall not include shares owned or held by or for
the account of the Company or any of its Subsidiaries, and the disposition of
any such shares shall be considered an issue or sale of the Common Stock for the
purposes of this Section 4.
Section 4.7. Adjustment Notices to Holder. Upon any increase or
decrease in the number of Warrant Shares purchasable upon the exercise of this
Warrant the Company shall, within 30 days thereafter, deliver written notice
thereof to the Holder, which notice shall state the increased or decreased
number of Warrant Shares purchasable upon the exercise of this Warrant setting
forth in reasonable detail the method of calculation and the facts upon which
such calculations are based. If the Company shall fail to so timely deliver any
notice required pursuant to this Section 4.7, the Exercise Period shall be
extended until the Holder shall have received the proper notification under this
Section 4.7.
Section 5.1. Special Covenants of the Company. The Company covenants
and agrees that until all Warrants have been exercised in full:
(a) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, directly or indirectly avoid or seek to avoid the
observance or performance of any of the terms of this Warrant or the
Warrant Agreement or to delay the merger of the Class C Common Stock with
the Class A Common Stock to a date after April 17, 2000, but will at all
times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against dilution or other impairment
in accordance with the terms of this Warrant. Without limiting the
generality of the foregoing, the Company (i) will not increase the par
value of any shares of stock receivable upon the exercise of the Warrants
above the Exercise Price payable therefor and (ii) will take all such
action as may be necessary or appropriate in order that the
10
<PAGE> 11
Company may validly and legally issue fully paid and nonassessable shares
of stock upon the exercise of all Warrants from time to time outstanding.
(b) If at any time as any Common Stock is listed on any national
securities exchange (as defined in the Exchange Act) or on the NASDAQ
National Market System, the Company will, at its expense, obtain and
maintain the approval for listing on each such exchange or on the NASDAQ
National Market System upon official notice of issuance of all Warrant
Shares receivable upon the exercise of the Warrants at the time
outstanding and maintain the listing of such Warrant Shares after their
issuance; and the Company will so list on such national securities
exchange, will register under the Exchange Act (and any similar state
statute then in effect) or on the NASDAQ National Market System, and will
maintain such listing of, any other securities that at any time are
issuable upon exercise of the Warrants, if and at the time that any
securities of the same class shall be listed on such national securities
exchange by the Company.
(c) The Company covenants and agrees to give the Initial Holder (to
the extent it or any of its Affiliates is still a Holder) prior written
notice of the expiration of the Exercise Period of the Warrants. Such
notice shall be delivered not less than thirty (30) days but not more than
sixty (60) days prior to such expiration; provided that if the Company
fails to give such notice, the expiration of such Exercise Period shall
not occur in respect of Warrants held by the Initial Holder (or its
Affiliates), until thirty (30) days after such notice is delivered.
Section 5.2. Pro Rata Purchase. If at any time the Company or any of
its Affiliates shall offer to purchase any shares of Common Stock, other than
shares purchased from any employees of the Company or any of its subsidiaries as
permitted by the terms of any employee benefit plan or stockholders or similar
agreement that has been approved by the Board of Directors of the Company, the
Company shall, as part of such offer, also make an offer to purchase the
Warrants and Warrant Shares from the holders of all outstanding Warrant Shares
and Warrants, and with any purchase pursuant to each offer to be allocated pro
rata among the holders of Warrant Shares and Warrants and the other holders of
Common Stock accepting each offer to purchase.
Section 6. Notification by the Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock or any other class of its capital stock; or
(ii) the Company shall offer for subscription pro rata to the
holders of its Common Stock or any other class of its capital stock any
additional shares of stock of any class or any other securities
convertible into or exchangeable for shares of stock or any rights or
options to subscribe thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the
11
<PAGE> 12
Company, or a sale or conveyance of all or a substantial part of the
assets of the Company, or a consolidation, merger or business combination
of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder not less than 30 days before any record date or other date set for
definitive action of the date on which (A) the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights or options or (B) such reorganization, reclassification, sale,
conveyance, consolidation, merger, dissolution, liquidation or winding up shall
take place or be voted on by stockholders of the Company, as the case may be.
Such notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution, subscription
rights or options or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, sale, conveyance, consolidation, merger, dissolution,
liquidation or winding-up, as the case may be. If the action in question or the
record date is subject to the effectiveness of a registration statement under
the Securities Act or to a favorable vote of stockholders, the notice required
by this Section 6 shall so state.
Section 7. No Voting Rights; Limitations of Liability. Prior to
exercise, this Warrant will not entitle the Holder to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Holder shall give rise to any
liability of the Holder for the purchase price of Common Stock acquirable by
exercise hereof or as a stockholder of the Company.
Section 8. Date of Issuance. The date the Company initially issues
this Warrant will be deemed to be the "Date of Issuance" hereof and of each new
Warrant issued in exchange, transfer or replacement hereof, regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued.
Section 9. Amendment and Waiver. (a) No failure or delay of the
Holder in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Required Holders.
(b) Any such amendment, modification or waiver effected pursuant to
this Section 9 shall be binding upon the Holders of all Warrants and Warrant
Shares, upon each future holder thereof, upon the Company and its stockholders.
In the event of any such amendment,
12
<PAGE> 13
modification or waiver, the Company shall give prompt written notice thereof to
all Warrantholders and, if appropriate, notation thereof shall be made on all
Warrants thereafter surrendered for registration of transfer or exchange.
(c) No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
Section 10. No Fractional Warrant Shares. The Company shall not be
required to issue stock certificates representing fractions of Warrant Shares.
Warrant Shares will be rounded to the nearest whole share.
Section 11. Reservation of Warrant Shares. The Company will
authorize, reserve and keep available at all times, free from preemptive rights,
a sufficient number of Warrant Shares to satisfy the requirements of this
Warrant and any other outstanding Warrants.
Section 12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing (including, telegraphic, telex,
facsimile or cable communication) and delivered, mailed telegraphed, telexed,
telecopied or cabled:
(i) if to the Holder, to its address as set forth in records of the
Company or the Warrant Agent, if a Warrant Agent is appointed; and
(ii) if to the Company, to Attention: General Counsel or at such
other address as may have been furnished to the Holder in writing by
the Company.
All such notices and communications shall, when mailed, telegraphed,
telexed, facsimiled, or cabled or sent by overnight courier, be effective 3
Business Days after deposited in the mails, certified, return receipt requested,
when delivered to the telegraph company, cable company or one day following
delivery to an overnight courier, as the case may be, or sent by telex or
facsimile device.
Section 13. Headings. The headings of the Sections and subsections
of this close Warrant are inserted for convenience only and shall not be deemed
to constitute a part of this Warrant.
Section 14. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK. If any action or proceeding shall be brought by
the Holder in order to enforce any right or obligation in respect of this
Warrant, the Company hereby consents and will submit to the jurisdiction of any
state or federal court of competent jurisdiction in the State of New York, and
agrees that venue will be proper in any such court. THE PARTIES HERETO EACH
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT
OF THE WARRANT AGREEMENT OR THE WARRANTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS
RELATED HERETO OR THERETO.
13
<PAGE> 14
Section 15. Binding Effect. The terms and provisions of this Warrant
shall inure to the benefit of the original Holder and its successors and assigns
and shall be binding upon the Company and its successors and assigns, including,
without limitation, any Person succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
Section 16. Registration Rights; etc. Each Holder shall be entitled
to the benefits of registration, co-sale and other rights pursuant to the
Warrant Agreement, and shall be subject to the restrictions on sale or transfer
of this Warrant or the Warrant Shares subject hereto, as the case may be,
pursuant to the Warrant Agreement.
14
<PAGE> 15
IN WITNESS WHEREOF, the seal of the Company and the signature of its
duly authorized officer have been affixed hereto as of __________, ______.
ANCHOR GLASS CONTAINER CORPORATION
By
------------------------------------
Title:
Attest: _________________
<PAGE> 16
PURCHASE FORM
Dated ________________,
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ___ shares of the Class C Common Stock
issuable hereunder, the purchase price of $.10 per share having previously been
paid.
