SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES
Under
THE TRUST INDENTURE ACT OF 1939
THE STROH BREWERY COMPANY
(Name of Applicant)
100 River Place, Detroit, Michigan 48207
(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
Junior Subordinated Notes Due 2008 Unlimited
(Title of class) (Amount)
Approximate date of proposed issuance: July 1, 1996
George E. Kuehn
Senior Vice President, General Counsel and Secretary
The Stroh Brewery Company
100 River Place
Detroit, Michigan 48207
(Name and address of agent for service)
With a copy to:
David B. Chapnick
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
The applicant hereby amends this application for qualification on such
date or dates as may be necessary to delay its effectiveness until (i) the 20th
day after the filing of a further amendment which specifically states that it
shall supersede this amendment, or (ii) such date as the Commission, acting
pursuant to Section 307(c) of the Trust Indenture Act of 1939, as amended (the
"Act"), may determine upon the written request of the applicant.
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Item 1. General Information.
(a) Form of organization: A corporation.
(b) State or other sovereign power under the laws of which organized:
Arizona.
Item 2. Securities Act Exemption.
On April 13, 1996, G. Heileman Brewing Company, Inc. ("Heileman"),
eleven of its subsidiaries and its parent, Heileman Holding Company, commenced
reorganization cases by filing voluntary petitions for relief under Chapter 11
of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), Case Nos. 96-501 (PJW) and 96-503 (PJW)
through 96-513 (PJW). On May 1, 1996, the Heileman companies filed an Amended
Joint Plan of Reorganization (the "Plan") with the Bankruptcy Court (Exhibit
T3E-2 hereto). The Plan is expected to be confirmed by the Bankruptcy Court on
June 26, 1996.
Upon consummation and pursuant to the Plan, the Company will become the
successor to Heileman and acquire substantially all of the assets, business and
operations of, and assume liabilities of, Heileman and subsidiaries in exchange
for (i) not in excess of $70,000,000 aggregate principal amount of Senior
Subordinated Notes due 2006 of the Company, (ii) $5,000,000
(subject to adjustment) principal amount of Junior Subordinated Notes due 2008
of the Company ("the Notes") and (iii) warrants to purchase common stock of the
Company. In accordance with the Plan, the Senior Subordinated Notes, the Notes
and the Warrants will be exchanged for, and in the cancellation of, claims
against Heileman, its parent and subsidiaries, by the holders of the 9 5/8%
Senior Subordinated Notes due 2004 and capital stock of Heileman.
The offer and sale of the Notes will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") in reliance upon an
exemption from Section 5 thereof provided by Section 1145 of the Bankruptcy
Code. Section 1145 of the Bankruptcy Code, generally, exempts from such
registration requirements the offer and sale of securities of a debtor or,
a successor to the debtor under a plan of reorganization in the event such
securities are offered or sold in exchange for a claim against or interest
in such debtor, of if such securities are offered or sold principally in
such exchange and partly for cash.
Item 3. Affiliates.
All of the outstanding capital stock of the Company is owned by The Stroh
Companies, Inc., a Delaware corporation. See Item 5 below.
The Stroh Companies, Inc. also owns 100% of the outstanding common stock
of Stroh Properties, Inc. and Apex Bioscience, Inc.
The Company owns 100% of the outstanding common stock of The Stroh Brewery
Company of New York, Inc., The Stroh Transportation Company, Stroh
International, Inc., The Stroh Brewery Company (Canada) Limited, Captiva
Beverage Company and Hoya Ventures, Inc.
The Stroh Companies, Inc. and the Company own 80% and 20%, respectively,
of the outstanding common stock of Victors Corporation and Mazenblu, Ltd.
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The voting common stock of The Stroh Companies, Inc. is beneficially owned
by various descendants of Julius Stroh, spouses and former spouses of such
descendants, other entities controlled, directly or indirectly, by such
descendants, spouses or former spouses and trusts established for the benefit
of such descendants. Because of (i) direct ownership of shares of voting
common stock of The Stroh Companies, Inc. and/or (ii) status as a trustee of,
and/or a beneficiary in, certain trusts, the following individuals may be
deemed to be affiliates of the Company (the percentage of the outstanding
voting common stock of The Stroh Companies, Inc. that such individuals may be
deemed to control, directly or indirectly, is indicated in parentheses): Gari
M. Stroh, Jr. (56%), Peter W. Stroh (35%), John W. Stroh, Jr. (28%), Elizabeth
Stroh Jackson (9%) and Anthony M. Stroh (9%). The percentages of the
outstanding voting common stock of The Stroh Companies, Inc. that such
individuals may be deemed to control, directly or indirectly, indicated above
is greater than 100% because more than one individual or other entity may be
deemed to have control over certain amounts of such voting common stock. All
such individuals are grandchildren of Julius Stroh.
Item 4. Directors and Executive Officers.
Name Office
Roger Fridholm Director
William L. Henry Director/President and Chief Executive Officer
Carlton M. Higbie, Jr. Director
William K. Howenstein Director
Harold A. Ruemenapp Director
Edward R. Stroh International Marketing Analyst/Director
Gari M. Stroh, Jr. Director
John W. Stroh, Jr. Director
John W. Stroh, III Director
Peter W. Stroh Chairman/Director
James R. Avery Senior Vice President, Operations
Joseph J. Franzem Senior Vice President, Customer Marketing and
Administration
George E. Kuehn Senior Vice President, General Counsel and
Secretary
Christopher T. Sortwell Senior Vice President, Finance and Chief
Financial Officer
S.D. Anderson Vice President, Quality Assurance
J.R. Curtin Vice President, Packaging and Logistics
J.D. Hartrich Vice President, Brewing
R.L. Pitcole Vice President, Information Systems/Service
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The Complete mailing address of each director and executive officer of
the Company is c/o The Stroh Brewery Company, 100 River Place,
Detroit, Michigan 48207.
Item 5. Principal owners of voting securities.
As of May 8, 1996:
Name and Complete Title of Percentage of Voting
Mailing Address Class Owned Amount Owned Securities Owned
The Stroh Companies, Inc. Common Stock 12,502 shares 100%
100 River Place
Detroit, MI 48207
UNDERWRITERS
Item 6. Underwriters.
(a) Within three years prior to the date of the filing of this
Application on Form T-3, no person acted as an underwriter of any securities of
the Company which are currently outstanding.
(b) None.
CAPITAL SECURITIES
Item 7. Capitalization.
(a) As of May 8, 1996, the authorized and outstanding amounts of classes
of securities of the Company were as follows:
[S] [C] [C]
Amount Amount
Title of Class Authorized Outstanding
Common Stock, par value $100 per share . . . 730,000 12,502
Non-Voting Common Stock, par value $100
per share . . . . . . . . . . . . . . . . 20,000 2,096.5875
Preferred Stock, par value $100 per share . . 5,000 2,500
(b) Holders of Common Stock are entitled to one vote per share, in person
or by proxy, upon all matters presented to the holders of Common Stock. The
Non-Voting Common Stock and the Preferred Stock do not have voting rights.
INDENTURE SECURITIES
Item 8. Analysis of Indenture Provisions.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
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by reference to, the Act, and all the provisions of the Indenture, including
the definitions therein of certain terms which are not otherwise defined in
this Application on Form T-3 and those terms made a part of the Indenture by
reference to the Act. Wherever particular provisions or defined terms of the
Indenture (or of the form of Notes which is a part thereof) are referred to,
such provisions or defined terms are incorporated herein by reference. As used
in this Item 8, the "Company" refers to The Stroh Brewery Company and does not,
unless the context otherwise indicates, include its subsidiaries.
(A) Defaults.
An "Event of Default" is defined in the Indenture as occurring upon: (1)
the failure to pay interest on the Notes when due, which continues for a period
of 30 days; (2) the failure to pay the principal amount of any Notes when due,
at maturity, upon redemption or otherwise; (3) the failure to observe or
perform any other covenant or agreement contained in the Indenture, which
continues for a period 30 days after written notice thereof by the Trustee or
the Holders of at least 25% in aggregate principal amount of the outstanding
Notes; (4) the failure to pay at the final stated maturity (giving effect to
any extensions thereof) the principal amount of any indebtedness of the Company
or any subsidiary of the Company, or the acceleration of the final stated
maturity of any such indebtedness, if the aggregate principal amount of such
indebtedness, aggregates $10,000,000 or more at any time, in each case after a
10-day period during which such default shall not have been cured or such
acceleration rescinded; (5) the entry of one or more judgments in an aggregate
amount in excess of $10,000,000 (which are not covered by insurance) shall have
been rendered against the Company or any of its significant subsidiaries that
remain undischarged or unstayed for a period of 60 days; or (6) certain events
of bankruptcy, insolvency, reorganization or similar events or proceedings with
respect to the Company or any significant subsidiary.
If an Event of Default (other than certain events of bankruptcy,
insolvency, reorganization or similar events or proceedings with respect to the
Company) occurs and is continuing, the Trustee or the holders of at least 25%
in aggregate principal amount of the Notes then outstanding may declare the
aggregate principal amount of the Notes outstanding, together with accrued but
unpaid interest, if any, thereon, to be due and payable, and the same (i) shall
become immediately due and payable or (ii) if there are any amounts outstanding
under the Credit Agreement (as defined in the Indenture), shall become due and
payable upon the first to occur of an acceleration under the Credit Agreement
or five business days after receipt by the Company and the representative under
the Credit Agreement of notice of such acceleration. If an Event of Default
involving certain events of bankruptcy, insolvency, reorganization or any
similar event or proceeding with respect to the Company occurs and is
continuing with respect to the Company, all unpaid principal and accrued
interest on the Notes then outstanding shall be immediately due and payable
without any declaration or other act on the part of the Trustee or any holder
of the Notes.
If a default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each holder of Notes notice of the uncured default
within 60 days after such default occurs. Except in the case of a default in
payment of principal of, or interest on, any Note and except in the case of a
failure to comply with certain prohibitions on the merger, consolidation,
liquidation or sale of all or substantially all of the assets of the Company,
the Trustee may withhold the notice to the holders of the Notes if and so long
as its board of directors, the executive committee of its board of directors or
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a committee of its directors and/or trust officers in good faith determines
that withholding the notice is in the interest of such holders.
(B) Authentication and Delivery; Application of Proceeds.
No Note shall be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note, which signature
shall be conclusive evidence that the Note has been authenticated under the
Indenture. Upon receipt of a written order of the Company, the Trustee will
authenticate and deliver the Notes as specified in such order.
Since the Notes will be issued in accordance with the Plan, and not for
cash, there will be no proceeds from the original issue of the Notes.
(C) Release and Substitution of Property Subject to the Lien of the
Indenture.
Not Applicable.
(D) Satisfaction and Discharge; Defeasance.
The obligations of the Company under the Notes and the Indenture will
terminate (except for certain obligations of the Company to indemnify the
Trustee under certain circumstances and certain obligations with respect to
unclaimed funds) when all outstanding Notes theretofore authenticated and
issued have been delivered to the Trustee for cancellation and the Company has
paid all sums payable by it.
In addition, at the Company's option, either (a) the Company shall be
deemed to have been discharged from any and all obligations with respect to the
Notes (except for certain obligations of the Company to register the transfer
or exchange of such Notes, replace stolen, lost or mutilated Notes, maintain
paying agencies and hold moneys for payment in trust) after the applicable
conditions set forth below have been satisfied or (b) the Company shall cease
to be under any obligation to comply with any restrictive covenants after the
applicable conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of the
Notes, money or obligations of, or guaranteed by, the United States of
America which, through the payment of interest thereon and principal in
respect thereof in accordance with their terms, will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants,
to pay and discharge each installment of principal of and interest on the
outstanding Notes on the dates such installments of interest or principal
are due; provided, that from and after the time of deposit, the funds
deposited shall not be subject to the rights of holders of senior debt
pursuant to the provisions of the Indenture; and provided, further, that
no such deposit shall result in the Company, the Trustee or the trust
becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(2) The Company shall have delivered to the Trustee an opinion of counsel
or a private letter ruling issued to the Company by the IRS to the effect
that the holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of the deposit and related
<PAGE>
defeasance and will be subject to federal income tax on the same amount
and in the same manner and at the same times as would have been the case
if such option had not been exercised and, in the case of an opinion of
counsel furnished in connection with a discharge pursuant to the
foregoing, accompanied by a private letter ruling issued to the Company by
the IRS to such effect;
(3) No default with respect to the Notes shall have occurred and be
continuing on the date of such deposit;
(4) The Company shall have delivered to the Trustee an opinion of
counsel, subject to certain qualifications, to the effect that (i) the
funds will not be subject to any rights of any other holders of
indebtedness of the Company, and (ii) the funds so deposited will not be
subject to avoidance under applicable bankruptcy law;
(5) The Company shall have paid or duly provided for payment of all
amounts then due to the Trustee pursuant to the Indenture;
(6) No such deposit will result in a default under the Indenture or a
breach or violation of, or constitute a default under, any other
instrument or agreement to which the Company or any of its subsidiaries is
a party or by which it or its property is bound; and
(7) A certificate of an officer and an opinion of counsel to the effect
that all conditions precedent to the defeasance have been complied with.
Notwithstanding the foregoing, the opinion of counsel required by clause
(i) of paragraph 4 above need not be delivered if all Notes not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable on the maturity date within one year, or (iii) are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company.
(E) Evidence as to compliance.
An officer of the Company will be required to deliver to the Trustee
annually a certificate stating that, to the best of such officer's knowledge,
the Company has complied with all of its obligations under the Indenture during
the preceding fiscal year and no default occurred during such fiscal year or
exists on the date of such certificate.
The Company must file with the trustee and provide to each holder of the
Notes of reports or other documents filed with the Securities Exchange
Commission pursuant to Sections 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). If the Company is not then subject to
the reporting requirements of the Exchange Act, the Company will provide to the
Trustee and each holder of the Notes consolidated financial statements,
comparable to those that would have been required to appear in annual or
quarterly reports with the Securities and Exchange Commission and, in the case
of the annual consolidated financial statements, accompanied by a written
report of the Company's independent accountants, and, under certain
circumstances, together with a management's discussion and analysis of
financial condition and results of operations for the period covered by such
financial statements.
<PAGE>
If any default has occurred and is continuing or if any holder of the
Notes seeks to exercise any remedy under the Indenture with respect to a
claimed default under the Indenture, the Company will deliver to the Trustee by
registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an officers' certificate
specifying such event, notice or other action within five business days of its
becoming aware of such occurrence.
Item 9. Other Obligors. There are no obligors upon the Notes other than
the Company.
Contents of application for qualification. This application for
qualification comprises:
(a) Pages numbered 1 to 9, consecutively.
(b) The statement of eligibility and qualification of the trustee under
the indenture to be qualified.
(c) The following exhibits in addition to those filed as part of the
statement of eligibility and qualification of the trustee:
Exhibit T3A: Restated Articles of Incorporation, as amended, of
the Company
Exhibit T3B: Bylaws of the Company, as amended
Exhibit T3C: Form of Indenture with respect to the Notes between
the Company and First Bank National Association, as
Trustee.
Exhibit T3D: Not applicable.