-----------------
INSTRUCTIONS FOR REGISTRATION OF
COMMON STOCK
Name __________________________________________________________________________
(please typewrite or print in block letters)
Address _______________________________________________________________________
Signature ________________________________________________________________
<PAGE> 17
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns and
transfers unto
Name ___________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
its right to purchase ___ shares of the Class C Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint ______ Attorney, to
transfer the same on the books of the Company, with full power of substitution
in the premises.
Date: ________________________
Signature ________________________
\
<PAGE> 1
EXHIBIT 12.1
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT RE COMPUTATION OF RATIOS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM FEBRUARY 5, 1997
TO SEPTEMBER 30, 1997
----------------------------
<S> <C>
EARNINGS --
Income (loss) before income taxes and extraordinary item............. $ (1,112)
Interest and amortization of debt expense............................ 12,725
Rental expense representative of interest factor..................... 4,512
-------
Total earnings............................................. $ 16,125
=======
FIXED CHARGES --
Interest and amortization of debt expense............................ $ 12,725
Rental expense representative of interest factor..................... 4,512
-------
Total fixed charges........................................ $ 17,237
=======
RATIO OF EARNINGS TO FIXED CHARGES................................... --
=======
DEFICIENCY OF EARNINGS AVAILABLE TO COVER FIXED CHARGES.............. $ 1,112
=======
</TABLE>
For the purposes of computing the ratio of earnings to fixed charges and
the deficiency of earnings available to cover fixed charges, earnings consist of
income (loss) before income taxes, extraordinary items and cumulative effect of
change in accounting, plus fixed charges. Fixed charges consist of interest and
amortization of debt expense plus a portion of operating lease expense.
2
<PAGE> 1
EXHIBIT 12.2
ANCHOR RESOLUTION CORP.
STATEMENT RE COMPUTATION OF RATIOS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1992 1993 1994 1995 1996
------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
EARNINGS -
Income (loss) before income taxes,
extraordinary items and cumulative
effect of accounting change $13,629 $(15,467) $(97,770) $(65,719) $(851,679)
Interest and amortization of
debt expense 66,853 64,938 59,166 59,757 55,063
Rental expense representative of
interest factor 5,804 6,049 6,856 8,192 7,851
------- -------- -------- -------- ---------
Total earnings $86,286 $55,520 $(31,948) $ 2,230 $(588,765)
======= ======== ======== ======== =========
FIXED CHARGES -
Interest and amortization of
debt expense $66,853 $64,938 $ 59,166 $ 59,757 $ 55,063
Rental expense representative of
Interest factor 5,804 6,049 6,656 8,192 7,851
------- -------- -------- -------- ---------
Total fixed charges $72,657 $70,987 $ 65,822 $ 67,949 $ 62,914
======= ======== ======== ======== =========
Ratio of earnings to fixed
charges 1.19
======= ======== ======== ======== =========
Deficiency of earnings available
to cover fixed charges $15,467 $ 97,770 $ 65,719 $ 651,679
======= ======== ======== ======== =========
</TABLE>
For the purposes of computing the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, earnings consist of
income (loss) before income taxes, extraordinary items and cumulative effect of
change in accounting, plus fixed charges. Fixed charges consist of interest and
amortization of debt expense plus a portion of operating lease expense.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
November 10, 1997
<PAGE> 1
Exhibit 25.1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
--------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------------
ANCHOR GLASS CONTAINER CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 59-3417812
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634-7513
(Address of principal executive offices) (Zip code)
--------------------------
CONSUMERS U.S., INC.
(Exact name of obligor as specified in its charter)
Delaware 23-2874087
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634-7513
(Address of principal executive offices) (Zip code)
<PAGE> 2
--------------------------
11 1/4% First Mortgage Notes due 2005
(Title of the indenture securities)
================================================================================
-2-
<PAGE> 3
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 12th day of June, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
------------------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 6,024,605
Interest-bearing balances .......... 808,821
Securities:
Held-to-maturity securities ........ 1,071,747
Available-for-sale securities ...... 3,105,207
Federal funds sold in domestic offices
of the bank: .......................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................31,962,915
LESS: Allowance for loan and
lease losses ..............635,084
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 31,327,402
Assets held in trading accounts ...... 1,539,612
Premises and fixed assets (including
capitalized leases) ................ 692,317
Other real estate owned .............. 22,123
Investments in unconsolidated
subsidiaries and associated
companies .......................... 213,512
Customers' liability to this bank on
acceptances outstanding ............ 985,297
Intangible assets .................... 590,973
Other assets ......................... 1,487,903
-----------
Total assets ......................... $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices ................ $25,929,642
Noninterest-bearing ......11,245,050
<PAGE> 6
Interest-bearing .........14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 12,852,809
Noninterest-bearing .........552,203
Interest-bearing .........12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the
bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............ 1,360,877
Securities sold under agreements
to repurchase....................... 226,158
Demand notes issued to the U.S.
Treasury ........................... 204,987
Trading liabilities .................. 1,437,445
Other borrowed money:
With original maturity of one year
or less .......................... 2,312,556
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,014,717
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,721,291
-----------
Total liabilities .................... 48,095,648
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 7,030
Cumulative foreign currency transla-
tion adjustments .................. (9,916)
-----------
Total equity capital ................ 4,024,812
-----------
Total liabilities and equity
capital ........................... $52,120,460
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-6-
<PAGE> 7
Exhibit 7
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit 25.2
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------------------
ANCHOR GLASS CONTAINER CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 59-3417812
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634-7513
(Address of principal executive offices) (Zip code)
------------------------------------
CONSUMERS U.S., INC.
(Exact name of obligor as specified in its charter)
Delaware 23-2874087
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634-7513
(Address of principal executive offices) (Zip code)
<PAGE> 2
------------------------------------
Guarantee of 11 1/4% First Mortgage Notes due 2005
(Title of the indenture securities)
================================================================================
-2-
<PAGE> 3
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE
901(d) OF REGULATION S-T Exhibit 25.2
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 12th day of June, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
-------------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 6,024,605
Interest-bearing balances .......... 808,821
Securities:
Held-to-maturity securities ........ 1,071,747
Available-for-sale securities ...... 3,105,207
Federal funds sold in domestic offices
of the bank: .......................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................31,962,915
LESS: Allowance for loan and
lease losses ..............635,084
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 31,327,402
Assets held in trading accounts ...... 1,539,612
Premises and fixed assets (including
capitalized leases) ................ 692,317
Other real estate owned .............. 22,123
Investments in unconsolidated
subsidiaries and associated
companies .......................... 213,512
Customers' liability to this bank on
acceptances outstanding ............ 985,297
Intangible assets .................... 590,973
Other assets ......................... 1,487,903
-----------
Total assets ......................... $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices ................ $25,929,642
Noninterest-bearing ......11,245,050
Interest-bearing .........14,684,592
In foreign offices, Edge and
<PAGE> 6
Agreement subsidiaries, and IBFs ... 12,852,809
Noninterest-bearing .........552,203
Interest-bearing .........12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............ 1,360,877
Securities sold under agreements
to repurchase....................... 226,158
Demand notes issued to the U.S.