Exhibit T3E-1: Disclosure Statement Relating to Amended Joint Plan
of Reorganization of Heileman and its subsidiaries.
Exhibit T3E-2: Amended Joint Plan of Reorganization of Heileman
and its subsidiaries.
Exhibit T3F: See Exhibit T3C for cross reference sheet showing
the location in the Indenture of the provisions
inserted therein pursuant to Section 310 through
318(a), inclusive, of the Act.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, The Stroh Brewery Company, a corporation organized and existing
under the laws of Arizona, has duly caused this application to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Detroit and State of
Michigan, on the 8th day of May, 1996.
THE STROH BREWERY COMPANY
By: /s/ George E. Kuehn
Name: George E. Kuehn
Title: Senior Vice President, General Counsel
and Secretary
Attest: /s/ Christopher T. Sortwell
Name: Christopher T. Sortwell
EXHIBIT T3A
THE STROH BREWERY COMPANY
RESTATED ARTICLES OF INCORPORATION
ARTICLE 1
The name of this Corporation shall be THE STROH BREWERY COMPANY.
ARTICLE 2
The purpose or purposes for which this Corporation is organized is the
transaction of any or all lawful business for which profit corporations may be
incorporated under Chapter 1 of Title 10, Arizona Revised Statutes.
ARTICLE 3
The capital stock of the corporation shall be Seventy-Five Million Five Hundred
Thousand Dollars ($75,500,000.00), Seventy-Three Million Dollars
($73,000,000.00) of which shall be voting common stock divided into shares of a
par value of One Hundred Dollars ($100.00) per share, Two Million Dollars
($2,000,000.00) of which shall be non-voting common stock divided into shares
of a par value of One Hundred Dollars ($100.00) per share, and Five Hundred
Thousand Dollars ($500,000.00) of which shall be preferred stock divided into
shares of a par value of One Hundred Dollars ($100.00) per share.
The holders of the preferred stock shall be entitled to receive out of the net
profits of the corporation dividends at the rate of six per cent per annum, --
such dividends on each share of preferred stock shall be computed from the date
of its first issue, and be payable on the last days of June and December in
each year before any dividend shall be set aside or paid on the common stock.
The dividends upon the preferred stock shall be cumulative, so that if at any
of the dates above mentioned such dividend shall not be paid in full the
deficiency shall be payable subsequently before any dividend is set apart or
paid on the common stock. In case of liquidation or dissolution of the
corporation, the holders of the preferred stock shall be entitled to be paid in
full, both the principal of such stock, and the accrued dividend charge, before
any amount is paid to the holders of common stock. The holders of common stock
shall be entitled to receive all money at any time appropriated to dividends
after all the aforesaid cumulative dividends on the preferred stock, accrued
and unpaid, at the time of making any such appropriation shall have been paid
or the money for such payment set aside. Said corporation may purchase and
retire the preferred stock, or any portion thereof, at any time after the first
day of January, 1915, by paying to the holder or holders thereof the par value
and five per cent in addition thereto, together with all dividends to which the
same may be entitled up to the date of such purchase and retirement. The right
of voting at all meetings of the stockholders is confined exclusively to the
holders of voting common stock. The holders of non-voting common and preferred
stock do not have the right to vote at such meetings by reason thereof.
ARTICLE 4
The period of duration of this Corporation shall be perpetual.
<PAGE>
ARTICLE 5
To the fullest extent permitted by law, no director of the Corporation shall be
personally liable to the Corporation or its shareholders for damages for breach
of the director's fiduciary duty.
EXHIBIT T3B
BYLAWS
OF
THE STROH BREWERY COMPANY
ARTICLE I
Definitions
Section 1.1. Defined Terms. As used herein and unless the context
otherwise requires, the following terms shall have the following meanings:
A. "Articles" or "Articles of Incorporation" means the articles of
incorporation of the Corporation, as the same may be amended and restated
from time to time.
B. "Board" or "Board of Directors" means the board of directors of
the Corporation, as the same may be duly constituted from time to time.
C. "Bylaws" means the bylaws of the Corporation, as the same may be
amended and altered from time to time.
D. "Corporation" means The Stroh Brewery Company, an Arizona
corporation.
E. "Director" means a director of the Corporation duly elected by
the Shareholders or duly elected by the Board to fill a vacancy; provided
that the term "Director" does not include an Honorary Director elected by
the Board.
F. "Shareholder" means a holder of record of Shares of any class.
G. "Shares" means the units into which the proprietary interests in
the Corporation are divided, as more specifically designated and set forth
in the Articles.
Section 1.2. Reference to Officers. Whenever in the Bylaws
reference is made to an office or officer and such reference is capitalized,
then such reference shall be deemed to be to such office or officer of the
Corporation unless the context otherwise requires.
ARTICLE II
Shareholders
Section 2.1. Annual Meeting. Except as otherwise directed by the
Board, the annual meeting of Shareholders shall be held on the third Tuesday in
June in each and every year if such day is not a legal holiday (and if such day
is a legal holiday, then on the next succeeding day not a legal holiday), for
the purpose of electing Directors and for transacting such other business as
may be properly brought before the meeting.
Section 2.2. Special Meetings. Special meetings of Shareholders may
be called at any time by a majority of the Directors acting with or without a
<PAGE>
meeting or by the Chairman of the Board and shall be called by the President or
Secretary at the written request of any number of Shareholders holding together
not less than 10% of the total outstanding Shares entitled to vote at such
meeting. Each such request shall state the purpose or purposes for which the
meeting is to be called.
Upon request in writing delivered either in person or by registered
mail to the President or Secretary by any person or persons entitled to call a
meeting of Shareholders, such officer shall forthwith cause to be given to the
Shareholders entitled thereto notice of such meeting to be held on a date not
less than ten (10) nor more than fifty (50) days after the delivery or mailing
of such request, as such officer may fix. If such notice is not given within
fifteen days after the delivery or mailing of such request, then the person or
persons making such request may call a meeting and give or cause to be given
notice in the manner as provided in the Bylaws.
At a special meeting of Shareholders, no business shall be transacted
and no corporate action shall be taken other than that stated in the notice of
the meeting unless the holders of record of all of the outstanding Shares of
each class entitled to vote at such meeting are present in person or by proxy
and all concur in such action.
Section 2.3. Place and Time of Meetings. Any meeting of
Shareholders may be held at the principal office of the Corporation, or at such
other place either within or without the State of Arizona and at such time as
shall be designated in the notice of the meeting.
Section 2.4. Notice of Meetings. Written notice of the day, place
and hour of each Shareholders' Meeting, and in the case of a special meeting,
the purpose(s) for which the meeting is called shall be given, except as
otherwise required by law or provided in the Articles or Bylaws, not less than
ten (10) nor more than fifty (50) days before the date of such meeting to each
Shareholder of record entitled to vote at such meeting, either personally or by
mailing such notice to each such Shareholder's address as the same appears upon
the books of the Corporation. No notice need be given of any adjourned meeting
of Shareholders if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken and at the adjourned
meeting only such business is transacted as might have been transacted at the
original meeting. However, if the adjournment is for more than 30 days or if
the Board of Directors fixes a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each Shareholder entitled to
notice as provided in this Section.
Section 2.5. Fixing of Record Dates. The Board may fix in advance a
date as the record date for the purpose of determining Shareholders entitled to
notice of and to vote at a meeting of Shareholders or an adjournment thereof,
or to express consent to Corporate action in writing without a meeting, or for
the purpose of determining Shareholders entitled to receive payment of a
dividend or allotment of a right, or for the purpose of any other action. The
record date shall not be more than sixty (60) nor less than ten (10) days
before the date of the meeting or any such other action. This Section shall
not affect the rights between a Shareholder and such Shareholder's transferor
or transferee.
Section 2.6. Quorum. At each meeting of Shareholders, a majority in
number of all the Shares entitled to vote at such meeting, represented in
person by the holder of record on the record date or by proxy of such holder,
<PAGE>
shall constitute a quorum for all purposes, unless the representation of a
larger number of Shares of any class shall be required by law, by the Articles
or by a Bylaw adopted by the Shareholders, and in that case the representation
of the respective number of Shares so required shall constitute a quorum.
Section 2.7. Organization. The Chairman of the Board, the
President, or a Vice President specifically designated by the Chairman of
Board or President, shall call meetings of Shareholders to order, and shall act
as chairman of such meetings. The Secretary shall act as secretary of all
meetings of Shareholders; but in the absence of the Secretary, the chairman may
appoint any person to act as secretary of the meeting.
Section 2.8. Voting. Each outstanding Share is entitled to one vote
on each matter submitted to a vote at a meeting of Shareholders, unless
otherwise provided in the Articles. Each such vote shall be cast by the holder
of such share on the record date established for such meeting, or by the proxy
of such holder. The vote upon any matter as to which a vote by ballot is
required by law, and, upon the demand of any Shareholder entitled to vote
thereon, the vote upon any other matter before the meeting, shall be cast by
ballot; otherwise all votes shall be cast orally. Except as to the election of
Directors and as otherwise provided by law or by the Articles, the affirmative
vote of the majority of Shares then represented at the meeting and entitled to
vote on the subject matter shall be the act of the Shareholders. Except as
otherwise provided in the Articles, Directors shall be elected by a plurality
of the votes cast at an election. Cumulative voting for the election of
Directors shall continue only so long as it is required by law.
Shares belonging to the Corporation shall not be entitled to vote at
any meeting of Shareholders, nor shall any such Shares be counted in
determining whether a quorum is present at any meeting.
A Shareholder whose Shares are pledged is entitled to vote such
Shares unless and until such Shares have been transferred of record into the
name of the pledgee or the nominee of the pledgee, in which event only such
pledgee or nominee, or a proxy of such pledgee or nominee, may represent such
shares and vote thereon.
Shares held of record by another corporation, domestic or foreign,
may be voted at any meeting of Shareholders by such officer, agent or proxy as
the bylaws of such other corporation may prescribe, or, in the absence of such
provision, as the board of directors of such other corporation may determine.
Section 2.9. Proxies. A Shareholder entitled to vote at a meeting
of Shareholders or to express consent to Corporate action without a meeting may
authorize other persons to act for such Shareholder by Proxy. A proxy shall be
signed by the Shareholder or such Shareholder's duly authorized attorney-
in-fact. A proxy is not valid after the expiration of eleven months from the
date of its execution unless otherwise provided in the proxy. A proxy is
revocable at the pleasure of the Shareholder executing it, except as otherwise
provided by law.
<PAGE>
ARTICLE III
Board of Directors
Section 3.1. Number and Term of Office. The business, affairs and
property of the Corporation shall be managed and controlled by, or under the
direction of, a Board of not less than seven (7) nor more than eleven (11)
Directors as shall be fixed from time to time by the Board of Directors. No
reduction in the number of Directors shall have the effect of removing any
Director prior to the expiration of such Director's term of office. An
increase in the number of Directors shall be deemed to create a vacancy which
may be filled by the Board of Directors in accordance with this Article III.
Directors need not be Shareholders or residents of the State of Arizona. At
each annual meeting of Shareholders, the Shareholders shall elect Directors to
hold office until the succeeding annual meeting. A Director shall hold office
for the term for which such Director is elected and until such Director's
successor is elected, or until such Director's resignation or removal, A
Director may resign by written notice to the Corporation.
Section 3.2. [Deleted - Effective April 10, 1995.]
Section 3.3. Removal, Vacancies, and Additional Directors. The
holders of a majority in number of the Shares entitled to vote at an election
of Directors may remove any Director or the entire Board of Directors with or
without cause and fill the vacancy or vacancies thereby created; provided that
so long as cumulative voting is required by law with respect to the election of
Directors, then if less than the entire Board is to be removed, no one of the
Directors may be removed if the votes cast against such Director's removal
would be sufficient to elect such Director if then cumulatively voted at an
election of the entire Board of Directors. Vacancies caused by each such
removal and not filled by the Shareholders at the meeting at which such removal
was made, or any vacancy caused by the death or resignation of any Director or
by any other cause, may be filled by the affirmative vote of a majority of the
Directors then in office though less than a majority of the number of Directors
authorized by Section 3.1 of this Article III; provided, however, that the term
of office of any Director so elected to fill such vacancy shall expire at the
next election of Directors by the Shareholders when such Director's successor
is elected and qualified.
Section 3.4. Place of Meetings. The Board of Directors may hold
meetings in such place or places in the State of Arizona or outside the State
of Arizona as the Board of Directors from time to time shall determine.
Section 3.5. Regular Meetings. Regular meetings of the Board of
Directors shall be held on the second Tuesday of February, May, August and
November and on the fourth Tuesday of June; such meetings to be held at the
Corporation's headquarters in Detroit, Michigan at the time stated in the
notice thereat, unless a different hour and place is designated by the Chairman
of the Board. Other regular meetings may be held at such times and places as
the Board from time to time by resolution shall determine.
Section 3.6. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President, or by a majority of the Directors then in office. In the event of
the death or permanent disability of the Chairman of the Board, or upon the
occurrence of a vacancy in that office, a special meeting shall be called by
the Vice-Chairman of the Board or by the Secretary.
Section 3.7. Notice. Notice of the date, hour and place of holding
each regular or special meeting of the Board of Directors shall be given to
each Director at least two (2) days before the meeting. Notice of regular or
<PAGE>
special meetings of the Board of Directors need not specify the purpose(s) of
the meeting or the business that may be transacted thereat. Except as
otherwise specifically set forth in a notice thereof, any and all business may
be transacted at any meeting of Directors. Notice of a meeting of Directors
may be given orally or in writing. Oral notice shall be deemed given upon its
being communicated in person or by telephone. Written notice shall be deemed
given on the date of its transmittal by mail, telegraph, telex, Cable,
wireless, or otherwise.
Section 3.8. Quorum. Subject to the provisions of Section 3.3 of
this Article III, and in the case of a committee of the Board to specific
resolution of the Board, a majority of the members of the Board of Directors
then in office, or of the members of a committee thereof, shall constitute a
quorum for the transaction of business by the Board or the committee, as the
case may be. The vote of a majority of the Directors or of the members of a
committee thereof present at any meeting of the Board or of a committee
thereof, as the case may be, at which a quorum is present, constitutes the
action of the Board of Directors or of the committee, unless the vote of a
larger number is required by the Articles, the Bylaws, or applicable law, or in
the case of a committee, by resolution of the Board. If at any meeting of the
Board there be less than a quorum present, a majority of those present may
adjourn the meeting from time to time.
Section 3.9. Compensation of Directors. Directors shall not be
entitled to receive compensation for their services except as expressly
authorized by the Board from time to time.
Section 3.10. Organization. The Chairman of the Board shall preside
and act as chairman of all meetings of the Board of Directors. In the absence
of the Chairman of the Board, the Vice-Chairman of the Board shall so preside,
and in the absence of the Vice-Chairman of the Board, a chairman shall be
elected from the Directors present. If present, the Secretary shall act as
secretary of all meetings of the Board of Directors; but in the absence of the
Secretary, or otherwise as approved by the Board, the chairman may appoint any
person to act as secretary of the meeting.
Section 3.11. Dissents. A Director who is present at a meeting of
the Board, or of a committee thereof of which such Director is a member, at
which action on any matter is taken shall be presumed to have assented to the
action unless such Director's dissent shall be entered in the minutes of the
meeting or unless such Director shall file a written dissent to such action
with the secretary of the meeting before the adjournment thereof, or shall send
such dissent by registered mall to the Secretary promptly after the adjournment
of the meeting. It shall be the duty of the Secretary to record such dissents
in or with, as the case may be, the minutes of the meeting at which the action
to which the dissent relates was taken. Such right to dissent shall not apply
to a Director who voted in favor of or consented in writing to such action. A
Director who is absent from a meeting of the Board, or of a committee thereof
of which such Director is a member, at which any action is taken is presumed to
have concurred in the action unless such Director files a written dissent with
the Secretary within a reasonable time after such director obtains knowledge of
the action.
Section 3.12. Honorary Directors. The Board may appoint any one or
more former Directors to the position of Honorary Director, and may appoint any
one or more Honorary Directors to serve as an honorary member of a committee of
the Board. Honorary Directors shall be entitled to and expected to attend all
<PAGE>
regular and special meetings of the Board and to attend all meetings of any
committees of the Board to which they are appointed, respectively, and to
participate in all such meetings; provided that Honorary Directors shall not be
counted for purposes of determining the presence of a quorum at any such
meetings, nor shall Honorary Directors be entitled to vote upon any matter
submitted to a vote of the Board or a committee thereof, as the case may be.
The Board shall have the right to fix from time to time the compensation, if
any, to be paid to Honorary Directors. Honorary Directors shall be entitled to
receive notices of meetings and copies of documents and other corporate
materials furnished to the Directors, provided that the failure to give such
notice or furnish such documents or materials to an Honorary Director shall not
affect the validity of any meeting of or action taken by the Board. Honorary
Directors shall serve one or more terms which expire on the date of each annual
meeting of Shareholders, and shall at all times serve at the will of the Board.
No person may be appointed an Honorary Director after attaining the age of 72
years.
ARTICLE IV
Committees
Section 4.1. Appointment and Powers. Unless otherwise provided in
the Articles, the Board may designate one or more committees, each committee to
consist of one or more Directors. The Board may designate one or more
Directors as alternate members of a committee who shall replace an absent
member at a meeting of the committee. A majority of any such committee, or the
chairman of any such committee, may fix the time and place of its meetings, and
the notice requirements therefor, unless otherwise provided by the Board, the
Articles, the Bylaws, or law. The Board shall have the power at any time to
fill vacancies in, to change the size or membership of, and to discharge any
such committee. A committee, to the extent provided in the resolution of the
Board, may exercise all powers and authority of the Board in management of the
business, affairs and property of the Corporation, subject to any limitations
provided by law or the Articles. Each such committee shall keep a written
record of its acts and proceedings and shall submit such record to the Board at
such time and from time to time as requested by the Board. Failure to submit
such record will not invalidate such acts and proceedings to the extent such
acts and proceedings have been carried out by the Corporation prior to the time
the record of such action should have been submitted to the Board.
ARTICLE V
Officers
Section 5.1. Officers. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice-Presidents, a Secretary
and a Treasurer. Each such officer shall be elected or appointed by the Board
of Directors. The Board may determine the seniority of Vice-Presidents and may
evidence such determination by designations of class in the respective titles
of such officers. The Board may from time to time elect or appoint other
officers as the Board may deem advisable. The Chairman of the Board, the
President and the Vice-Chairman of the Board (if such office is filled) shall
be elected or appointed from among the members of the Board. Any two or more
offices may be held by the same person except the offices of President and
Secretary. The term of office of each officer shall be the term for which such
<PAGE>
officer is elected or appointed and until such officer's successor is elected
or appointed and qualified, or until such officer's resignation or removal.
Each officer shall qualify either by accepting the election or appointment to
an office in writing, or by acting on behalf of the Corporation in the capacity
of such office. An officer may resign by written notice to the Corporation.
Except where otherwise expressly provided in a written contract duly
authorized by the Board, all officers, agents and employees shall be subject to
removal at any time, with or without cause, by the Board. The election or
appointment of an officer for a given term, or a general provision in the
Articles or the Bylaws with respect to term of office, shall not be deemed to
create contract rights.
In addition to the powers, authority and duties of the officers of
the Corporation as set forth in the Bylaws, each officer shall have such other
powers and authority, and shall perform such other duties, as shall generally
pertain to each such officer's respective office and as shall be assigned to or
vested in such officer by the Board of Directors from time to time.
Section 5.2. Chairman of the Board. The Chairman of the Board shall
be the Chief Executive Officer of the Corporation and, subject to the Board of
Directors, shall have general management and oversight of the administration
and operation of the Corporation's business and shall have general supervision
of the Corporation's policies and affairs. The Chairman of the Board shall be
responsible for the implementation of all orders and resolutions of the Board
of Directors. In the absence or disability of the President, the Chairman of
the Board shall also perform the duties and execute the power and authority of
the President.
Section 5.3. Permanent Absence of Chairman of the Board; Vice-
Chairman of the Board. In the event of the death or permanent disability of
the Chairman of the Board, or of a vacancy in such office, and until such time
as the Board of Directors shall appoint a new Chairman of the Board, the powers
and duties of the Chairman of the Board shall devolve upon the Vice Chairman of
the Board and the President, jointly, and such officers shall during such time
confer with each other regarding all significant matters which but for such
absence of the Chairman of the Board would have been attended to by the
Chairman of the Board. In the event there is no Vice-Chairman of the Board,
such powers and duties shall devolve upon the President until the Board shall
appoint a Vice-Chairman, at which time the powers and duties shall be executed
and performed jointly as provided above, or until the Board of Directors
appoints a new Chairman of The Board. During any time when the powers and
duties of the Chairman of the Board are being executed and performed by the
Vice-Chairman of the Board and the President, the President shall be the Chief
Executive Officer of the Corporation, but the President shall at all times
consult with the Vice-Chairman of the Board and shall take no action contrary
to the express written direction of the Vice-Chairman of the Board. In the
event there is no President at or during a time at which the powers and duties
of the Chairman of the Board are to devolve upon the Vice-Chairman of the Board
and the President, jointly, then the powers and duties of the Chairman of the
Board shall devolve upon the Vice-Chairman of the Board until the Board shall
appoint a President, at which time the powers and duties shall be executed and
performed jointly as provided above, or until the Board appoints a new Chairman
of the Board. It is the intention of this Section 5.3 that the Vice-Chairman
of the Board, when acting jointly with the President, shall act as a
representative of the Shareholders and the indirect and beneficial shareholders
of the Corporation, and as such shall perform the duties and execute the powers
<PAGE>
of the office of Vice Chairman with particular attention to the needs and
benefit of all such shareholders; provided, however, that such representative
capacity shall not give rise to any duties or liabilities additional to those
generally applicable to a chief executive officer of a corporation. Except as
set forth in this Section, in Section 3.10 and as otherwise provided by
specific resolution of the Board, the Vice-Chairman shall have no powers and
duties apart from those which devolve upon the Vice-Chairman as a Director.
This Section 5.3 has been adopted for the benefit of the Shareholders entitled
to vote and shall not be repealed, substantively altered or substantively
amended by the Board.
Section 5.4. President. Subject to the direction of the Board of
Directors and the Chairman of the Board, the President shall be the Chief
Operating Officer of the Corporation, and as such shall have general charge and
authority over the day to day business of the Corporation. The President shall
from time to time make such reports of the business of the Corporation as the
Board of Directors may require.
Section 5.5. Vice-Presidents. Each Vice-President shall render such
cooperation as may be requested in formulating and recommending policies to be
adopted by the Corporation; and shall report to such officer as the Board, the
Chairman of the Board or the President shall determine from time to time.
Section 5.6. Secretary. The Secretary shall have custody of the
minutes of all meetings of the Board and the minutes of all meetings of
Shareholders and shall keep such minutes in books provided for that purpose.
The Secretary shall attend to the giving or serving of all notices of the
Corporation. The Secretary shall have charge of the stock certificate books,
transfer books and stock ledgers and such other books and papers as the Board
shall direct. The Secretary shall have charge of the corporate seal. The
Board shall have power by resolution to delegate any of the powers or duties of
the Secretary to other officers.
Section 5.7. Treasurer. The Treasurer shall have custody of all the
funds and securities of the Corporation. The Treasurer may endorse an behalf
of the Corporation for collection checks, notes and other obligations and shall
deposit the same to the credit of the Corporation in such bank or banks or
depository or depositories as the Board may designate specifically or
generally. The Treasurer may sign all receipts and vouchers for payments made
to the Corporation. The Treasurer shall enter or cause to be entered regularly
in the books of the Corporation kept for that purpose full and accurate
accounts of all moneys received and paid on account of the Corporation, and
whenever required by the Board shall render statements of such accounts. The
Board shall have power by resolution to delegate any of the powers or duties of
the Treasurer to other officers.
Section 5.8. Absence or Disability. In case of the absence or
disability of any officer of the Corporation and of any person authorized by
the Bylaws to act in such officer's place during such period of absence or
disability, the Board may from time to time delegate the powers and duties of
such officer to any of the officers or any Director, or any person whom it may
select.
Section 5.9. Voting Upon Stocks. The Chairman of the Board and the
President, or either of them, shall have the full power and authority on behalf
of the Corporation to vote the stock of any other corporation owned by the
Corporation, or in the name of the Corporation to execute proxies to vote such
<PAGE>
stock or execute waivers and consents with respect to such stock or the voting
thereof, and to attend meetings of shareholders of any such other corporations
and at each such meeting, such officer or officers shall possess and may
exercise, in person or by proxy, any and all rights, powers and privileges
incident to the ownership of such stock. The Board of Directors may by
resolution from time to time confer like powers upon any other person or
person.
Section 5.10. Compensation of Officers. The officers of the
corporation shall receive such compensation for their services as is authorized
by the Board of Directors from time to time.
Section 5.11. Chairman Emeritus. The Board may appoint the last
preceding Chairman of the Board to the position of Chairman Emeritus. The
Chairman Emeritus shall be entitled as such, and shall be expected, to attend
meetings of the Board and to participate therein as if, and irrespective of
whether or not, the Chairman Emeritus is an Honorary Director. The Chairman
Emeritus shall serve for one or more terms which expire on the date of each
annual meeting of Share-holders, and shall at all times serve at the will of
the Board. The compensation, if any, to be paid to the Chairman Emeritus shall
be as determined from time to time by the Board.
ARTICLE VI
Capital Stock
Section 6.1. Certificates for Shares. The interest of each
shareholder in the Corporation shall be evidenced by certificates for Shares
certifying the number and class of Shares represented thereby and in such form,
consistent with the Articles and the laws of the State of Arizona, as shall be
approved by the Board. All certificates shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary and shall not be
valid unless so signed. The signatures of the officers may be facsimiles if
the certificate is countersigned by a transfer agent or registered by a
registrar, other than the Corporation itself or its employee. In case any
officer or officers who shall have signed or whose facsimile signature has been
placed upon any such certificate or certificates shall cease to be such officer
or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been issued by
the Corporation, such certificate or certificates may nevertheless be issued
and delivered as though the person or persons who signed or whose facsimile
signature has been placed upon such certificate or certificates had not ceased
to be such officer of officers of the Corporation.
All certificates for Shares shall be consecutively numbered by class
as the same are issued. The name of the holder of record of the Shares
represented thereby with the number of shares and the date of issue thereof
shall be entered on the books of the Corporation.
Except as otherwise provided in the Bylaws, all certificates
surrendered to the Corporation for transfer shall be cancelled, and no new
certificates shall be issued until former certificates for the same number of
shares have been surrendered and cancelled.
Section 6.2. Lost, Stolen or Destroyed Certificates. Whenever a
person owning a certificate evidencing Shares alleges that it has been stolen,
lost, or destroyed, such person shall file in the office of the Corporation an
<PAGE>
affidavit setting forth, to the best of such person's knowledge and belief, the
time, place and circumstances of the loss, theft or destruction, and, if
required by the Board, a bond of indemnity sufficient in the opinion of the
Board to indemnify the Corporation against any claim that may be made against
it on account of the alleged loss. Thereupon the Board may cause to be issued
to such person a new certificate or a duplicate of the certificate alleged to
have been lost, stolen or destroyed. Upon the ledger of each new or duplicate
certificate so issued shall be noted the fact of such issue and the number,
date, and the name of the registered owner of the lost, stolen or destroyed
certificate in lieu of which the new or duplicate certificate is issued.
Section 6.3. Transfer of Shares. Shares shall be transferred on the
books of the Corporation upon lawful surrender and cancellation of certificates
for the number of shares to be transferred, properly endorsed for transfer,
except as provided in the preceding Section 6.2. Books for the transfer of
shares shall be kept by the Corporation or by one or more transfer agents
appointed by it.
Section 6.4. Regulations. The Board of Directors shall have power
and authority to make such rules and regulations as it may deem appropriate
concerning the issue, transfer and registration of certificates for Shares.
Section 6.5. Dividends. Subject to the Articles, the Board shall
have the power to determine whether any, and if so, what part, of the funds
legally available for the payment of dividends shall be declared in dividends,
and to cause the Corporation to declare and pay dividends or make other
distributions in cash, property or other assets of the Corporation, including
securities of other corporations and of the Corporation, upon outstanding
Shares, but only as provided by law.
Subject to the Articles, any dividends declared by the Board shall be
payable on such date or dates as the Board shall determine. If the date fixed
for the payment of any dividend shall in any year fall upon a legal holiday,
then the dividend payable on such date shall be paid on the next day not a
legal holiday. If no date is fixed for the payment of a dividend, then such
dividend shall be payable as soon as practicable subsequent to the declaration.
ARTICLE VII
Miscellaneous Provisions
Section 7.1. Corporate Seal. The Board may provide a suitable seal,
containing the name of the Corporation, which seal shall be in the charge of
the Secretary. If and when so directed by the Board, a duplicate of the seal
may be kept and be used by any officer of the Corporation designated by the
Board.
Section 7.2. Checks, Notes, Etc. All checks, drafts, bills of
exchange, acceptances, notes, bonds or other obligations or orders for the
payment of money shall be signed, and if so required countersigned, by such
officer or officers of the Corporation and/or other persons as the Board shall
from time to time designate either generally or specifically.
Section 7.3. Fiscal Year. The fiscal year of the Corporation shall
be the year commencing April 1 and ending March 31.
<PAGE>
Section 7.4. Loans, Contracts and Conveyances. No cash loans and no
renewals of any cash loans shall be contracted on behalf of the Corporation
except as authorized by the Board or as otherwise provided by the Bylaws. When
so authorized, any officer or agent of the Corporation may obtain loans and
advances for the Corporation from any bank, trust company or other institution
or from any firm, corporation or individual, and for such loans and advances
may make, execute and deliver promissory notes, bonds or other evidences of
indebtedness of the Corporation. When so authorized, any officer or agent of
the Corporation may pledge, mortgage, hypothecate or transfer, as security for
the payment of any and all loans, advances, indebtedness and liabilities of the
Corporation, any and all stocks, securities and other personal or real property
at any time held by the Corporation, and to that end may endorse, assign and
deliver the same. Such authority may be general or confined to specific
instances.