Treasury ........................... 204,987
Trading liabilities .................. 1,437,445
Other borrowed money:
With original maturity of one year
or less .......................... 2,312,556
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,014,717
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,721,291
-----------
Total liabilities .................... 48,095,648
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 7,030
Cumulative foreign currency transla-
tion adjustments .................. (9,916)
-----------
Total equity capital ................ 4,024,812
-----------
Total liabilities and equity
capital ........................... $52,120,460
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-6-
<PAGE> 7
Exhibit 7
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
- --------------------------------------------------------------------------------
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ANCHOR RESOLUTION CORP. FOR THE YEAR ENDED
DECEMBER 31, 1996 INCLUDED IN THE S-4 OF ANCHOR GLASS CONTAINER CORPORATION AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,898
<SECURITIES> 0
<RECEIVABLES> 55,851
<ALLOWANCES> 1,503
<INVENTORY> 144,419
<CURRENT-ASSETS> 222,761
<PP&E> 655,425
<DEPRECIATION> 344,655
<TOTAL-ASSETS> 643,468
<CURRENT-LIABILITIES> 368,880
<BONDS> 458,025
0
0
<COMMON> 0
<OTHER-SE> (269,307)
<TOTAL-LIABILITY-AND-EQUITY> 643,468
<SALES> 814,370
<TOTAL-REVENUES> 814,370
<CGS> 831,612
<TOTAL-COSTS> 881,585<F1>
<OTHER-EXPENSES> 490,232<F2>
<LOSS-PROVISION> 1,126
<INTEREST-EXPENSE> 55,063
<INCOME-PRETAX> (651,679)
<INCOME-TAX> 1,825
<INCOME-CONTINUING> (653,504)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,336)
<CHANGES> 0
<NET-INCOME> (655,840)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES A RESTRUCTURING CHARGE OF $49,973
<F2>INCLUDES THE IMPAIRMENT OF LONG-LIVED ASSETS OF $490,232
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONDENSED FINANCIAL STATEMENTS OF ANCHOR GLASS CONTAINER CORPORATION INCLUDED IN
FORM S-4 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS.
</LEGEND>
<CIK>
<NAME> ANCHOR GLASS CONTAINER CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-05-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 804
<SECURITIES> 0
<RECEIVABLES> 60,840
<ALLOWANCES> 1,790
<INVENTORY> 118,191
<CURRENT-ASSETS> 188,613
<PP&E> 343,073
<DEPRECIATION> 33,131
<TOTAL-ASSETS> 588,712
<CURRENT-LIABILITIES> 125,151
<BONDS> 151,954
55,983
34
<COMMON> 139
<OTHER-SE> 86,850
<TOTAL-LIABILITY-AND-EQUITY> 588,712
<SALES> 415,636
<TOTAL-REVENUES> 415,636
<CGS> 386,130
<TOTAL-COSTS> 386,130
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 225
<INTEREST-EXPENSE> 12,725
<INCOME-PRETAX> (1,112)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,112)
<DISCONTINUED> 0
<EXTRAORDINARY> (11,200)
<CHANGES> 0
<NET-INCOME> (12,312)
<EPS-PRIMARY> (17.18)
<EPS-DILUTED> (17.18)
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF CONSUMERS U.S., INC. INCLUDED IN
FORM S-4 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-05-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 804
<SECURITIES> 0
<RECEIVABLES> 60,840
<ALLOWANCES> 1,790
<INVENTORY> 118,191
<CURRENT-ASSETS> 188,613
<PP&E> 343,073
<DEPRECIATION> 33,131
<TOTAL-ASSETS> 586,317
<CURRENT-LIABILITIES> 125,151
<BONDS> 151,954
55,983
0
<COMMON> 170
<OTHER-SE> 82,215
<TOTAL-LIABILITY-AND-EQUITY> 586,317
<SALES> 415,636
<TOTAL-REVENUES> 415,636
<CGS> 386,130
<TOTAL-COSTS> 386,130
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 225
<INTEREST-EXPENSE> 12,725
<INCOME-PRETAX> (1,112)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,112)
<DISCONTINUED> 0
<EXTRAORDINARY> (11,200)
<CHANGES> 0
<NET-INCOME> (465)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
ANCHOR GLASS CONTAINER CORPORATION
OFFER FOR ALL OUTSTANDING
11 1/4% FIRST MORTGAGE NOTES DUE 2005
IN EXCHANGE FOR
11 1/4% FIRST MORTGAGE NOTES DUE 2005
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
PURSUANT TO THE PROSPECTUS DATED _______, 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________,
1997 OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY BE EXTENDED
(THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: Facsimile Transmission Number: By Hand/Overnight Delivery:
(212) 571-3080
The Bank of New York The Bank of New York
101 Barclay Street - 7E (For Eligible Institutions Only) 101 Barclay Street
New York, New York 10286 Confirm by Telephone: Corporate Trust Services Window
Attn: Enrique Lopez (212) 815-2742 Ground Level
Floor 7E Attn: Enrique Lopez
Reorganization Section Floor 7E
Reorganization Section
For Information Call:
(212) 815-6333
</TABLE>
Delivery of this letter of transmittal to an address other than as set
forth above, or transmission of instructions via facsimile other than as set
forth above, does not constitute a valid delivery.
The undersigned acknowledges that he or she has received the Prospectus
dated __________, 1997 (as amended or supplemented from time to time, the
"Prospectus") of Anchor Glass Container Corporation, a Delaware corporation (the
"Company"), and this Letter of Transmittal (as amended or supplemented from time
to time, the "Letter of Transmittal"), which together constitute the Company's
offer (the "Exchange Offer") to exchange up to $150,000,000 aggregate principal
amount of 11 1/4% First Mortgage Notes due 2005 (the "Exchange Notes") of the
Company, for an equal principal amount of the Company's issued and outstanding
11 1/4% First Mortgage Notes due 2005 (collectively, the "Outstanding Notes").
The terms of the Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to those of the
Outstanding Notes, except that the Exchange Notes will be registered under the
Securities Act of 1933, as amended (the "Securities Act").
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein have the meanings given
to such terms in the Prospectus.
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Outstanding
Notes either if Outstanding Notes are to be forwarded herewith or if tenders of
Outstanding Notes are to be made by book-entry transfer to an account maintained
by The Bank of New York (the "Exchange Agent") at The Depository Trust Company
(the "Book-Entry Transfer Facility" or "DTC") pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Procedures for Tendering
Outstanding Notes." Delivery of this Letter of Transmittal and any other
required documents should be made to the Exchange Agent.
If a Holder desires to tender Outstanding Notes pursuant to the
Exchange Offer but time will not permit this Letter of Transmittal, certificates
representing Outstanding Notes or other required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedure for book-entry transfer
cannot be completed on a timely basis, such Holder may effect a tender of such
Notes in accordance with the guaranteed delivery procedures set forth in the
Prospectus under "Exchange Offer -- Procedures for Tendering Outstanding Notes."
See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
The undersigned has completed the appropriate boxes below and signed
this Letter of Transmittal to indicate the action the undersigned desires to
take with respect to the Exchange Offer.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Outstanding Notes should be listed on a separate schedule
affixed hereto.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES (1) (2) (3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Registered Holder(s) Aggregate Principal Amount
(Please fill in, if blank) Principal of Outstanding
Certificate Amount of Notes
Number(s)* Outstanding Notes Tendered
(if less than all)**
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
* Need not be completed if Outstanding Notes are being tendered by book-entry holders.
** Outstanding Notes may be tendered in whole or in part in denominations of
$100,000 and integral multiples of $1,000 in excess thereof, provided that
if any Outstanding Notes are tendered for exchange in part, the untendered
principal amount thereof must be at least $100,000 or any integral multiple
of $1,000 in excess thereof. See instruction 3. Unless this column is
completed, a holder will be deemed to have tendered the full aggregate
principal amount of the Outstanding Notes represented by the Outstanding
Notes indicated in column 2.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE> 3
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_____________________________________________
Account Number____________________________________________________________
Transaction Code Number___________________________________________________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s)___________________________________________
Window Ticket Number (if any)_____________________________________________
Name of Eligible Institution that Guaranteed Delivery_____________________
Date of Execution of Notice of Guaranteed Delivery________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution_____________________________________________
Account Number____________________________________________________________
Transaction Code Number___________________________________________________
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING
NOTES ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER SET FORTH ABOVE
/ / CHECK HERE IF YOU ARE A BROKER-DEALER THAT ACQUIRED THE OUTSTANDING NOTES
FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND
10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Outstanding Notes indicated above in exchange for a like aggregate principal
amount of Exchange Notes. Subject to, and effective upon, the acceptance for
exchange of the Outstanding Notes tendered hereby,
-3-
<PAGE> 4
the undersigned hereby exchanges, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to such Outstanding Notes.