Section 7.5. Authority to Sign. The Board may from time to time
designate the officer and/or agent who shall have authority to execute any
contract, conveyance, mortgage or other instrument on behalf of the
Corporation. When the execution of an instrument has been authorized without
specification of the executing officer or agent, the Chairman of the Board, the
President, any Executive Vice President, Senior Vice-President or the Secretary
may execute the same in the name and on behalf of the Corporation.
Section 7.6. Waiver of Notice. Whenever any notice is required to
be given to any Shareholder or Director under the provisions of law, the
Articles or the Bylaws, a waiver of such notice in writing signed by the person
or persons entitled to the notice, whether signed before or after the time
stated in the notice, shall be deemed equivalent to such notice. Attendance at
any meeting, in person or, in the case of a Shareholder, by proxy, without
objection to the manner in which notice of the meeting has been given shall be
deemed a waiver of notice thereof; except in the event such attendance is for
the express purpose of objecting at the beginning of such meeting to the
transaction of any business because the meeting is not lawfully called or
convened and such objection is made, then such attendance shall not constitute
a waiver of notice.
Section 7.7. Action Without Meeting. Any action required or
permitted to be taken at any meeting of Shareholders may be taken without a
meeting, without prior notice and without a vote, if, before or after the
action, a consent in writing or counterparts thereof, setting forth the action
so taken, is signed by the holders of all Shares entitled to vote with respect
to the subject matter thereof.
Any action required or permitted to be taken pursuant to
authorization voted at a meeting of the Board of Directors or a committee
thereof may be taken without a meeting if, before or after the action, all
members of the Board or of the committee, as the case may be, consent thereto
in writing. The consent has the same effect as a unanimous vote of the Board
or of the committee for all purposes.
All written consents shall be promptly filed with the Secretary.
Failure to so file any such written consent shall not affect the validity of
the action authorized or taken thereby.
Section 7.8. Participation by Communication Equipment. One or more
Shareholders may participate in a meeting of Shareholders, by conference
telephone or similar communications equipment by which all persons
<PAGE>
participating in the meeting may hear each other, if all participants are
advised of the communications equipment and the names of the participants in
the conference are divulged to all participants.
One or more Directors may participate in a meeting of Directors or of
a committee thereof by a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.
Participation in a meeting pursuant to this Section 7.8 constitutes
presence in person at the meeting.
Section 7.9. Indemnification by the Corporation. The Corporation
shall, to the fullest extent now or hereafter permitted by law, indemnify any
person who was or is a party to or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding by reason of the
fact that such person is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses including attorneys' fees
(which expenses may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as provided by law), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
or failed to act in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation or its
shareholders, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The
indemnification herein provided for shall continue as to a person who has
ceased to be a director, officer, employee or agent of the Corporation and/or
of another corporation and shall inure to the benefit of the heirs, executors
and administrators of such person. This Section 7.9 has been specifically
approved by the Shares entitled to vote hereon for the benefit of the persons
covered thereby and shall not be repealed, substantively altered or
substantively amended by the Board.
Section 7.10. Insurance. The Corporation shall have power, to the
fullest extent now or hereafter provided by law, to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such.
Section 7.11. Dealing with the Corporation. A contract or other
transaction between the Corporation and one or more of its Directors or
officers, or between the Corporation and a domestic or foreign corporation,
firm or association of any type or kind in which one or more of the
Corporation's Directors or officers are directors or officers, or are otherwise
financially interested, is not void or voidable solely because of such common
directorship, officership or interest, or solely because such Directors are
present at the meeting of the Board or committee thereof at which such contract
or transaction is acted upon or solely because their votes are counted for such
purpose if any of the following conditions is satisfied:
<PAGE>
(a) The contract or other transaction is fair and reasonable to the
Corporation when it is authorized, approved or ratified in light of the
circumstances known to those entitled to vote thereon at that time;
(b) The material facts as to such Director's or officer's
relationship or interest and as to the contract or transaction are
disclosed or known to the Board or committee thereof, and the Board or
committee thereof authorizes, approves or ratifies the contract or
transaction by a vote sufficient for the purpose without counting the vote
of any common or interested Director; or
(c) The material facts as to such Director's relationship or
interest and as to the contract or transaction are disclosed to or known
by the Shareholders, and they authorize approve or ratify the contract or
transaction by vote or written consent.
ARTICLE VIII
Amendments
Sections 8.1. Amendment. Except as otherwise provided in the
Articles, the power to alter, amend or repeal the Bylaws or adopt new Bylaws,
subject to repeal or change by action of the Shareholders, shall be vested in
the Board.
EXHIBIT T3C
INDENTURE, dated as of _______ __, 1996, between The Stroh Brewery
Company, an Arizona corporation (the "Company"), and
_______________________________________, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
Junior Subordinated Notes due 2008:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acceleration Notice" has the meaning provided in Section 6.2.
"Affiliate" means a Person who, directly or indirectly, through one
or more intermediaries controls, or is controlled by, or is under common
control with, the Company. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agent" means any Registrar, Paying Agent or
Co-Registrar.
"Bankruptcy Law" means Title 11, United States Code or any similar
federal, state or foreign law for the relief of debtors.
"Blockage Period" shall have the meaning provided in Section 10.2.
"Board of Directors" means, with respect to any Person, the board of
directors (or any other equivalent governing body) of such Person or any
committee of the board of directors of such Person duly authorized, with
respect to any particular matter, to exercise the power of the board of
directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal
Holiday.
"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease to which
such Person is a party that is required to be classified and accounted for as a
capital lease obligation under GAAP and, for purposes of this definition, the
amount of such obligation at any date shall be the capitalized amount of such
obligation at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person, and (ii) with respect to any Person that is not
<PAGE>
a corporation, any and all partnership or other equity interests of such
Person.
"Cash Equivalents" means (i) marketable direct obligations issued by,
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 one of the two highest ratings
obtainable from either Standard & Poor's Ratings Services or Moody's Investors
Services, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Ratings Services or at least P-1 from Moody's
Investors Services, Inc.; (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 or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not
less than $200,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through
(v) above.
"Change of Control" means (i) the sale of all or substantially all of
the assets of the Company or Holding to any Person that is not a Stroh
Affiliate, (ii) Stroh Affiliates shall cease to beneficially own, directly or
indirectly, voting securities of the Company entitled in an election of
directors to exercise more than 50% of the voting power thereof on a fully-
diluted basis, or (iii) the merger or consolidation of the Company or Holding
with or into any Person which results in Stroh Affiliates ceasing to exercise
beneficial ownership of more than 50% of the voting securities of the surviving
entity on a fully-diluted basis.
"Change of Control Date" has the meaning provided in Section 4.10.
"Change of Control Offer" has the meaning provided in Section 4.10.
"Change of Control Payment Date" has the meaning provided in Section
4.10.
"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually used in
the ordinary course of business of the Company and its Subsidiaries.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor and also includes for the purposes of any provision contained herein
and required by the TIA any other obligor on the Securities.
"Credit Agreement" means the Credit Agreement dated on or about the
Issue Date among the Company, the Lenders party thereto and Morgan Guaranty
<PAGE>
Trust Company of New York, as agent, together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including by way of adding subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
the Company or any of its Subsidiaries against fluctuation in currency values.
"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.
"Default Notice" shall have the meaning provided in Section 10.2.
"Designated Senior Debt" means (i) Indebtedness under or in respect
of the Credit Agreement, (ii) Indebtedness represented by the Senior
Subordinated Notes and (iii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $25,000,000 and is specifically designated in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Company.
"Discharged" has the meaning provided in Section 8.1.
"Disqualified Capital Stock" means any Capital Stock which, 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
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except,
in each case, upon the occurrence of a Change of Control), in whole or in part,
on or prior to the final maturity date of the Securities.
"Escrow Agreement" means the escrow agreement to be entered into
pursuant to the Asset Purchase Agreement dated March __, 1996, between G.
Heileman Brewing Company, Inc., its subsidiaries and the Company, as in effect
on the Issue Date.
"Event of Default" has the meaning provided in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Funds" shall have the meaning provided in Section 8.1.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America as of the Issue Date.
<PAGE>
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding" means The Stroh Companies, Inc., a Delaware corporation and
its successors, and the owner of 100% of the capital stock of the Company on
the Issue Date.
"Indebtedness" means with respect to any Person, without duplication,
any liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations of such Person, (iv) incurred 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 arising in the ordinary course of business), (v) all obligations for
the reimbursement of any obligor on any letter of credit, banker's acceptance
or similar credit transaction, (vi) all Indebtedness of others guaranteed by
such Person, (vii) Interest Swap Obligations, Commodity Agreements and Currency
Agreements and (viii) all Indebtedness of any other Person of the type referred
to in clauses (i) through (vii) above which are secured by any Lien on any
property or asset of such first referred to Person, the amount of such
Indebtedness being deemed to be the lesser of the value of such property or
asset or the amount of the Indebtedness so secured. The amount of Indebtedness
of any Person at any date shall be the outstanding principal amount of all
unconditional obligations described above, as such amounts would be reflected
on a balance sheet prepared in accordance with GAAP, and the maximum liability
at such date of such Person for any contingent obligations described above.
"Indenture" means this indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Securities.
"Interest Swap Obligation" means the obligation of any Person under
any interest rate protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other interest rate hedge or
arrangement.
"Issue Date" means the date of original issuance of the Securities.
"Legal Holiday" has the meaning provided in Section 11.7.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof or any
agreement to give any security interest).
"Maturity Date" means ____________ __, 2008.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing, or otherwise relating
to, any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
<PAGE>
Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.4 and 11.5, as they relate to the making of an
Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee complying with the requirements of
Sections 11.4 and 11.5, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.3.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, unincorporated organization, government or political
subdivision thereof or governmental agency or other entity.
"principal" of any Indebtedness (including the Securities) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"pro forma" means, unless otherwise provided herein, with respect to
any calculation made or required to be made pursuant to the terms of this
Indenture, a calculation in accordance with Article 11 of Regulation S-X under
the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Redemption Date" means, with respect to any Securities, the Maturity
Date of such Security or the earlier date on which such Security is to be
redeemed by the Company pursuant to the terms of the Securities.
"Redemption Price" shall have the meaning provided in Section 3.3.
"Registrar" has the meaning provided in Section 2.3.
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided that if,
and for so long as, any Designated Senior Debt lacks such a representative,
then the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Company's 11% Junior Subordinated Notes due
2008, as amended or supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
<PAGE>
"Senior Debt" means any Indebtedness of the Company (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law), whether outstanding on
the Issue Date or thereafter created, incurred or assumed, if, in the case of
any particular indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall be senior in right of payment to the Securities. Without
limiting the generality of the foregoing, "Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, and all monetary obligations of every nature under, (x) the Credit
Agreement, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) the Senior Subordinated Indenture and the Senior Subordinated
Notes issued thereunder and (z) all Interest Swap Obligations, Commodity
Agreements and Currency Agreements. Notwithstanding the foregoing, Senior Debt
shall not include any of the following amounts (whether or not constituting
Indebtedness as defined in this Indenture), (i) any indebtedness of the Company
to a Subsidiary of the Company, (ii) Indebtedness to, or guaranteed by the
Company on behalf of, any director, officer or employee of the Company or any
Subsidiary (including, without limitation, amounts owed for compensation),
(iii) Indebtedness and other amounts owing to trade creditors incurred in
connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal,
state, local or other taxes owed or owing by the Company, and (vi) any
Indebtedness which is, by its express terms, subordinated in right of payment
to any other Indebtedness of the Company.
"Senior Subordinated Indenture" means the Indenture dated on or about
the Issue Date between the Company, as Issuer, and ___________________, as
Trustee, under which the Senior Subordinated Notes are issued, as amended or
supplemented from time to time in accordance with the terms thereof.
"Senior Subordinated Notes" means the Company's ___% Senior
Subordinated Notes due _____________, 2006, as amended or supplemented from
time to time in accordance with the Senior Subordinated Indenture.
"Significant Subsidiary" means for any Person each Subsidiary of such
Person which (i) for the most recent fiscal year of such Person accounted for
more than 5% of the consolidated net income of such Person or (ii) as at the
end of such fiscal year, was the owner of more than 5% of the consolidated
assets of such Person.
"Stroh Affiliate" means (i) any descendant of Julius Stroh or any
spouse or former spouse of any such descendant, (ii) any corporation,
partnership or joint venture owned or controlled, directly or indirectly, by
any descendant of Julius Stroh or any spouse or former spouse of any such
descendant, (iii) any trust formed for the benefit of any descendant of Julius
Stroh, and (iv) any combination or group consisting of one or more of the
foregoing.
"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
<PAGE>
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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date on which this
Indenture is qualified under the TIA, except as otherwise provided in Section
9.3.
"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,
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters or, in the
case of a successor trustee, an officer assigned to the department, division or
group performing the corporation trust work of such successor.
"U.S. Government Obligations" has the meaning provided in Section
8.1.
"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.
"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.
SECTION 1.2. 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:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"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 Securities.
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.
<PAGE>
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the Issue Date;
(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 2
THE SECURITIES
SECTION 2.1. Form and Dating.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A hereto. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall approve the form of the Securities and any notation,
legend or endorsement thereon. Each Security shall be dated the date of its
authentication.
The terms and provisions contained in the Securities 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.
SECTION 2.2. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign,
or one Officer shall sign and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer, Secretary or Assistant Secretary whose signature is on
a Security was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Security, the Security shall nevertheless be valid.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
<PAGE>
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $5,000,000 (and any additional principal
amount issued pursuant to the Escrow Agreement), upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of Securities to be authenticated and the
date on which the Securities are to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $5,000,000, except
as provided in Section 2.7 or if increased pursuant to the Escrow Agreement.
Upon the written order of the Company in the form of an Officers' Certificate,
the Trustee shall authenticate Securities in substitution of Securities
originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Securities shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3. Registrar and Paying Agent.
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 (a) Securities may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (b) Securities may be presented or
surrendered for payment ("Paying Agent") and (c) notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company, upon notice to the Trustee, may have one or more
co-Registrars and one or more additional paying agents reasonably acceptable to
the Trustee. 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 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, the Trustee shall
act as such.
The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed.
SECTION 2.4. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee of any default by the Company (or any other obligor on
the Securities) 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
<PAGE>
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 the Paying Agent,
the Paying Agent shall have no further liability for such assets.
SECTION 2.5. Securityholder 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. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee 5 Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing a list as of the applicable record
date and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.6. Transfer and Exchange.
When Securities are presented to the Registrar or a co-Registrar with
a request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities 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, however, that the Securities surrendered for 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 transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Securities 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 suf-
ficient to cover any transfer tax or similar governmental charge payable in
connection therewith. The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of any Security (i) during a period
beginning at the opening of business 15 days before the mailing of a notice of
redemption of Securities 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 Security being redeemed in
part.
SECTION 2.7. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of 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 Security is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Security, including
reasonable fees and expenses of counsel. Every replacement Security shall
constitute an additional obligation of the Company.
<PAGE>
SECTION 2.8. Outstanding Securities.
Securities outstanding at any time are all the Securities 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.
A Security does not cease to be outstanding because the Company or any of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.7.
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 Securities 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 Securities cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver, consent or notice,
Securities owned by the Company or an Affiliate 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 Securities which the Trustee 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 Securities, of the
aggregate principal amount of such Securities so repurchased or otherwise
acquired.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities 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 Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate upon receipt of a written
order of the Company pursuant to Section 2.2 definitive Securities in exchange
for temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities 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 and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.7, the Company may not issue new Securities
to replace Securities that the Company has paid or delivered to the Trustee for
<PAGE>
cancellation. If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities 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 Securities,
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, 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.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities 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 Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities.
SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date
and 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.
ARTICLE 3
REDEMPTION
SECTION 3.1. Notices to Trustee.
If the Company elects to redeem Securities pursuant to paragraph 6 of
the Securities, it shall notify the Trustee and the Paying Agent in writing of
the Redemption Date and the principal amount of the Securities to be redeemed
and whether it wants the Trustee to give notice of redemption to the Holders
(at the Company's expense) at least 60 days (unless a shorter notice shall be
satisfactory to the Trustee) but not more than 90 days before the Redemption
Date. Any such notice may be cancelled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
<PAGE>
SECTION 3.2. Selection of Securities To Be Redeemed.
If fewer than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed in compliance with the requirements
of the principal national securities exchange, if any, on which the Securities
being redeemed are listed, or, if the Securities are not 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.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities 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 Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.3. Notice of Redemption.
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 to each Holder whose Securities are to be redeemed, with a copy to
the Trustee. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid (the "Redemption Price");
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in the aggregate principal amount equal to the unredeemed
portion thereof will be issued; and
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption.
<PAGE>
SECTION 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.3,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price. Upon surrender to the Trustee or Paying Agent,
such Securities called for redemption shall be paid at the Redemption Price.
SECTION 3.5. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price of all
Securities 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 7.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price, interest on the
Securities to be redeemed will cease to accrue on and after the applicable
Redemption Date, whether or not such Securities are presented for payment.
SECTION 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
COVENANTS AND REPRESENTATIONS
SECTION 4.1. Payment of Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. An installment of
principal of or interest on the Securities shall be considered paid on the date
it is due if the Trustee or Paying Agent holds on that date U.S. Legal Tender
designated for and sufficient to pay the installment. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months. The
Company shall pay interest on overdue principal and interest on overdue
installments of interest (including interest accruing on or after the filing of
a petition in bankruptcy or reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceeding), to the
extent lawful, at the rate per annum equal to 1% per annum in excess of the
rate borne by the Securities, which interest on overdue interest shall accrue
from the date such amounts become overdue.
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 4.2. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.3. The Company shall give prior 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
<PAGE>
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 11.2.
SECTION 4.3. Corporate Existence.
Except as otherwise permitted by Article 5, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate or other existence and the corporate or other existence of
each of its Significant Subsidiaries in accordance with the respective
organizational documents of each such Significant Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Significant Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Significant Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company or such
Significant Subsidiary, as the case may be, shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or any such Significant Subsidiary.
SECTION 4.4. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments
and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon it or any of its
Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might by law become a
Lien upon the property of it or any of its Subsidiaries; provided, however,
that there shall not be required to be paid or discharged any such tax, assess-
ment or charge, the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings and for which adequate
provision has been made or where the failure to effect such payment or
discharge is not adverse in any material respect to the Holders.
SECTION 4.5. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its Significant
Subsidiaries to, maintain its properties in normal condition (subject to
ordinary wear and tear) and make all necessary repairs, renewals or
replacements thereto as in the judgment of the Company may be necessary to the
conduct of the business of the Company and its Significant Subsidiaries;
provided, however, that nothing in this Section 4.5 shall prevent the Company
or any of its Subsidiaries from discontinuing the operation and maintenance of
any of its properties (including, without limitation, any brewery), if such
properties are, in the good faith judgment of the Board of Directors of the
Company or the Subsidiary, as the case may be, no longer necessary or desirable
in the conduct of their respective businesses.
(b) The Company shall provide or cause to be provided, for itself
and each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company, are adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries.
<PAGE>
SECTION 4.6. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of the Company's fiscal year, an Officers' Certificate (signed by the
principal executive officer, principal financial officer or principal
accounting officer) stating that a review of its activities and the activities
of its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether it 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 knowledge the Company during such preceding fiscal year has
kept, observed, performed and fulfilled each and every such covenant and no
Default or Event of Default occurred during such year and at the date of such
certificate there is no Default or Event of Default that has occurred and is
continuing or, if such signers do know of such Default or Event of Default, the
certificate shall describe the Default or Event of Default and its status with
particularity. The Officers' Certificate shall also notify the Trustee should
the Company elect to change the manner in which it fixes its fiscal year end.
(b) The annual financial statements delivered to the Trustee
pursuant to Section 4.8 shall be accompanied by a written report of the
Company's independent accountants that in conducting their audit of such
financial statements nothing has come to their attention that would lead them
to believe that the Company has violated any provisions of Article 4, 5 or 6
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.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Securities, the
Company shall deliver to the Trustee by registered or certified mail or by
telegram, telex or facsimile transmission followed by hard copy by registered
or certified mail an Officers' Certificate specifying such event, notice or
other action within five Business Days of its becoming aware of such
occurrence.
SECTION 4.7. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their
respective properties, except for such noncompliances as are not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole.
SECTION 4.8. SEC Reports.
The Company shall file with the Trustee and provide to the
Securityholders, within 15 days after it files the same with the SEC, copies of
the annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company files with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. In the event that the Company is at any time
<PAGE>
not subject to the reporting requirements of the Exchange Act, it shall provide
to the Trustee and supply each Holder without cost, within 15 days after it
would have been required to file such information with the SEC, consolidated
financial statements, comparable to those which would have been required to
appear in annual or quarterly reports, together with a management's discussion
and analysis of financial condition and results of operations for the period
covered by such financial statements; provided that such management's
discussion and analysis shall only be provided to the Holders if it is then
required to be furnished to the Persons parties to the Credit Agreement; and
provided, further, that the copies of any such management's discussion and
analysis furnished to the Holders of the Securities pursuant hereto may omit
any information which the Company deems to be confidential. The Company shall
also comply with the other provisions of TIA Section 314(a).
SECTION 4.9. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein 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. Change of Control.
(a) In the event of a Change of Control, the Company shall be
obligated to make an offer to repurchase all outstanding Securities pursuant to
the offer described in paragraph (b) below (the "Change of Control Offer") at a
purchase price equal to 100% of the principal amount thereof plus accrued
interest, if any, to the date of repurchase. Prior to the mailing of the
notice referred to below, but in any event within 30 days following the date on
which a Change of Control occurs, the Company covenants to (i) repay in full
all Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and under the Senior Subordinated Indenture or offer to repay in
full all such Indebtedness (and terminate all such commitments) and to repay
the Indebtedness owed to (and terminate the commitments of) each lender and or
noteholder which has accepted such offer or (ii) obtain the requisite consents
under the Credit Agreement and the Senior Subordinated Indenture to permit tho
repurchase of the Securities as provided below. The Company shall first comply
with the covenant in the preceding sentence before it shall be required to
repurchase Securities pursuant to the provisions described in this Section
4.10; provided that the Company's failure to comply with such covenant shall
constitute an Event of Default under Section 6.1(3) and not under Section
6.1(2).
(b) Within 30 days following the date upon which a Change of Control
occurs (the "Change of Control Date"), the Company shall send, by first class
mail, a notice to each Holder of Securities as of the Change of Control Date,
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
<PAGE>
materials necessary to enable such Holders to tender Securities pursuant to the
Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.10 and that all Securities validly tendered and not withdrawn
will be accepted for payment;
(2) the purchase price (including the amount of accrued interest, if
any) and the purchase date (which shall be no earlier than 30 days nor
later than 45 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 Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Security 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 Security purchased pursuant to a
Change of Control Offer will be required to surrender the Security,
properly endorsed for transfer together with such customary documents as
the Company reasonably may request, to the Paying Agent at the address
specified in the notice prior to the close of business on the 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 telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased;
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Securities or portions thereof validly tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the purchase price of all Securities so tendered and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate and mail to such Holders new Securities equal in
principal amount to any unpurchased portion of the Securities surrendered. Any
Securities not so accepted shall be promptly mailed by the Company to the
Holder thereof.
Any amounts remaining after the purchase of Securities pursuant to a
Change of Control Offer shall be returned by the Trustee to the Company.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
<PAGE>
extent such laws and regulations are applicable in connection with the purchase
of the Securities pursuant to a Change of Control Offer. To the extent the
provisions of any such rule conflict with the provisions of the Indenture
relating to a Change of Control Offer, the Company shall comply with the
provisions of such rule and be deemed not to have breached its obligations
relating to such Change of Control Offer by virtue thereof.
SECTION 4.11. Investment Company Act.
The Company shall not become an investment company subject to
registration under the Investment Company Act of 1940, as amended.
SECTION 4.12. Payments for Consents.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid or agreed to be paid to all Holders of the Securities which
so consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.13. Limitation on Restricted Payments.
The Company shall not, and shall cause each of its Subsidiaries not
to, directly or indirectly, (a) declare or pay any dividend or make any
distribution (other than dividends or distributions payable in Qualified
Capital Stock of the Company) on shares of the Company's Capital Stock, (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 the exchange of such Capital Stock or any
warrants, rights or options to acquire shares of any class of such Capital
Stock for Qualified Capital Stock or warrants, rights or options to acquire
Qualified Capital Stock or (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 Indebtedness of the Company or its Subsidiaries that is
subordinate or junior in right of payment to the Securities (each of the
foregoing prohibited actions set forth in clauses (a), (b) and (c) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment, or immediately after giving effect thereto, a Default or an Event of
Default has occurred and is continuing.
Notwithstanding the foregoing, the provisions of this Section 4.13
shall 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 acquisition of Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any Indebtedness that is
convertible into, or exchangeable for, Capital Stock) through the
application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of Qualified Capital
<PAGE>
Stock or warrants, options or other rights to acquire Qualified Capital
Stock;
(3) the acquisition of Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities, either (i)
solely in exchange for shares of Qualified Capital Stock (or warrants,
rights or options to acquire Qualified Capital Stock) or Indebtedness of
the Company which is subordinate or junior in right of payment to the
Securities, at least to the extent that the Indebtedness being acquired is
subordinated to the Securities and has a Weighted Average Life to Maturity
no less than that of the Indebtedness being acquired or (ii) through the
application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock or warrants, rights or options to acquire Qualified Capital Stock or
Indebtedness of the Company which is subordinate or junior in right of
payment to the Securities, at least to the extent that the Indebtedness
being acquired is subordinated to the Securities and has a Weighted
Average Life to Maturity no less than that of the Indebtedness being
acquired; and
(4) payments by the Company to Holding pursuant to the Tax Sharing
Agreement dated __________, 199_ between the Company and Holding, as in
effect on the Issue Date.
SECTION 4.14. Representations.
The Company represents and warrants to the Trustee and each Holder
that this Indenture has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery hereof by the
Trustee, constitutes a valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms, and the
Securities have been duly authorized, executed and issued by the Company and,
assuming due authentication thereof by the Trustee pursuant hereto, constitute
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their terms and entitled to the benefits hereof;
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc.
(a) The Company shall not, in a single transaction or through a
series of related transactions, consolidate with or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person or adopt a plan of
liquidation, unless:
(1) either (A) the Company shall be the survivor of such merger or
consolidation or (B) the surviving or transferee Person is a corporation,
partnership or trust organized and existing under the laws of the United
States, any State thereof or the District of Columbia and such surviving
<PAGE>
or transferee Person shall expressly assume by supplemental indenture all
the obligations of the Company under the Securities and this Indenture;
(2) except in the case of a transaction or transactions being
entered into to effect a change in the State in which the Company is
incorporated, immediately after giving effect to such transaction
(including any Indebtedness incurred or anticipated to be incurred in
connection with the transaction) no Default or Event of Default shall have
occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and Opinion of Counsel, each stating that such consolidation, merger or
transfer complies with this Indenture, that the surviving or transferee
Person agrees by supplemental indenture to be bound thereby, and that all
conditions precedent in the Indenture relating to such transaction have
been satisfied (and the Trustee shall be entitled to conclusively rely
upon such Officers' Certificate and Opinion of Counsel).
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one
or more Subsidiaries, 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 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.1, the successor Person formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
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
Person had been named as the Company herein. When a successor corporation
assumes all of the obligations of the Company hereunder and under the
Securities and agrees to be bound hereby and thereby, the predecessor shall be
released from such obligations.
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on the
Securities when the same becomes due and payable and the Default continues
for a period of 30 days (whether or not such payment shall be prohibited
by Article Ten); or
(2) the Company defaults in the payment of the principal amount of
any Securities when the same becomes due and payable, at maturity, upon
redemption or otherwise (whether or not such payment shall be prohibited
by Article Ten); or
<PAGE>
(3) the Company fails to observe or perform any other covenant or
agreement contained in the Securities or this Indenture and the Default
continues for a period 30 days after written notice thereof specifying
such Default has been given to the Company by the Trustee or the Holders
of at least 25% in aggregate principal amount of the outstanding
Securities; or
(4) there shall be a failure to pay at the final stated maturity
(giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity of any such Indebtedness, if the
aggregate principal amount of such Indebtedness, together with the
aggregate principal amount of any other such Indebtedness in default for
failure to pay principal at the final stated maturity or which has been
accelerated, aggregates $10,000,000 or more at any time, in each case
after a 10-day period during which such default shall not have been cured
or such acceleration rescinded; or
(5) one or more judgments in an aggregate amount in excess of
$10,000,000 (which are not covered by insurance as to which the insurer
has not disclaimed coverage) shall have been rendered against the Company
or any of its Significant Subsidiaries and such judgments remain
undischarged or unstayed for a period of 60 days after such judgment or
judgments become final and non-appealable; or
(6) the Company or any Significant 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 or
(E) makes a general assignment for the benefit of its creditors; or
(7) 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
Significant Subsidiary, (B) appoint a Custodian of the Company or any
Significant 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.
SECTION 6.2. Acceleration.