The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Outstanding Notes with the full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest),
subject to the right of withdrawal described in the Prospectus, to (i) deliver
certificates for such Outstanding Notes to the Company and deliver all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company and (ii) present such Outstanding Notes for transfer on the books of
the Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Outstanding Notes, all in accordance with the terms
of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the
Outstanding Notes tendered hereby and that, when the same are accepted for
exchange, the Company will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims or proxies. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
the Outstanding Notes tendered hereby, and the undersigned will comply with its
obligations under the Registration Rights Agreement. The undersigned has read
and agreed to all of the terms of the Exchange Offer.
The undersigned agrees that acceptance of any tendered Outstanding
Notes by the Company and the issuance of Exchange Notes in exchange therefor
will constitute performance in full by the Company of its obligations under the
Registration Rights Agreement and that the Company will have no further
obligations or liabilities thereunder (except in limited circumstances).
The name(s) and address(es) of the registered holders of the
Outstanding Notes tendered hereby should be printed above, if they are not
already set forth above, as they appear on the Outstanding Notes. The
Certificate number(s) and the Outstanding Notes that the undersigned wishes to
tender should be indicated in the appropriate boxes above.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on certain interpretive letters by the staff of the Securities
and Exchange Commission (the "SEC") to third parties in unrelated transactions.
On the basis thereof, the Exchange Notes issued in exchange for the Outstanding
Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holders' business and such holders are not participating
in, and have no arrangement or understanding with any person to participate in,
the distribution of such Exchange Notes. THE UNDERSIGNED ACKNOWLEDGES THAT ANY
HOLDER OF OUTSTANDING NOTES USING THE EXCHANGE OFFER TO PARTICIPATE IN A
DISTRIBUTION OF THE EXCHANGE NOTES (I) CANNOT RELY ON THE POSITION OF THE STAFF
OF THE SEC ENUNCIATED IN ITS INTERPRETIVE LETTER WITH RESPECT TO EXXON CAPITAL
HOLDINGS CORPORATION (AVAILABLE APRIL 13, 1989) OR SIMILAR LETTERS AND (II) MUST
COMPLY WITH THE REGISTRATION AND PROSPECTUS REQUIREMENTS OF THE SECURITIES ACT
IN CONNECTION WITH A SECONDARY RESALE TRANSACTION. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of Exchange Notes. If the undersigned is
a broker-dealer that will receive Exchange Notes for its own account in exchange
for Outstanding Notes that were acquired as a result of market-making activities
or other trading activities, it acknowledges that it will deliver a prospectus
in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned represents that (i) it is not an affiliate of either
the Company or, if the undersigned is an affiliate of the Company, it will
comply with the registration and prospectus requirements of the Securities Act
to the extent applicable, (ii) the Exchange Notes are being acquired in the
ordinary course of business of the person receiving such Exchange Notes, whether
or not such person is the holder, (iii) the undersigned has not entered into an
arrangement or understanding with any other person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes,
(iv) the undersigned is not a broker-dealer who purchased the Notes for resale
pursuant to an exemption
-4-
<PAGE> 5
under the Securities Act and (v) the undersigned will be able to trade Exchange
Notes acquired in the Exchange Offer without restriction under the Securities
Act.
The Company and the Parent Guarantor have agreed that, subject to the
provisions of the Registration Rights Agreement, the Prospectus may be used by a
Participating Broker-Dealer (as defined below) in connection with resales of
Exchange Notes received in exchange for Outstanding Notes, where such
Outstanding Notes were acquired by such Participating Broker-Dealer for its own
account as a result of market-making activities or other trading activities, for
a period ending 90 days after the Expiration Date (subject to extension under
certain limited circumstances described in the Prospectus) or, if earlier, when
all such Exchange Notes have been disposed of by such Participating
Broker-Dealer. In that regard, each broker-dealer who acquired Outstanding Notes
for its own account as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), by tendering such Outstanding Notes and
executing this Letter of Transmittal, agrees that, upon receipt of notice from
the Company of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in the Prospectus
untrue in any material respect or which causes the Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference therein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-Dealer
will suspend the sale of Exchange Notes pursuant to the Prospectus until the
Company and the Parent Guarantor have amended or supplemented the Prospectus to
correct such misstatement or omission and have furnished copies of the amended
or supplemented Prospectus to the Participating Broker-Dealer or the Company has
given notice that the sale of the Exchange Notes may be resumed, as the case may
be. If the Company gives such notice to suspend the sale of the Exchange Notes,
the 90-day period referred to above during which Participating Broker-Dealers
are entitled to use the Prospectus in connection with the resale of Exchange
Notes shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the supplemented or
amended Prospectus necessary to permit resales of the Exchange Notes or to and
including the date on which the Company has given notice that the sale of
Exchange Notes may be resumed, as the case may be.
The undersigned understands that tenders of the Outstanding Notes
pursuant to any one of the procedures described under "The Exchange Offer --
Procedures for Tendering Outstanding Notes" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company in accordance with the terms and subject to the conditions set
forth herein and in the Prospectus.
The undersigned recognizes that under certain circumstances set forth
in the Prospectus under "The Exchange Offer -- Conditions to the Exchange Offer"
the Company will not be required to accept for exchange any of the Outstanding
Notes tendered. Outstanding Notes not accepted for exchange or withdrawn will be
returned to the undersigned at the address set forth below unless otherwise
indicated under "Special Delivery Instructions" below (or, in the case of
Outstanding Notes tendered by book-entry transfer, credited to an account
maintained by the tendering holder at DTC).
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes
(and, if applicable, any substitute certificates representing Outstanding Notes
not exchanged or not accepted for exchange) be issued in the name(s) of the
undersigned and be delivered to the undersigned at the address, or, in the case
of book-entry transfer of Outstanding Notes, be credited to the account at DTC
shown above in the box entitled "Description of Outstanding Notes."
Holders of the Outstanding Notes whose Outstanding Notes are accepted
for exchange will not receive accrued interest on such Outstanding Notes for any
period from and after the last Interest Payment Date to which interest has been
paid or duly provided for on such Outstanding Notes prior to the original issue
date of the Exchange Notes or, if no such interest has been paid or duly
provided for, will not receive any accrued interest on such Outstanding Notes,
and the undersigned waives the right to receive any interest on such Outstanding
Notes accrued from and after such Interest Payment Date or, if no such interest
has been paid or duly provided for from and after the original issue date of the
Exchange Notes.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators,
-5-
<PAGE> 6
personal representatives, trustees in bankruptcy, legal representatives,
successors and assigns of the undersigned. This tender may be withdrawn only in
accordance with the procedures set forth in the Prospectus and in the
instructions contained in this Letter of Transmittal.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
OUTSTANDING NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL AND DELIVERING
SUCH NOTES AND THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT, WILL BE DEEMED
TO HAVE TENDERED THE OUTSTANDING NOTES AS SET FORTH IN SUCH BOX ABOVE.
-6-
<PAGE> 7
________________________________________________________________________________
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
X____________________________ Date: ______________, 1996
X____________________________ Date: ______________, 1996
Signature(s) of Owner
The above lines must be signed by the registered holder(s) exactly as
their name(s) appear(s) on the Outstanding Notes, or by person(s) authorized to
become registered holder(s) by a properly completed bond power from the
registered holder(s), a copy of which must be transmitted with this Letter of
Transmittal. If Outstanding Notes to which this Letter of Transmittal relate are
held of record by two or more joint holders, then all such holders must sign
this. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, then please set forth full title. See Instruction 4.
Name(s):_______________________________________________________________
_______________________________________________________________________
(Please Type or Print)
Capacity:______________________________________________________________
Address:_______________________________________________________________
_______________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number:________________________________________
Tax Identification or
Social Security Number(s):_____________________________________________
SIGNATURE GUARANTEE (If required
by Instruction 4)
Signatures Guaranteed
by an Eligible Institution:____________________________________________
(Authorized Signature)
_______________________________________________________________________
(Title)
_______________________________________________________________________
(Name of Firm)
_______________________________________________________________________
(Address and Telephone Number)
Dated: _________________, 1997
________________________________________________________________________________
-7-
<PAGE> 8
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if certificates for Outstanding Notes not exchanged
and/or Exchange Notes are to be issued in the name of and sent to someone other
than the person or persons whose signature(s) appear(s) on this Letter of
Transmittal above.
Issue Exchange Notes and/or Outstanding Notes to:
Name(s): .......................................................................
(PLEASE TYPE OR PRINT)
................................................................................
(PLEASE TYPE OR PRINT)
Address: .......................................................................
................................................................................
(ZIP CODE)
Telephone Number:...............................................................
Tax Identification or
Social Security Number(s):......................................................
(COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if certificates for Outstanding Notes not exchanged
and/or Exchange Notes are to be sent to someone other than the person or persons
whose signature(s) appear(s) on this Letter of Transmittal above or to such
person or persons at an address other than shown in the box above entitled
"Description of Outstanding Notes."
Deliver Exchange Notes and/or Outstanding Notes to:
Name(s): .......................................................................
(PLEASE TYPE OR PRINT)
................................................................................
(PLEASE TYPE OR PRINT)
Address: .......................................................................
................................................................................
(ZIP CODE)
Telephone Number:...............................................................
Tax Identification or
Social Security Number(s):......................................................
- --------------------------------------------------------------------------------
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH,
THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATE(S) FOR OUTSTANDING NOTES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
-8-
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OUTSTANDING NOTES.
This Letter of Transmittal is to be used to, and must accompany, (i)
all certificates representing Outstanding Notes tendered pursuant to the
Exchange Offer and (ii) all tenders or Outstanding Notes made pursuant to the
procedures for book-entry transfer set forth in the Prospectus under "The
Exchange Offer -- Procedures for Tendering Outstanding Notes." Certificates
representing the Outstanding Notes in proper form for transfer, or a timely
confirmation of a book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at DTC, as well as a properly completed and duly
executed copy of this Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, a Substitute Form W-9 (or facsimile thereof) and
any other documents required by this Letter of Transmittal must be received by
the Exchange Agent at its address set forth herein on or before the Expiration
Date.
The method of delivery of this Letter of Transmittal, the Outstanding
Notes and all other required documents is at the election and risk of the
tendering holders, but delivery will be deemed made only when actually received
or confirmed by the Exchange Agent. If such delivery is by mail, it is
recommended that registered mail properly insured, with return receipt
requested, be used. In all cases, sufficient time should be allowed to permit
timely delivery.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEED DELIVERY PROCEDURES.
If a holder desires to tender Outstanding Notes, but time will not
permit a Letter of Transmittal, certificates representing the Outstanding Notes
to be tendered or other required documents to reach the Exchange Agent on or
before the Expiration Date, or if the procedure for book-entry transfer cannot
be completed on or prior to the Expiration Date, such holder's tender may be
effected if:
(a) such tender is made by or through an Eligible Institution
(as defined below);
(b) on or before to the Expiration Date, the Exchange Agent
has received a properly completed and duly executed Notice of
Guaranteed Deliver, substantially in the form made available by the
Company (or a facsimile thereof) (receipt confirmed by telephone and an
original delivered by guaranteed overnight courier) from such Eligible
Institution setting forth the name and address of the holder of such
Outstanding Notes, the name(s) in which the Outstanding Notes are
registered and the principal amount of Outstanding Notes tendered and
stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the Expiration
Date, certificates representing the Outstanding Notes to be tendered,
in proper form for transfer, or a Book-Entry confirmation, as the case
may be, together with a duly executed Letter of Transmittal and any
other documents required by this Letter of Transmittal and the
instructions hereto, will be deposited by such Eligible Institution
with the Exchange Agent; and
(c) a Letter of Transmittal (or a facsimile thereof) and
certificates representing the Outstanding Notes to be tendered, in
proper form for transfer, or a Book-Entry Confirmation, as the case may
be, and all other required documents are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration
Date.
3. PARTIAL TENDERS AND WITHDRAWAL RIGHTS.
Tenders of Outstanding Notes will be accepted only in the principal
amount of $100,000 and integral multiples of $1,000 in excess thereof, provided
that if any Outstanding Notes are tendered for exchange in part, the untendered
principal amount thereof must be $100,000 or any integral multiple of $1,000 in
excess thereof. If less than all the Outstanding Notes evidenced by any
Certificate submitted are to be tendered, fill in the principal amount of
Outstanding Notes which are to
-9-
<PAGE> 10
be tendered in the box entitled "Principal Amount of Outstanding Notes Tendered
(if less than all)." In such case, new certificate(s) for the remainder of the
Outstanding Notes that were evidenced by your old certificate(s) will only be
sent to the holder of the Outstanding Notes (or, in the case of Outstanding
Notes tendered pursuant to book-entry transfer, will only be credited to the
account at DTC maintained by the holder of the Outstanding Notes) promptly after
the Expiration Date. All Outstanding Notes represented by certificates or
subject to a Book-Entry Confirmation delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
Any holder who has tendered Outstanding Notes may withdraw the tender
by delivering written notice of withdrawal (which may be sent by facsimile) to
the Exchange Agent at its address set forth herein prior to the Expiration Date.
Any such notice of withdrawal must specify (i) the person named in the Letter of
Transmittal as having tendered the Outstanding Notes to be withdrawn, (ii) the
certificate numbers of the Outstanding Notes to be withdrawn, (iii) the
principal amount of Outstanding Notes to be withdrawn, (iv) a statement that
such holder is withdrawing its election to have such Outstanding Notes exchanged
and (v) the name of the registered holder of such Outstanding Notes and must be
signed by the holder in the same manner as the original signature on the Letter
of Transmittal (including any required signature guarantees) by which such
Outstanding Notes were tendered, or be accompanied by evidence satisfactory to
the Company that the person withdrawing the tender has succeeded to the
beneficial ownership of the Outstanding Notes being withdrawn. If Outstanding
Notes have been tendered pursuant to the procedures for book-entry transfer set
forth in the Prospectus under "The Exchange Offer -- Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number o
the account at DTC to be credited with the withdrawal of Outstanding Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly
withdraw will not be deemed validly tendered for purposes of the Exchange Offer,
but may be retendered at any subsequent time on or prior to the Expiration Date
by following any of the procedures described in the Prospectus under "The
Exchange Offer -- Procedures for Tendering Outstanding Notes." The Exchange
Agent will return the properly withdrawn Outstanding Notes promptly following
receipt of notice of withdrawal.
All questions as to the validity of notices of withdrawals, including
time of receipt, will be determined by the Company, and such determinations will
be final and binding on all parties. Neither the Company nor the Exchange Agent
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give such
notification.
4. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered holder of the
Outstanding Notes tendered herewith, the signature must correspond exactly with
the name as written on the face of the certificates without any alteration,
enlargement or change whatsoever.
If any tendered Outstanding Notes are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
tendered Outstanding Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are names in which tendered
Outstanding Notes are registered.
If this Letter of Transmittal is signed by the registered holder, and
Exchange Notes are to be issued and any untendered or unaccepted principal
amount of Outstanding Notes are to be reissued or returned to the registered
holder, then the registered holder need not and should not endorse any tendered
Outstanding Notes nor provide a separate bond power. In any other case, the
registered holder must either properly endorse the Outstanding Notes tendered or
transmit a properly completed separate bond power with this Letter of
Transmittal (in either case, executed exactly as the name of the registered
holder appears on such Outstanding Notes), with the signature on the endorsement
or bond power guaranteed by an Eligible Institution, unless such certificates or
bond powers are signed by an Eligible Institution.
If this Letter of Transmittal or any Outstanding Notes or bond powers
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and submit with this
Letter of Transmittal evidence satisfactory to the Company of their authority to
so act.