If an Event of Default (other than an Event of Default specified in
Section 6.1(6) or (7) with respect to the Company) occurs and is continuing and
has not been waived pursuant to Section 6.4, the Trustee may, by notice to the
Company, or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding may, by written notice to the Company and the
Trustee, and the Trustee shall, upon the request of such Holders, declare the
aggregate principal amount of the Securities outstanding, together with accrued
but unpaid interest, if any, thereon to be due and payable by notice in writing
to the Company and the Trustee specifying the respective Event of Default and
that it is a "notice of acceleration" (the "Acceleration Notice"), and the same
<PAGE>
(i) shall become immediately due and payable or (ii) if there are any amounts
outstanding under the Credit Agreement, shall become due and payable upon the
first to occur of an acceleration under the Credit Agreement or five Business
Days after receipt by the Company and the Representative under the Credit
Agreement of such Acceleration Notice (unless all Events of Default specified
in such Acceleration Notice have been cured or waived); provided, however, that
the Trustee shall be under no obligation to follow any request of any of the
Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against any loss, liability or expense which may be
incurred by it in compliance with such request, order or direction. If an
Event of Default specified in Section 6.1(6) or (7) occurs and is continuing
with respect to the Company, all unpaid principal and accrued interest on the
Securities then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Securityholder. The Holders of a majority in principal amount of the
Securities then outstanding (by notice to the Trustee) may rescind and cancel
an acceleration and its consequences if (i) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction, (ii) all
existing Events of Default have been cured or waived, except non-payment of the
principal or interest on the Securities which have become due solely by such
declaration of acceleration, (iii) the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances, (iv) in the event of the cure or waiver of a
Default or Event of Default of the type described in Sections 6.1(6) and (7),
the Trustee shall have received an Officers' Certificate and an Opinion of
Counsel and (v) to the extent the payment of such interest is lawful, interest
(at the same rate as specified in the Securities) on overdue installments of
interest and overdue payments of principal, which has become due otherwise than
by such declaration of acceleration, has been paid. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
SECTION 6.3. 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 Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder 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 6.4. Waiver of Past Defaults.
Subject to Sections 6.7 and 9.2, the Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences, except a
Default in the payment of principal of or interest on any Security as specified
in clauses (1) and (2) of Section 6.1.
<PAGE>
SECTION 6.5. Control by Majority.
The Holders of a majority in principal amount of the outstanding
Securities 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, including, without limitation, any remedies provided for in
Section 6.3. Subject to Section 7.1, however, the Trustee may refuse to follow
any direction that conflicts with any law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of another Securityholder,
or that may involve the Trustee in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 6.6. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee reasonable indemnity or
security against any loss, liability or expense to be incurred in
compliance with such request;
(4) the Trustee does not comply with the request within 45 days
after receipt of the request and the offer of satisfactory indemnity or
security; and
(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.7. 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 Security, on or
after the respective due dates expressed in such Security, 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 6.8. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.1 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 Securities 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 the
Securities and such further amount as shall be sufficient to cover the costs
<PAGE>
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9. 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
Securityholders allowed in any judicial proceedings relating to the Company or
any other obligor upon the Securities, 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 Securityholder 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 Securityholders, 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 7.7. The Company's payment obligations
under this Section 6.9 shall be secured in accordance with the provisions of
Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Sections 6.9 and 7.7;
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 Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Fourth: to the Company or any other obligor on the Securities, as
their interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Securityholders 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
<PAGE>
attorneys' fees, 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 6.7, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Securities.
ARTICLE 7
TRUSTEE
SECTION 7.1. 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 its own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture or the TIA and no covenants or obligations
shall be implied in this Indenture that are adverse to 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, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(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 7.1.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.4 or 6.5.
(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.
<PAGE>
(e) 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 7.1.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree 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) In the absence of bad faith, negligence or wilful misconduct on
the part of the Trustee, the Trustee shall not be responsible for the
application of any money by any Paying Agent other than the Trustee.
SECTION 7.2. Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any 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.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 11.4 and 11.5. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent 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,
debenture, 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, to examine the books, records, and premises of the Company,
personally or by agent or attorney.
(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 of the Securities pursuant to the
provisions of this Indenture, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred by it in compliance with such
request, order or direction.
(g) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection
from liability with respect to any action taken, omitted or suffered by it
<PAGE>
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Subsidiary of the Company, 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 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture or the
Securities other than the Trustee's certificate of authentication.
SECTION 7.5. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the uncured Default or Event of Default within 60 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 Security,
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
Proceeds Purchase Date pursuant to a Net Proceeds Offer and, except in the case
of a failure to comply with Article 5, 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 in good faith
determines that withholding the notice is in the interest of the Securityhold-
ers. The Trustee shall not be deemed to have knowledge of a Default or Event
of Default other than (i) any Event of Default occurring pursuant to Section
6.1(1), 6.1(2) or 4.1; or (ii) any Default or Event of Default of which a Trust
Officer shall have received written notification or obtained actual knowledge.
SECTION 7.6. Reports by Trustee to Holders.
Within 60 days after each _________ of each year beginning with
__________, 1996, 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 Securityholder 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) and 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
The Company shall promptly notify the Trustee if the Securities
become listed on any stock exchange and the Trustee shall comply with TIA
Section 313(d).
<PAGE>
SECTION 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as may be agreed upon by the Company and the Trustee. 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 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 shall indemnify the Trustee and its agents, employees,
stockholders and directors for, and hold them harmless against, any loss,
liability or expense 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 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. The Company shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel 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 7.7, the
Trustee shall have a lien prior to the Securities 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 Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(6) or (7) occurs, such expenses and the
compensation for such services shall be paid to the extent allowed under any
Bankruptcy Law.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Securities may remove the
Trustee by so notifying the Company and the Trustee 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
<PAGE>
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 Securities 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. Promptly 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 7.7, 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
Securityholder.
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 Securities
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 Securityholder
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
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9. 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 corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1) and 310(a)(2). 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
$100,000,000 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.
Neither the Company nor any other obligor on the Securities nor any person
directly or indirectly controlling, or controlled by, or under common control
with the Company or any other obligor on the Securities shall serve as Trustee
upon any of the Securities.
<PAGE>
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 any
other obligor of the Securities.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect and the
obligations of the Company under the Securities and this Indenture shall
terminate (except that the obligations under Sections 7.7, 8.4 and 8.5 shall
survive the effect of this Article Eight) when all outstanding Securities
theretofore authenticated and issued have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it hereunder.
In addition, at the Company's option, either (a) the Company shall be
deemed to have been Discharged from any and all obligations with respect to the
Securities (except for certain obligations of the Company to register the
transfer or exchange of such Securities, replace stolen, lost or mutilated
Securities, maintain paying agencies and hold moneys for payment in trust)
after the applicable conditions set forth below have been satisfied or (b) the
Company shall cease to be under any obligation to comply with any term,
provision or condition set forth in Article Four (except that the Company's
obligations under Sections 4.1 and 4.2 shall survive) and Section 5.1 after the
applicable conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders of
the Securities U.S. Legal Tender or U.S. Government Obligations or a com-
bination thereof which, through the payment of interest thereon and
principal in respect thereof in accordance with their terms, will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge each installment of principal of and
interest on the outstanding Securities on the dates such installments of
interest or principal to any Stated Maturity of the Securities selected by
the Company; provided that no deposits made pursuant to this Section
8.1(1) shall cause the Trustee to have a conflicting interest as defined
in and for purposes of the TIA; provided, further, that from and after the
time of deposit, the Funds deposited shall not be subject to the rights of
holders of Senior Debt pursuant to the provisions of Article Ten; and
provided, further, that no such deposit shall result in the Company, the
Trustee or the trust becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940;
(2) The Company shall have delivered to the Trustee an Opinion of
Counsel or a private letter ruling issued to the Company by the IRS to the
effect that the Holders of the Securities will not recognize income, gain
or loss for federal income tax purposes as a result of the deposit and
<PAGE>
related defeasance and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have been the
case if such option had not been exercised and, in the case of an Opinion
of Counsel furnished in connection with a Discharge pursuant to the
foregoing, accompanied by a private letter ruling issued to the Company by
the IRS to such effect;
(3) No Event of Default or Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit;
(4) The Company shall have delivered to the Trustee an Opinion of
Counsel, subject to certain qualifications, to the effect that (i) the
Funds will not be subject to any rights of any other holders of
Indebtedness of the Company, and (ii) the Funds so deposited will not be
subject to avoidance under applicable Bankruptcy Law;
(5) The Company shall have paid or duly provided for payment of all
amounts then due to the Trustee pursuant to Section 7.7;
(6) No such deposit will result in a Default under this Indenture or
a breach or violation of, or constitute a default under, any other
instrument or agreement (including, without limitation, the Credit
Agreement) to which the Company or any of its Subsidiaries is a party or
by which it or its property is bound; and
(7) An Officers' Certificate and an Opinion of Counsel to the effect
that all conditions precedent to the defeasance have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel required by
clause (i) of paragraph 4 above need not be delivered if all Securities not
theretofore delivered to the Trustee for cancellation (i) have become due and
payable, (ii) will become due and payable on the Maturity Date within one year,
or (iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except (i) the rights
of the Holders of Securities to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest on such
Securities when such payments are due, (ii) the Company's obligations with
respect to the Securities under Sections 2.3 through 2.7, 7.7 and 7.8 and (iii)
the rights, powers, trusts, duties and immunities of the Trustee hereunder.
"Funds" means the aggregate amount of U.S. Legal Tender and/or U.S.
Government Obligations deposited with the Trustee pursuant to this Article
Eight.
"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.
<PAGE>
SECTION 8.2. Acknowledgment of Discharge by Trustee.
Subject to Section 8.5, after (i) the conditions of Section 8.1, have
been satisfied and (ii) the Company has delivered to the Trustee an Opinion of
Counsel, stating that all conditions precedent referred to in clause (i) above
relating to the satisfaction and discharge of this Indenture have been complied
with, the Trustee upon written request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in this Article Eight.
SECTION 8.3. Application of Trust Money.
The Trustee shall hold in trust Funds deposited with it pursuant to
Section 8.1. It shall apply the Funds through the Paying Agent and in
accordance with this Indenture to the payment of principal and accrued and
unpaid interest on the Securities.
SECTION 8.4. Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the Company
any Funds held by them for the payment of principal or interest that remains
unclaimed for one year; provided, however, that the Trustee or such Paying
Agent 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 mailed to each
Holder, notice that such Funds remain unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication or mailing, any unclaimed balance of such Funds then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to
the Funds must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person and all liability
of the Trustee and Paying Agent with respect to such Funds shall cease.
SECTION 8.5. Reinstatement.
If the Trustee or Paying Agent is unable to apply any Funds 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 Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.1 until such time as the Trustee or Paying Agent is permitted to
apply all such Funds in accordance with Section 8.1; provided, however, that if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from Funds held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Securities without
notice to or consent of any Securityholder:
<PAGE>
(1) to cure any ambiguity, defect or inconsistency; provided that
such amendment or supplement does not adversely affect the rights of any
Holder in any material respect;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
(4) to make any other change that does not adversely affect in any
material respect the rights of any Securityholders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel
and an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 9.1.
SECTION 9.2. With Consent of Holders.
Subject to Section 6.7, 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 principal amount of the outstanding
Securities may amend or supplement this Indenture or the Securities, without
notice to any other Securityholders. Subject to Sections 6.4 and 6.7, the
Holder or Holders of a majority in aggregate principal amount of the
outstanding Securities may waive compliance by the Company with any provision
of this Indenture or the Securities without notice to any other Securityholder.
No amendment, supplement or waiver, including a waiver pursuant to Section 6.4,
shall, directly or indirectly, without the consent of each Holder of each
Security affected thereby:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or change the time for payment of interest,
including defaulted interest, on any Securities;
(3) reduce the principal of or change the fixed maturity of any
Securities, or change the date on which any Securities may be subject to
redemption or repurchase, or reduce the redemption or repurchase price
therefor;
(4) make any Securities payable in money other than that stated in
the Securities;
(5) make any change in provisions of this Indenture protecting the
right of each Holder of a Security to receive payment of principal of and
interest on such Security 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 Securities to waive Defaults or Events of Default,
other than ones with respect to the payment of principal of or interest on
the Securities, or relating to certain amendments of this Indenture;
(6) after the Company's obligation to purchase the Securities arises
thereunder, amend, modify or change the obligation of the Company to make
or consummate a Change of Control Offer or a Net Proceeds Offer or waive
any default in the performance thereof or modify any of the provisions or
definitions with respect to any such offers; or
<PAGE>
(7) make any change in Article 10 or the definitions used in Article
10 that adversely affects the Holders of the Securities.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective (as provided in Section 9.4), 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 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. 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 Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to his Security or portion of his
Security 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 Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver (at
which time such amendment, supplement or waiver shall become effective).
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 120
days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (7) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; 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 Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
<PAGE>
SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
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 Security
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 9.6. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article 9; provided that the Trustee may, but shall
not be obligated to, execute any such amendment, supplement or waiver which
affects the Trustee's own rights, duties or immunities under this Indenture.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel and an Officers' Certificate each stating
that the execution of any amendment, supplement or waiver authorized pursuant
to this Article 9 is authorized or permitted by this Indenture. Such Opinion
of Counsel shall not be an expense of the Trustee.
SECTION 9.7. Effect on Senior Debt.
No amendment of this Indenture shall adversely affect the rights of
any holder of Senior Debt under Article 10 of this Indenture, without the
consent of such holder.
ARTICLE 10
SUBORDINATION
SECTION 10.1. Securities Subordinated to Senior Debt.
The Company covenants and agrees and the Trustee and each Holder of
the Securities, by its acceptance thereof, likewise covenants and agrees, that
all Securities shall be issued subject to the provisions of this Article 10;
and the Trustee and each Person holding any Security, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees that
the payment of all Obligations on the Securities (except for the payment of
fees and expenses of the Trustee under Section 7.7) by the Company shall, to
the extent and in the manner herein set forth, be subordinated and junior in
right of payment to the prior payment in full in cash or Cash Equivalents (or
such payment shall be duly provided for to the satisfaction of the holders of
the Senior Debt) of all Obligations on the Senior Debt; that the subordination
is for the benefit of, and shall be enforceable directly by, the holders of
Senior Debt, and that each holder of Senior Debt whether now outstanding or
hereafter created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Debt in reliance upon the covenants and provisions contained in
this Indenture and the Securities.
SECTION 10.2. No Payment on Securities in Certain Circumstances.
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on or any other amounts owing with respect to any Senior
Debt, no payment of any kind or character (except (i) in Qualified Capital
Stock issued by the Company to pay interest on the Securities or issued in
<PAGE>
exchange for the Securities, (ii) in securities substantially identical to the
Securities issued by the Company in payment of interest accrued thereon or
(iii) in securities issued by the Company which are subordinated to the Senior
Debt at least to the same extent as the Securities and having a Weighted
Average Life to Maturity at least equal to the remaining Weighted Average Life
to Maturity of the Securities (the issuance of such subordinated securities to
be consented to by the holders of at least a majority of the outstanding amount
of Senior Debt consisting of each class of Designated Senior Debt then
outstanding, which subordinated securities shall be issued in exchange for
outstanding Securities or to pay interest accrued on outstanding Securities))
shall be made by the Company or any other Person on behalf of the Company with
respect to any Obligations on the Securities or to acquire any of the
Securities for cash or property or otherwise. In addition, if any other event
of default occurs and is continuing (or if such an event of default would occur
upon any payment with respect to the Securities or would arise upon the passage
of time as a result of such payment) with respect to any Designated Senior Debt
(as such event of default is defined in the instrument creating or evidencing
such Designated Senior Debt) and such event of default permits the holders of
such Designated Senior Debt then outstanding to accelerate the maturity thereof
and if the Representative for the respective issue of Designated Senior Debt
gives written notice of the event of default to the Company and the Trustee (a
"Default Notice"), then, unless and until all events of default have been cured
or waived or have ceased to exist or the Company and the Trustee receives
notice from the Representative for the respective issue of Designated Senior
Debt terminating the Blockage Period, during the 180 days after the delivery of
such Default Notice (the "Blockage Period"), neither the Company nor any other
Person on behalf of the Company shall make any payment of any kind or character
(except (i) in Qualified Capital Stock issued by the Company to pay interest on
the Securities or issued in exchange for the Securities, (ii) in securities
substantially identical to the Securities issued by the Company in payment of
interest accrued thereon or (iii) in securities issued by the Company which are
subordinated to the Senior Debt at least to the same extent as the Securities
and having a Weighted Average Life to Maturity at least equal to the remaining
Weighted Average Life to Maturity of the Securities (the issuance of such
subordinated securities to be consented to by the holders of at least a
majority of the outstanding amount of Senior Debt consisting of each class of
Designated Senior Debt then outstanding, which subordinated securities shall be
issued in exchange for outstanding Securities or to pay interest accrued on
outstanding Securities)) with respect to any Obligations on the Securities or
to acquire any of the Securities for cash or property or otherwise.