-10-
<PAGE> 11
The signatures on this Letter of Transmittal or a notice of withdrawal,
as the case may be, must be guaranteed unless the Outstanding Notes surrendered
for exchange pursuant thereto are tendered (i) by a registered holder (which
term, for purposes of this document, shall include any participant in DTC whose
name appears on the register of holders maintained by the Company as owner of
the Outstanding Notes) who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in this Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that the
signatures in this Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantees must be by a commercial
bank or trust company located or having an office or correspondent in the United
States, or by a member firm of a national securities exchange or the National
Association of Securities Dealers, Inc., or by a member of a signature medallion
program such as "STAMP" (any of the foregoing being referred to herein as an
"Eligible Institution"). If Outstanding Notes are registered in the name of a
person other than the signer of this Letter of Transmittal, the Outstanding
Notes surrendered for exchange must be endorsed by, or be accompanied by a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by the Company in its sole discretion, duly executed by the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Outstanding Notes should indicate in the
applicable box the name and address or account at DTC to which Exchange Notes
issued pursuant to the Exchange Offer and/or substitute Outstanding Notes for
principal amounts not tendered or not accepted for exchange are to be issued,
sent or deposited if different from the name and address or account of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification or social security number of the
person named must also be indicated. If no such instructions are given, any
Exchange Notes will be issued in the name of, and delivered to, the name and
address (or account at DTC, in the case of any tender by book-entry transfer) of
the person signing this Letter of Transmittal, and any Outstanding Notes not
accepted for exchange will be returned to the name and address (or account at
DTC, in the case of any tender by book-entry transfer) of the person signing
this Letter of Transmittal.
6. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9.
Under the federal income tax laws, payments that may be made by the
Company on account of Exchange Notes issued pursuant to the Exchange Offer may
be subject to backup withholding at the rate of 31%. In order to avoid such
backup withholding, each tendering holder should complete and sign the
Substitute Form W-9 included in this Letter of Transmittal and either (a)
provide the correct taxpayer identification number ("TIN") and certify, under
penalties of perjury, that the TIN provided is correct and that (i) the holder
has not been notified by the Internal Revenue Service (the "IRS") that the
holder is subject to backup withholding as a result of failure to report all
interest or dividends or (ii) the IRS has notified the holder that the holder is
no longer subject to backup withholding; or (b) provide an adequate basis for
exemption. If the tendering holder has not been issued a TIN and has applied for
one, or intends to apply for one in the near future, such holder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, sign and date the Substitute Form W-9 and sign the Certificate of Payee
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I,
the Company (or the Paying Agent under the Indenture governing the Exchange
Notes) will retain 31% of payments made to the tendering holder during the
60-day period following the date of the Substitute Form W-9. If the holder
furnishes the Exchange Agent or the Company with its TIN within 60-days after
the date of the Substitute Form W-9, the Company (or the Paying Agent) will
remit such amounts retained during the 60-day period to the holder and no
further amounts shall be retained or withheld from payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent or the
Company with its TIN within such 60-day period, the Company (or the Paying
Agent) will remit such previously retained amounts to the IRS as backup
withholding. In general, if a holder is an individual, the taxpayer
identification number is the Social Security Number of such individual. If the
Exchange Agent or the Company is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by the
IRS. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Exchange Agent. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if Outstanding Notes are
registered in more than one name), consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute From W-9.
-11-
<PAGE> 12
Failure to complete the Substitute Form W-9 will not, by itself, cause
Outstanding Notes to be deemed invalidly tendered, but may require the Company
(or the Paying Agent) to withhold 31% of the amount of any payments made on
account of the Exchange Notes. Backup withholding is not an additional federal
income tax. Rather, the federal income tax liability of a person subject to
backup withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
7. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Outstanding Notes to it or its order pursuant to the Exchange Offer.
If, however, Exchange Notes and/or substitute Outstanding Notes not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Outstanding Notes tendered
herewith, or if tendered Outstanding Notes are registered in the name of any
person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the transfer of Outstanding
Notes to the Company or its order pursuant to the Exchange Offer, the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Notes specified in this
Letter of Transmittal.
8. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part,
any of the conditions to the Exchange Offer set forth in the Prospectus.
9. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders of
Outstanding Notes or transmittals of this Letter of Transmittal will be
accepted. All tendering holders of Outstanding Notes, by execution of this
Letter of Transmittal, shall waive any right to receive notice of the acceptance
of their Outstanding Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of defects or irregularities in any tender, nor shall
any of them incur any liability for failure to give any such notice.
10. INADEQUATE SPACE.
If the space provided herein is inadequate, the aggregate principal
amount of Outstanding Notes being tendered and the certificate number or numbers
(if applicable) should be listed on a separate schedule attached hereto and
separately signed by all parties required to sign this Letter of Transmittal.
11. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES.
If any certificate has been lost, mutilated, destroyed or stolen, the
holder should promptly notify The Bank of New York at 101 Barclay Street (7
East), New York, New York 10286, telephone (212) 815-2742. The holder will then
be instructed as to the steps that must be taken to replace the certificate.
This Letter of Transmittal and related documents cannot be processed until the
Outstanding Notes have been replaced.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number indicated
above.
-12-
<PAGE> 13
13. VALIDITY OF TENDERS.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Outstanding Notes will be determined by the
Company, in its sole discretion, which determination will be final and binding.
The Company reserves the right to reject any and all Outstanding Notes not
validly tendered or any Outstanding Notes, the Company's acceptance of which
may, in the opinion of the Company or counsel to the Company, be unlawful. The
Company also reserves the right to waive any conditions of the Exchange offer or
defects or irregularities in tenders of Outstanding Notes as to any
ineligibility of any holder who seeks to tender Outstanding Notes in the
Exchange Offer, whether or not similar conditions or irregularities are waived
in the case of other holders. The interpretation of the terms and conditions of
the Exchange offer (including this Letter of Transmittal and the instructions
hereto) by the Company shall be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Outstanding Notes
must be cured within such time as the Company shall determine. The Company will
use reasonable efforts to give notification of defects or irregularities with
respect to tenders of Outstanding Notes, but neither the Company nor the
Exchange Agent shall incur any liability for failure to give such notification.
14. ACCEPTANCE OF TENDERED OUTSTANDING NOTES AND ISSUANCE OF EXCHANGE
NOTES; RETURN OF OUTSTANDING NOTES.
Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Outstanding Notes as soon as
practicable after the Expiration Date and will issue Exchange Notes therefor as
soon as practicable thereafter. For purposes of the Exchange Offer, the Company
shall be deemed to have accepted tendered Outstanding Notes when, as and if the
Company has given written and oral notice thereof to the Exchange Agent. If any
tendered Outstanding Notes are not exchanged pursuant to the Exchange Offer for
any reason, such unexchanged Outstanding Notes will be returned, without
expense, to the name and address shown above or, if Outstanding Notes have been
tendered by book-entry transfer, to the account at DTC shown above, or at a
different address or account at DTC as may be indicated under "Special Delivery
Instructions."
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<PAGE> 14
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 6)
PAYOR'S NAME: ANCHOR GLASS CONTAINER CORPORATION
<TABLE>
<S> <C> <C>
===========================================================================================================================
SUBSTITUTE FORM W-9 PART I--TAXPAYER IDENTIFICATION
NUMBER
Department of the Treasury -------------------------------------
Internal Revenue Service Enter your taxpayer identification Social Security Number
number in the appropriate box. For
most individuals, this is your social OR
security number. If you do not have
a number, see how to obtain a
"TIN" in the enclosed Guidelines. -------------------------------------
Employer Identification Number
NOTE: If the account is in more
than one name, see the chart on
page 2 of the enclosed Guidelines to
determine what number to give.
---------------------------------------------------------------------------------------
PART II--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (SEE ENCLOSED
GUIDELINES)
---------------------------------------------------------------------------------------
Payor's Request for Taxpayer CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I
Identification Number (TIN) CERTIFY THAT:
and Certification (1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am no subject to backup withholding either because
I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends or the IRS has notified me that
I am no longer subject to backup withholding.
SIGNATURE DATE
-------------------------------- ------------------
- ---------------------------------------------------------------------------------------------------------------------------
Certificate Guidelines--You must cross out Item (2) of the above certification if you have been notified by
the IRS that you are subject to backup withholding because of underreporting of interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup withholding,
you received another notification from the IRS that you are no longer subject to backup withholding, do not
cross out Item (2).
===========================================================================================================================
</TABLE>
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me and that I mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payor, 31% of all payments made
to me on account of the Exchange Notes shall be retained until I provide a
Taxpayer Identification Number to the payor and that, if I do not provide my
Taxpayer Identification Number within 60 days, such retained amounts shall be
remitted to the Internal Revenue Service as a backup withholding and 31% of all
reportable payments made to me thereafter will be withheld and remitted to the
Internal Revenue Service until I provide a Taxpayer Identification Number.
SIGNATURE DATE
------------------------------------------- ---------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE EXCHANGE NOTES.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-14-
<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
ANY AND ALL OUTSTANDING
11 1/4% FIRST MORTGAGE NOTES DUE 2005
IN EXCHANGE FOR NEW 11 1/4% FIRST
MORTGAGE NOTES DUE 2005
OF
ANCHOR GLASS CONTAINER CORPORATION
FULLY AND UNCONDITIONALLY GUARANTEED
BY CONSUMERS U.S., INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used by registered holders of outstanding 11 1/4% First
Mortgage Notes due 2005 (the "Outstanding Notes") of Anchor Glass Container
Corporation, a Delaware corporation (the "Company"), who wish to tender their
Outstanding Notes for an equal principal amount of new 11 1/4% First Mortgage
Notes of the Company due 2005 (the "Exchange Notes") that have been registered
under the Securities Act of 1933, as amended (the "Securities Act") if (i) the
Outstanding Notes, a duly completed and executed Letter of Transmittal (as
defined in the Prospectus) and all other required documents cannot be delivered
to The Bank of New York (the "Exchange Agent") on or prior to 5:00 P.M., New
York City time, on the Expiration Date (as defined in the Prospectus referred to
below) or (ii) the procedures for delivery of the Outstanding Notes being
tendered by book-entry transfer, together with a duly completed and executed
Letter of Transmittal, cannot be completed on or prior to 5:00 P.M., New York
City time on the Expiration Date. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight delivery), to the Exchange Agent. See "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus. The
Company has the right to reject a tender of Outstanding Notes made pursuant to
the guaranteed delivery procedures unless the registered holder using the
guaranteed delivery procedure submits either (a) the Outstanding Notes tendered
thereby, in proper form for transfer, or (b) confirmation of book-entry transfer
set forth in the Prospectus, in either case together with one or more properly
completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and
any other required documents by 5:00 P.M., New York City time, on the third New
York Stock Exchange trading day following the Expiration Date. Capitalized terms
not defined herein have the meanings assigned to them in the Prospectus.
<PAGE> 2
The Exchange Agent for The Exchange Offer Is:
The Bank of New York
<TABLE>
<S> <C> <C>
By Registered or Certified Mail Facsimile Transmissions: By Hand Or Overnight Delivery
(Eligible Institutions Only)
The Bank of New York (212) 571-3080 The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Confirm By Telephone: Corporate Trust Services Window
Attn: Enrique Lopez (212) 815-2742 Ground Level
Floor 7E New York, New York 10286
Reorganization Section For Information Call: Attn: Enrique Lopez
(212) 815-2742 Floor 7E
Reorganization Section
</TABLE>
Delivery of this Notice Of Guaranteed Delivery to an address other than
as set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a valid
delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in Prospectus dated ___________, 1997 (as
the same may be amended or supplemented from time to time, the "Prospectus"),
and the related Letter of Transmittal (which together constitute the "Exchange
Offer"), receipt of which is hereby acknowledged, the aggregate principal amount
of the Outstanding Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange Offer
- --Procedures for Tendering Outstanding Notes" and in instruction 2 to the Letter
of Transmittal.
2
<PAGE> 3
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
Name and address of
registered holder as it Certificate Number(s) Aggregate Principal Principal Amount of
appears on the Outstanding of Outstanding Notes Amount Represented Outstanding Notes
Notes (Please print) Tendered by Outstanding Notes* Tendered
<S> <C> <C> <C>
__________________________ _____________________ _____________________ ___________________
__________________________ _____________________ _____________________ ___________________
__________________________ _____________________ _____________________ ___________________
__________________________ _____________________ _____________________ ___________________
__________________________ _____________________ _____________________ ___________________
__________________________ _____________________ _____________________ ___________________
</TABLE>
* Must be in denominations of a principal amount of $1,000 and any
integral multiple thereof, and not less than $100,000 aggregate
principal amount.
If the Outstanding Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number:___________________________________
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
X__________________________________ Date:__________________, 1997
X__________________________________ Date:__________________, 1997
Signature(s) of Owner(s)
or Authorized Signatory
Area Code and Telephone Number:______________________
Must be signed by the holder(s) of the Outstanding Notes as their name(s)
appear(s) on certificates of the Outstanding Notes or on a security position
listing, or by person(s) authorized
3
<PAGE> 4
to become registered holder(s) by endorsement and documents transmitted with
this Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in a
fiduciary or representative capacity, such person must set forth his or her full
title below.
Please print name(s) and address(es)
Names(s): ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Capacity: ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Address(es):____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
4
<PAGE> 5
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
learning agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either (a) the
Outstanding Notes tendered hereby, in proper from for transfer, or (b)
confirmation of the book-entry transfer of such Outstanding Notes to the
Exchange Agent's account at the Depositary Trust Company ("DTC") maintained for
such purpose, pursuant to the procedures for book-entry transfer set forth in
the Prospectus, in either case together with one or more properly completed and
duly executed Letter(s) of Transmittal (or facsimile thereof) and any other
required documents by 5:00 P.M, New York City time, on the third New York Stock
Exchange trading day following the Expiration Date.
The undersigned acknowledged that it must deliver the Letter(s) of
Transmittal and the Outstanding Notes tendered hereby to the Exchange Agent
within the time period set forth above and that failure to do so could result in
a financial loss to the undersigned.
Name of Firm:_________________________ ___________________________________
(Authorized Signature)
Address:______________________________ Title:_____________________________
______________________________________ Name:______________________________
(zip code) (Please type or print)
Area Code and
Telephone Number:_____________________ Date:______________________________
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR OUTSTANDING NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
5
<PAGE> 1
Exhibit 99.3
Offer to Exchange
11 1/4% First Mortgage Notes Due 2005, which
have been Registered under the Securities Act,
for Outstanding
11 1/4% First Mortgage Notes Due 2005
of
Anchor Glass Container Corporation
Fully and Unconditionally Guaranteed
by
Consumers U.S., Inc.
To The Depository Trust Company Participants:
We are enclosing herewith the materials listed below relating to the offer
by Anchor Glass Container Corporation (the "Company") to exchange up to
$150,000,000 aggregate principal amount of its 11 1/4% First Mortgage Notes Due
2005 (the "Exchange Notes"), pursuant to an offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), for a like principal
amount of its issued and outstanding 11 1/4% First Mortgage Notes Due 2005 (the
"Outstanding Notes") upon the terms and subject to the conditions set forth in
the Prospectus dated ______________ , 1997 (the "Prospectus") of the Company and
Consumers U.S., Inc. (the "Parent Guarantor"), and the related Letter of
Transmittal (the "Letter of Transmittal"), in each case as amended or
supplemented from time to time (which together constitute the "Exchange Offer").
Capitalized terms used but not defined herein have the meaning given to such
terms in the Prospectus.
Enclosed herewith are copies of the following documents;
1. Prospectus dated ____________, 1997;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Book-Entry Transfer Participant from Owner; and
5. Letter which may be sent to your clients for whose account you hold
Outstanding Notes in your name or in the name of your nominee, to
accompany the instruction form referred to above, for obtaining such
client's instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the offer
will expire at 5:00 p.m., New York City time, on _____________ , 1997, unless
extended.
The Exchange Offer is not conditioned upon any minimum number of
Outstanding Notes being tendered.
To participate in the Exchange Offer, a beneficial holder (a "Holder") of
Outstanding Notes must cause a DTC Participant to tender such Holder's
Outstanding Notes to The Bank of New York's (the "Exchange Agent") account
maintained at the Depository Trust Company ("DTC") for the benefit of the
Exchange Agent through DTC's Automated Tender Offer Program ("ATOP"), including
transmission of a computer-generated message that acknowledges and agrees, on
behalf of the DTC Participant and the beneficial owners of tendered Outstanding
Notes, to be bound by the terms of the Letter of Transmittal. By complying with
DTC's ATOP procedures with respect to the Exchange Offer, the DTC Participant
confirms, on behalf of itself and the beneficial owners of tendered Outstanding
Notes, all provisions of the
<PAGE> 2
Letter of Transmittal applicable to it and such beneficial owners as fully as if
it completed, executed and returned the Letter of Transmittal to the Exchange
Agent.