Notwithstanding anything herein to the contrary, in no event will a Blockage
Period extend beyond 180 days from the date the payment on the Securities was
due and only one such Blockage Period may be commenced within any 360
consecutive days. For all purposes of this Section 10.2(a), no event of
default which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Senior Debt initiating such
Blockage Period shall be, or be made, the basis for the commencement of a
second Blockage Period by the Representative of such Designated Senior Debt,
whether or not within a period of 360 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provision under which an event of default
previously existed or was continuing shall constitute a new event of default
for this purpose).
<PAGE>
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.2(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to
such holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any, received from the holders of
Senior Debt (or their Representatives) or, if such information is not received
from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the
holders of Senior Debt.
Nothing contained in this Article 10 shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to section 6.2 or to pursue any rights or
remedies hereunder; provided that all Senior Debt thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Holders are entitled to receive any payment with respect to Obligations on the
Securities.
SECTION 10.3. Payment Over of Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshalling of assets of the Company or in a
bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash or Cash Equivalents, or such payment duly
provided for to the satisfaction of the holders of the Senior Debt, before any
payment or distribution of any kind or character is made on account of any
Obligations on the Securities, or for the acquisition of any of the Securities
for cash or property or otherwise. Upon any such dissolution, winding-up,
liquidation, reorganization, receivership or similar proceeding, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to which the Holders of the Securities or the
Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the Trustee under this Indenture if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the respective amounts of Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the
payment of Senior Debt remaining unpaid until all such Senior Debt has been
paid in full in cash or Cash Equivalents after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of Senior
Debt.
(b) To the extent any payment of Senior Debt (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
<PAGE>
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person, the Senior Debt or part
thereof originally intended to be satisfied shall be deemed to be reinstated
and outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by Section 10.3(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five and as long as permitted under the terms of the Senior Debt shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five.
SECTION 10.4. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in
Sections 10.2 and 10.3, from making payments at any time for the purpose of
making payments of principal of and interest on the Securities, or from
depositing with the Trustee any moneys for such payments, or (ii) in the
absence of actual knowledge by the Trustee that a given payment would be
prohibited by Section 10.2 or 10.3, the application by the Trustee of any
moneys deposited with it for the purpose of making such payments of principal
of, and interest on, the Securities to the Holders entitled thereto unless at
least one Business Day prior to the date upon which such payment would
otherwise become due and payable, the Trustee shall have received the written
notice provided for in Section 10.2(a) or in Section 10.7. The Company shall
give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Company.
SECTION 10.5. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Securities shall be subrogated to the rights of
the holders of Senior Debt to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Debt until the
Securities shall be paid in full; and, for the purposes of such subrogation, no
such payments or distributions to the holders of the Senior Debt by or on
behalf of the Company or by or on behalf of the Holders by virtue of this
Article Ten which otherwise would have been made to the Holders shall, as
<PAGE>
between the Company and the Holders of the Securities, be deemed to be a
payment by the Company to or on account of the Senior Debt, it being understood
that the provisions of this Article Ten are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on
the one hand, and the holders of the Senior Debt, on the other hand.
SECTION 10.6. Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and any interest on
the Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Company other than the holders
of the Senior Debt, nor shall anything herein or therein prevent the Holder of
any Security or the Trustee on its behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, in respect of cash, property or securities of
the Company received upon the exercise of any such remedy.
SECTION 10.7. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trust Officer of the Trustee
shall have received notice in writing from the Company, or from a holder of
Senior Debt or a Representative therefor, and, prior to the receipt of any such
written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 10.8. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Securities shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
<PAGE>
delivered to the Trustee or the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Ten.
SECTION 10.9. Trustee's Relation to Senior Debt.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of
any knowledge thereof which any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Securities and without
impairing or releasing the subordination provided in this Article Ten or the
obligations hereunder of the Holders of the Securities to the holders of the
Senior Debt, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt, or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the payment or collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company and any
other Person.
<PAGE>
SECTION 10.11. Securityholders Authorize Trustee To Effectuate Subordination of
Securities.
Each Holder of Securities by its acceptance of such Security
authorizes and expressly directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to effectuate, as between the
holders of Senior Debt and the Holders of Securities, the subordination
provided in this Article Ten, and appoints the Trustee such Holder's
attorney-in-fact for such purposes, including, in the event of any dissolution,
winding-up, liquidation or reorganization of the Company (whether in
bankruptcy, insolvency, receivership, reorganization or similar proceedings or
upon an assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the filing of a claim
for the unpaid balance of its Securities and accrued interest in the form
required in those proceedings.
SECTION 10.12. This Article 10 Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article 10 will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article 10 will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. 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 11.2. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
if to the Company:
The Stroh Brewery Company
100 River Place
Detroit, Michigan 48207-4291
Attention: Chief Financial Officer
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David B. Chapnick
and
<PAGE>
The Stroh Brewery Company
100 River Place
Detroit, Michigan 48207-4291
Attention: General Counsel
if to the Trustee:
_______________________
_______________________
_______________________
Attention: ___________
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 11.4. 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.
<PAGE>
SECTION 11.5. 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 4.6, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(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, he has made
such examination or investigation as is reasonably necessary to enable him
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 11.6. 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 Securityholders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.7. 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 not a Legal Holiday, and no interest shall accrue
for the intervening period.
SECTION 11.8. Governing Law.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 11.9. 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 11.10. No Recourse Against Others.
A past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creations. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
<PAGE>
SECTION 11.11. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or in the
Securities 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first written above.
THE STROH BREWERY COMPANY
Attest: By:___________________________
Name:
Title:
______________________________
as Trustee
Attest: By:__________________________
Name:
Title:
<PAGE>
EXHIBIT A
THE STROH BREWERY COMPANY
Junior Subordinated Note due 2008
No. $
THE STROH BREWERY COMPANY, an Arizona corporation (the "Company"),
for value received, promises to pay to ___________________ or registered
assigns, the principal sum of __________ Dollars, on _______ __, 2008.
Interest Payment Dates:
Record Dates:
Reference is made to the further provisions of this Security
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 Security to be signed
manually or by facsimile by its duly authorized officers.
THE STROH BREWERY COMPANY
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
<PAGE>
Trustee's Certificate of Authentication
This is one of the Junior Subordinated Notes due 2008 referred to in
the within-mentioned Indenture.
Dated: _______ __, 1996
______________________________
as Trustee
By:_____________________________
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
Junior Subordinated Note due 2008
1. Interest. THE STROH BREWERY COMPANY, an Arizona corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at the rate per annum shown above until ________ __, 2003 and thereafter at a
rate of 13% per annum. Interest on the Securities will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from _______ __, 1996. The Company will pay interest semi-annually in arrears
on each Interest Payment Date, commencing ____ __, 1996. Interest will be com-
puted on the basis of a 360-day year of twelve 30-day months.
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
Securities to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Securities (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 Securities are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities 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, ______________________
___________________ will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act as Registrar or co-Registrar.
4. Indenture. The Company issued the Securities under an Indenture,
dated as of _______ __, 1996, between the Company and ______________________
_________________ (the "Trustee") (the "Indenture"). This Security is one of
a duly authorized issue of Securities of the Company designated as its Junior
Subordinated Notes due 2008 (the "Securities"), limited (except as otherwise
provided in the Indenture) in aggregate principal amount up to $_________,
which may be issued under the Indenture. The terms of the Securities 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"), as in effect on the date of the Indenture. Notwithstanding anything
to the contrary herein, the Securities are subject to all such terms, and
Holders of Securities are referred to the Indenture and said Act for a
statement of them. The Securities are general unsecured obligations of the
Company.
5. Subordination. The Securities are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on his
<PAGE>
behalf, to take such action as may be necessary or appropriate to effectuate
the subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Optional Redemption. The Securities may not be redeemed by the
Company prior to _______ __, 2001. Thereafter, the Company may redeem all or
any of the Securities at any time at a purchase price equal to 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date.
Except as set forth in the Indenture, if monies for the redemption of
the Securities 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, the Securities called for redemption
will cease to bear interest from and after such Redemption Date and the only
right of the Holders of such Securities will be to receive payment of the
Redemption Price.
7. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at such Holder's registered address.
Securities in denominations larger than $1,000 may be redeemed in part.
8. Change of Control Offer. In the event of a Change of Control,
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Securities
pursuant to a Change of Control Offer at a purchase price equal to 100% of the
principal amount thereof plus accrued interest, if any, to the date of
repurchase. Holders of Securities which are the subject of such an offer to
repurchase shall receive an offer to repurchase and may elect to have such
Securities repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
9. Denominations; Transfer; Exchange. The Securities 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
Securities 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 any Securities during a period
beginning 15 days before the mailing of a redemption notice or any Securities
or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Security
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 one year, 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 Securities
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 Securities (including certain covenants,
<PAGE>
but excluding its obligation to pay the principal of and interest on the
Securities).
13. Amendment, Supplement, Waiver. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Securities 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 Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities, or comply
with Article 5 of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a
Security.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, merge or consolidate with any other Person, sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets or
adopt a plan of liquidation. 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.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Securities 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 Securities then outstanding may declare all the Securities to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated
to enforce the Indenture or the Securities unless it has been offered
reasonable indemnity or security. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines in good faith 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
Securities 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 past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Securities 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 Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
<PAGE>
19. Authentication. This Security shall not be valid until the
Trustee or authenticating agent manually signs the certificate of
authentication on this Security.
20. Governing Law. The laws of the State of New York shall govern
this Security and the Indenture, without regard to principles of conflict of
laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Security 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 Securities as a convenience to the Holders
of the Securities. No representation is made as to the accuracy of such
numbers as printed on the Securities and reliance may be placed only on the
other identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time. Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture, which has the text of this
Security in larger type. Requests may be made to: THE STROH BREWERY COMPANY,
100 River Place, Detroit, Michigan 48207-4291, Attention: Chief Financial
Officer.
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- ---------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------------------------
(please print or type name and address)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
- ------------------------------------------------------------------------------
attorney to transfer the Security on the books of the Issuer with full power of
substitution in the premises.
Dated: _________________ ________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the face
of the within Security in every particular without
alteration or enlargement or any change whatsoever
and be guaranteed by the endorser's bank or broker.
<PAGE>
INDENTURE
Dated as of _______ __, 1996
BETWEEN
THE STROH BREWERY COMPANY, as Issuer
and
_______________________________________, as Trustee
___________________
$
Junior Subordinated Notes due 2008
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Incorporation by Reference of TIA . . . . . . . . . . 7
SECTION 1.3. Rules of Construction . . . . . . . . . . . . . . . . 8
ARTICLE 2
THE SECURITIES . . . . . . . . . . . . . 8
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . 8
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . 9
SECTION 2.4. Paying Agent To Hold Assets in Trust . . . . . . . . . 9
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . 10
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . 10
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . 10
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . 11
SECTION 2.9. Treasury Securities . . . . . . . . . . . . . . . . . 11
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . 11
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . 12
SECTION 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.14. Deposit of Moneys . . . . . . . . . . . . . . . . . . 12
ARTICLE 3
REDEMPTION . . . . . . . . . . . . . . 12
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . 12
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . . . 13
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . 13
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . 14
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . 14
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . . . 14
ARTICLE 4
COVENANTS AND REPRESENTATIONS . . . . . . . . . . 14
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . 14
SECTION 4.2. Maintenance of Office or Agency . . . . . . . . . . . 14
SECTION 4.3. Corporate Existence . . . . . . . . . . . . . . . . . 15
SECTION 4.4. Payment of Taxes and Other Claims . . . . . . . . . . 15
SECTION 4.5. Maintenance of Properties and Insurance . . . . . . . 15
SECTION 4.6. Compliance Certificate; Notice of Default . . . . . . 16
SECTION 4.7. Compliance with Laws . . . . . . . . . . . . . . . . . 16
SECTION 4.8. SEC Reports . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.9. Waiver of Stay, Extension or Usury Laws . . . . . . . 17
SECTION 4.10. Change of Control . . . . . . . . . . . . . . . . . . 17
<PAGE>
SECTION 4.11. Investment Company Act . . . . . . . . . . . . . . . . 19
SECTION 4.12. Payments for Consents . . . . . . . . . . . . . . . . 19
SECTION 4.13. Limitation on Restricted Payments . . . . . . . . . . 19
SECTION 4.14. Representations . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5
SUCCESSOR CORPORATION . . . . . . . . . . . . 20
SECTION 5.1. When Company May Merge, Etc . . . . . . . . . . . . . 20
SECTION 5.2. Successor Corporation Substituted . . . . . . . . . . 21
ARTICLE 6
DEFAULT AND REMEDIES . . . . . . . . . . . . 21
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . 21
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . 23
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . 24
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . 24
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . . . 24
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . 24
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . 25
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . 25
ARTICLE 7
TRUSTEE . . . . . . . . . . . . . . . 26
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . 26
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . 27
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . 28
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . 28
SECTION 7.5. Notice of Default . . . . . . . . . . . . . . . . . . . 28
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . 28
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . 29
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . 29
SECTION 7.9. Successor Trustee by Merger, Etc . . . . . . . . . . . 30
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . . . . 30
SECTION 7.11. Preferential Collection of Claims Against Company. . . 31
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE . . . . . . . . 31
SECTION 8.1. Termination of Company's Obligations . . . . . . . . . 31
SECTION 8.2. Acknowledgment of Discharge by Trustee. . . . . . . . . 33
SECTION 8.3. Application of Trust Money. . . . . . . . . . . . . . . 33
SECTION 8.4. Repayment to the Company. . . . . . . . . . . . . . . . 33
SECTION 8.5. Reinstatement . . . . . . . . . . . . . . . . . . . . . 33
<PAGE>
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . 33
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . 33
SECTION 9.2. With Consent of Holders. . . . . . . . . . . . . . . . 34
SECTION 9.3. Compliance with TIA . . . . . . . . . . . . . . . . . . 35
SECTION 9.4. Revocation and Effect of Consents . . . . . . . . . . . 35
SECTION 9.5. Notation on or Exchange of Securities. . . . . . . . . 35
SECTION 9.6. Trustee To Sign Amendments, Etc. . . . . . . . . . . . 36
SECTION 9.7. Effect on Senior Debt . . . . . . . . . . . . . . . . . 36
ARTICLE 10
SUBORDINATION . . . . . . . . . . . . . . 36
SECTION 10.1. Securities Subordinated to Senior Debt . . . . . . . . 36
SECTION 10.2. No Payment on Securities in Certain Circumstances . . 36
SECTION 10.3. Payment Over of Proceeds upon Dissolution, Etc. . . . 38
SECTION 10.4. Payments May Be Paid Prior to Dissolution . . . . . . 39
SECTION 10.5. Subrogation . . . . . . . . . . . . . . . . . . . . . 39
SECTION 10.6. Obligations of the Company Unconditional . . . . . . . 40
SECTION 10.7. Notice to Trustee . . . . . . . . . . . . . . . . . . 40
SECTION 10.8. Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . 40
SECTION 10.9. Trustee's Relation to Senior Debt . . . . . . . . . . 41
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt. . . . . . 41
SECTION 10.11. Securityholders Authorize Trustee To Effectuate
Subordination of Securities. . . . . . . . . . . . . . 41
SECTION 10.12. This Article 10 Not To Prevent Events of Default . . . 42
SECTION 10.13. Trustee's Compensation Not Prejudiced . . . . . . . . 42
ARTICLE 11
MISCELLANEOUS . . . . . . . . . . . . . . 42
SECTION 11.1. TIA Controls . . . . . . . . . . . . . . . . . . . . . 42
SECTION 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 11.3. Communications by Holders with Other Holders . . . . . 43
SECTION 11.4. Certificate and Opinion as to Conditions Precedent . . 43
SECTION 11.5. Statements Required in Certificate or Opinion . . . . 43
SECTION 11.6. Rules by Trustee, Paying Agent, Registrar . . . . . . 44
SECTION 11.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.8. Governing Law . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.9. No Adverse Interpretation of Other Agreements . . . . 44
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . 44
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.12. Duplicate Originals . . . . . . . . . . . . . . . . . 45
SECTION 11.13. Severability . . . . . . . . . . . . . . . . . . . . 45
Exhibit A - Form of Security . . . . . . . . . . . . . . . . . . . . . . . A-1
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10; 11.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 11.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6; 4.8; 11.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 11.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
________________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
EXHIBIT T3E-1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- -----------------------------------x
:
In re : Chapter 11 Case Nos.