Pursuant to the Letter of Transmittal, each Holder of Outstanding Notes
will represent to the Company that (i) it is not an affiliate of either the
Company or, if the Holder is an affiliate of the Company, it will comply with
the registration and prospectus requirements of the Securities Act to the extent
applicable, (ii) the Exchange Notes are being acquired in the ordinary course of
business of the person receiving such Exchange Notes, whether or not such person
is the Holder, (iii) the Holder has not entered into an arrangement or
understanding with any other person to participate in the distribution (within
the meaning of the Securities Act) of the Exchange Notes, (iv) the Holder is not
a broker-dealer who purchased the Notes for resale pursuant to an exemption
under the Securities Act, and (v) the Holder will be able to trade Exchange
Notes acquired in the Exchange Offer without restriction under the Securities
Act. If the tendering Holder is a broker-dealer that will receive Exchange Notes
for its own account pursuant to the Exchange Offer, we will represent on behalf
of such broker-dealer that the Outstanding Notes to be exchanged for the
Exchange Notes were acquired by it as a result of market-making activities or
other trading activities, and acknowledge on behalf of such broker-dealer that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. By acknowledging that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes, such broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The enclosed Instruction to the Book-Entry Transfer Participant from Owner
contains an authorization by the beneficial owners of the Outstanding Notes for
you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Outstanding Notes pursuant to the Exchange Offer. The
Company will pay or cause to be paid any transfer taxes payable on the transfer
of Outstanding Notes to it, except as otherwise provided in Instruction 7 of the
enclosed Letter of Transmittal.
<PAGE> 3
Additional copies of the enclosed material may be obtain from The Bank of
New York, 101 Barclay Street, (7 East), New York, NY 10286, Attention:
Reorganization Section.
Very truly yours,
Anchor Glass Container Corporation
By:
--------------------------------------
M. William Lightner, Jr.
Vice President--Finance
Chief Financial Officer and Treasurer
Consumers U.S., Inc.
By:
--------------------------------------
M. William Lightner, Jr.
Vice President and Chief Financial Officer
Anchor Glass Container Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF ANCHOR GLASS CONTAINER CORPORATION, CONSUMERS U.S., INC. OR THE BANK OF
NEW YORK OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR
BEHALF IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit 99.4
Offer to Exchange
11 1/4% First Mortgage Notes Due 2005, which
have been Registered under the Securities Act,
for Outstanding
11 1/4% First Mortgage Notes Due 2005
of
Anchor Glass Container Corporation
Fully and Unconditionally Guaranteed
by
Consumers U.S., Inc.
To Our Clients:
We are enclosing herewith a Prospectus dated _____________, 1997 (the
"Prospectus") of Anchor Glass Container Corporation (the "Company") and
Consumers U.S., Inc. (the "Parent Guarantor"), and a Letter of Transmittal
(which together constitute the "Exchange Offer") relating to the offer by the
Company to exchange up to $150,000,000 aggregate principal amount of its 11 1/4%
First Mortgage Notes Due 2005 (the "Exchange Notes"), pursuant to an offering
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding 11 1/4% First Mortgage
Notes Due 2005 (the "Outstanding Notes") upon the terms and subject to the
conditions set forth in the Exchange Offer. Capitalized terms used but not
defined herein have the meaning given to such terms in the Prospectus.
Please note that the offer will expire at 5:00 p.m., New York City time,
on ____________, 1997, unless extended.
The Exchange Offer is not conditioned upon any minimum number of
Outstanding Notes being tendered.
We are the participants in the book-entry transfer facility of Outstanding
Notes held by us for your account. A tender of such Outstanding Notes can be
made only by us as the participant in the book-entry transfer facility and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Outstanding Notes held
by us for your account.
We request instructions as to whether you wish to tender any or all of the
Outstanding Notes held by us for your account pursuant to the terms and
conditions of the Exchange Offer. We also request that you confirm that we may
on your behalf make the representations contained in the Letter of Transmittal
that are to be made with respect to you as beneficial owner.
Pursuant to the Letter of Transmittal, each holder (a "Holder") of
Outstanding Notes will represent to the Company that (i) it is not an affiliate
of either the Company or, if the Holder is an affiliate of the Company, it will
comply with the registration and prospectus requirements of the Securities Act
to the extent applicable, (ii) the Exchange Notes are being acquired in the
ordinary course of business of the person receiving such Exchange Notes, whether
or not such person is the Holder, (iii) the Holder has not entered into an
arrangement or understanding with any other person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes,
(iv) the Holder is not a broker-dealer who purchased the Notes for resale
pursuant to an exemption under the Securities Act, and (v) the Holder will be
able to trade Exchange Notes acquired in the Exchange Offer without restriction
under the Securities Act. If the tendering Holder is a broker-dealer that will
receive Exchange Notes for its own account pursuant to the Exchange Offer, we
will represent on behalf of such broker-dealer that the Outstanding Notes to be
exchanged for the Exchange Notes were acquired by it as a result of
market-making activities or other trading activities, and acknowledge on behalf
of such broker-dealer that it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such Exchange Notes. By
acknowledging that it will deliver a prospectus meeting the requirements of the
Securities
<PAGE> 2
Act in connection with any resale of such Exchange Notes, such broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
Very truly yours,
<PAGE> 3
INSTRUCTION TO
BOOK-ENTRY TRANSFER PARTICIPANT FROM OWNER
OF
ANCHOR GLASS CONTAINER CORPORATION
11 1/4% FIRST MORTGAGE NOTES DUE 2005
To Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
____________, 1997 (the "Prospectus") of Anchor Glass Container Corporation (the
"Company") and Consumers U.S., Inc. (the "Parent Guarantor"), and a related
Letter of Transmittal (which together constitute the "Exchange Offer").
Capitalized terms used but not defined herein have the meaning given to such
terms in the Prospectus.
This will instruct you, the book-entry transfer facility participant, as
to the action to be taken by you relating to the Exchange Offer with respect to
the Outstanding Notes held by you for the account of the undersigned.
The aggregate face amount of the Outstanding Notes held by you for the
account of the undersigned is (fill in amount):
$___________________ of the 11 1/4% First Mortgage Notes Due 2005.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate statement):
A. ________________ To TENDER the following Outstanding notes held by
you for the account of the undersigned (insert principal amount of
Outstanding Notes to be tendered):
$__________________(1) of the 11 1/4% First Mortgage Notes Due
2005, and not to tender other Outstanding
Notes, if any, held by you for the account
of the undersigned;
OR
B. _________________ NOT to tender any Outstanding Notes held by you
for the account of the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by
you for the account of the undersigned, it is understood that you are authorized
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) it
is not an affiliate of either the Company or, if the undersigned is an affiliate
of the Company, it will comply with the registration and prospectus requirements
of the Securities Act to the extent applicable, (ii) the Exchange Notes are
being acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the holder, (iii) the undersigned
has not entered into an arrangement or understanding with any other person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes, (iv) the undersigned is not a broker-dealer who purchased
the Notes for resale pursuant to an exemption under the Securities Act, and (v)
the undersigned will be able to trade Exchange Notes acquired in the Exchange
Offer without restriction under the Securities Act. If the undersigned is a
broker-dealer (whether or not it is also an "affiliate") that will receive
Exchange Notes for its own account pursuant to the Exchange Offer, it represents
that such Outstanding Notes to be exchanged were acquired by it as a result of
market-making activities or other trading activities, and it acknowledges that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. By acknowledging
- ----------
(1) Must be in a minimum aggregate principal amount of $100,000 and in
integral multiples of $1,000 thereof.
<PAGE> 4
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of such Exchange Notes, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print): ________________________________________________________
Address: ________________________________________________________
(zip code)
Telephone Number: ______________________________________________________________
(area code)
Taxpayer identification or Social Security Number:
___________________________________________________
Date: _____________________________________________