: 96-501 (PJW) and
G. HEILEMAN BREWING COMPANY, INC., : 96-503 (PJW) through
et al., : 96-513 (PJW)
: (Jointly Administered)
Debtors. :
:
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AMENDED JOINT PLAN OF REORGANIZATION
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
and Debtors in Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
-and-
100 Crescent Court
Dallas, Texas 75201
(214) 746-7700
-and-
RICHARDS, LAYTON & FINGER, P.A.
Attorneys for the Debtors
and Debtors in Possession
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
Dated: Wilmington, Delaware
May 6, 1996
<PAGE>
AMENDED JOINT PLAN OF REORGANIZATION
G. Heileman Brewing Company, Inc., Heileman Holding Company, Blitz-
Weinhard Brewing Company, Inc., Carling National Brewing Company, Inc.,
Christian Schmidt Brewing Company, Inc., GHB Souvenir Sales, Inc., Heileman Air
Services, Inc., Heileman Brewing Company, Inc., Heileman Export Marketing,
Inc., HBC Leasing Company, Inc., Lone Star Brewing Company, Inc. and Rainier
Brewing Company, Inc. jointly and severally propose the following Amended Joint
Plan of Reorganization:
SECTION 1. DEFINITIONS AND INTERPRETATION
A. Definitions.
The following terms used herein shall have the respective meanings
defined below:
1.1. Acquisition Agreement means that certain Asset Purchase
Agreement dated as of April 1, 1996 among G. Heileman Brewing Company, Inc.,
Blitz-Weinhard Brewing Company, Inc., Carling National Brewing Company, Inc.,
Christian Schmidt Brewing Company, Inc., GHB Souvenir Sales, Inc., Heileman Air
Services, Inc., Heileman Brewing Company, Inc., Heileman Export Marketing,
Inc., HBC Leasing Company, Inc., Lone Star Brewing Company, Inc., and Rainier
Brewing Company, Inc., and The Stroh Brewery Company, annexed as Exhibit A
hereto, as the same may be amended from time to time in accordance with the
terms thereof, subject to the Plan Undertaking Agreement.
1.2. Administration Expense Claim means any right to payment
constituting a cost or expense of administration of any of the Reorganization
Cases allowed under sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, any actual and necessary costs and expenses of
preserving the estates of the Debtors, any actual and necessary costs and
expenses of operating the business of the Debtors, any indebtedness or
obligations incurred or assumed by the Debtors in Possession in connection with
the conduct of their business, including, without limitation, for the
acquisition or lease of property or an interest in property or the rendition of
services, any allowances of compensation and reimbursement of expenses to the
extent allowed by Final Order under section 330 or 503 of the Bankruptcy Code,
and any fees or charges assessed against the estates of the Debtors under
section 1930, chapter 123, title 28, United States Code.
1.3. Affiliate means, with reference to any entity, any other entity
that, within the meaning of Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended, "controls," is "controlled by" or is under
"common control with" such entity.
1.4. Allowed means, with reference to any Claim or Equity Interest,
(a) any Claim or Equity Interest against any Debtor which has been listed by
such Debtor in its Schedules, as such Schedules may be amended by the Debtors
before the Consummation Date and by the Consolidated Company after the
Consummation Date from time to time in accordance with Bankruptcy Rule 1009, as
liquidated in amount and not disputed or contingent and for which no contrary
proof of claim has been filed, (b) any Claim or Equity Interest allowed by
Final Order, (c) any Claim or Equity Interest as to which the liability of the
Debtors and the amount thereof are determined by final order of a court of
<PAGE>
competent jurisdiction other than the Bankruptcy Court or (d) any Claim allowed
hereunder.
1.5. Ballot means the form or forms distributed to each holder of an
impaired Claim or Equity Interest on which is to be indicated acceptance or
rejection of this Plan of Reorganization.
1.6. Ballot Date means the date fixed by the Bankruptcy Court by
which all Ballots for acceptance or rejection of this Plan of Reorganization
must be received.
1.7. Bankruptcy Code means title 11, United States Code, as
applicable to the Reorganization Cases.
1.8. Bankruptcy Court means the United States District Court for the
District of Delaware having jurisdiction over the Reorganization Cases and, to
the extent of any reference under section 157, title 28, United States Code,
the unit of such District Court under section 151, title 28, United States
Code.
1.9. Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure as promulgated by the United States Supreme Court under section 2075,
title 28, United States Code, and any Local Rules of the Bankruptcy Court.
1.10. Business Day means any day other than a Saturday, a Sunday or
any other day on which banking institutions in New York, New York are required
or authorized to close by law or executive order.
1.11. Cash means legal tender of the United States of America.
1.12. Causes of Action means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights, suits, debts, sums
of money, damages, judgments, claims and demands whatsoever, whether known or
unknown, in law, equity or otherwise.
1.13. Claim means (a) any right to payment from any of the Debtors,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured or (b) any right to an equitable remedy for breach of
performance if such breach gives rise to a right of payment from any of the
Debtors, whether or not such right to an equitable remedy is reduced to judg-
ment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or
unsecured.
1.14. Collateral means any property or interest in property of the
estate of any Debtor subject to a Lien to secure the payment or performance of
a Claim, which Lien is not subject to avoidance under the Bankruptcy Code.
1.15. Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on its docket.
1.16. Confirmation Hearing means the hearing held by the Bankruptcy
Court on confirmation of this Plan of Reorganization, as such hearing may be
adjourned or continued from time to time.
1.17. Confirmation Order means the order of the Bankruptcy Court
confirming this Plan of Reorganization.
<PAGE>
1.18. Consolidated Company means The Stroh Brewery Company after
giving effect to the Transaction and consummation of this Plan of
Reorganization.
1.19. Consummation Date means the later to occur of (a) the eleventh
day (calculated under Bankruptcy Rule 9006) after the Confirmation Date if no
stay of the Confirmation Order is then in effect or (b) such other date as is
fixed from time to time after the Confirmation Date by the Debtors by filing a
notice thereof with the Bankruptcy Court, but in no event shall the
Consummation Date occur earlier than the date of the satisfaction of each of
the conditions precedent to the occurrence of the Consummation Date of this
Plan of Reorganization in section 10.2 hereof unless waived as provided in
section 10.3 hereof.
1.20. Creditors' Committee means, on and after the date of its
organization by the U.S. Trustee, the statutory unsecured creditors' committee
appointed in the Reorganization Cases under section 1102 of the Bankruptcy
Code.
1.21. Debtor means each of G. Heileman Brewing Company, Inc., a
Delaware corporation, Heileman Holding Company, a Delaware corporation, Blitz-
Weinhard Brewing Company, Inc., a Delaware corporation, Carling National
Brewing Company, Inc., a Delaware corporation, Christian Schmidt Brewing
Company, Inc., a Delaware corporation, GHB Souvenir Sales, Inc., a Delaware
corporation, Heileman Air Services, Inc., a Delaware corporation, Heileman
Brewing Company, Inc., a Delaware corporation, Heileman Export Marketing, Inc.,
a Delaware corporation, HBC Leasing Company, Inc., a Delaware corporation, Lone
Star Brewing Company, Inc., a Delaware corporation, and Rainier Brewing
Company, Inc., a Delaware corporation, the debtors in Chapter 11 Case Nos. 96-
501 (PJW) and 96-503 (PJW) through 96-513 (PJW), respectively.
1.22. Debtor in Possession means each Debtor in its capacity as a
debtor in possession under sections 1107(a) and 1108 of the Bankruptcy Code.
1.23. Disbursing Agent means any Entity in its capacity as a
disbursing agent under section 7.2 hereof.
1.24. Disclosure Statement means the Disclosure Statement,
including, without limitation, all exhibits and schedules thereto, in the form
approved by the Bankruptcy Court relating to this Plan of Reorganization.
1.25. Disputed Claim means a Claim against a Debtor to the extent
that such Claim is not an Allowed Claim.
1.26. Equity Interest means any share of common stock or other
instrument evidencing a present ownership interest in any of the Debtors,
whether or not transferable.
1.27. Escrow A means that certain escrow created under the Escrow
Agreement in substantially the form of Exhibit E to the Acquisition Agreement.
1.28. Escrow B means that certain escrow created under the Warrant
Escrow Agreement in substantially the form of Exhibit K to the Acquisition
Agreement.
1.29. Escrow Agent means the escrow agent for Escrow A and Escrow
B.
<PAGE>
1.30. Existing Credit Agreement means, collectively, that certain
Credit Agreement dated as of January 21, 1994 among Heileman Holding Company,
Heileman Acquisition Company (the predecessor in interest to G. Heileman
Brewing Company, Inc.), the banks party thereto from time to time and Bankers
Trust Company as agent as the same may have been amended from time to time in
accordance with the terms thereof, and the Security Documents referred to
therein, as the same may have been amended from time to time in accordance with
the terms thereof.
1.31. Existing Indenture means that certain Indenture dated as of
January 15, 1994 between Heileman Acquisition Company (the predecessor in
interest to G. Heileman Brewing Company, Inc.) as issuer and United States
Trust Company of New York as trustee as the same may have been supplemented
from time to time in accordance with the terms thereof.
1.32. Existing Indenture Trustee means United States Trust Company
of New York, in its capacity as indenture trustee under the Existing Indenture,
or any successor indenture trustee to United States Trust Company of New York
appointed in accordance with the terms of the Existing Indenture.
1.33. Existing Senior Subordinated Notes means those certain 9-5/8%
Senior Subordinated Notes due 2004 issued by Heileman Acquisition Company (the
predecessor in interest to G. Heileman Brewing Company, Inc.) under the
Existing Indenture.
1.34. Final Order means an order or judgment of the Bankruptcy Court
entered by the Clerk of the Bankruptcy Court on the docket in the
Reorganization Cases, which has not been reversed, vacated or stayed and as to
which (a) the time to appeal, petition for certiorari or move for a new trial,
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for a new trial, reargument or rehearing shall
then be pending or (b) if an appeal, writ of certiorari, new trial, reargument
or rehearing thereof has been sought, such order or judgment of the Bankruptcy
Court shall have been affirmed by the highest court to which such order was
appealed, or certiorari shall have been denied or a new trial, reargument or
rehearing shall have been denied or resulted in no modification of such order,
and the time to take any further appeal, petition for certiorari or move for a
new trial, reargument or rehearing shall have expired; provided, that the
possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be filed
relating to such order shall not cause such order not to be a Final Order.
1.35. General Unsecured Claim means any Unsecured Claim other than
an Intercompany Affiliate Unsecured Claim or a Subordinated Unsecured Claim.
1.36. Intercompany Affiliate Unsecured Claim means any Unsecured
Claim held by any Debtor against any other Debtor or any Unsecured Claim held
by any Affiliate of a Debtor against such Debtor.
1.37. Lien means any charge against or interest in property or an
interest in property to secure payment of a debt or performance of an
obligation.
1.38. New Junior Subordinated Note Indenture means that certain
Trust Indenture between The Stroh Brewery Company and the Indenture Trustee
named therein in substantially the form of Exhibit C to the Acquisition
Agreement.
<PAGE>
1.39. New Junior Subordinated Notes means those certain Junior
Subordinated Notes due 2008 issued by the Consolidated Company under the New
Junior Subordinated Note Indenture.
1.40. New Senior Subordinated Note Indenture means that certain
Trust Indenture between The Stroh Brewery Company and the Indenture Trustee
named therein in substantially the form of Exhibit B to the Acquisition
Agreement.
1.41. New Senior Subordinated Notes means those certain Senior
Subordinated Notes due 2006 issued by the Consolidated Company under the New
Senior Subordinated Note Indenture.
1.42. New Warrant Agreement means that certain Warrant Agreement
between The Stroh Brewery Company and the Warrant Agent named therein in
substantially the form of Exhibit D to the Acquisition Agreement.
1.43. New Warrants means those certain Warrants issued by the
Consolidated Company under the New Warrant Agreement.
1.44. Other Secured Claims means any Secured Claim not constituting
a Senior Secured Claim.
1.45. Oversight Committee means the committee delegated the rights
and exercising the functions of the Debtors under the Acquisition Agreement on
and after the Consummation Date as contemplated by section 6.5 hereof.
1.46. Petition Date means April 3, 1996, the date on which each of
the Debtors filed its voluntary petition for relief under the Bankruptcy Code.
1.47. Plan of Reorganization means this Amended Joint Plan of
Reorganization, including, without limitation, the exhibits and schedules
hereto, as the same may be amended or modified from time to time in accordance
with the terms hereof.
1.48. Plan Undertaking Agreement means that certain Plan Undertaking
Agreement dated as of the date hereof among The Stroh Brewery Company, G.
Heileman Brewing Company, Inc. and Hicks, Muse, Tate & Furst Incorporated in
the form of Schedule 1.0 to the Acquisition Agreement.
1.49. Priority Non-Tax Claim means any Claim of a kind specified in
section 507(a)(2), (3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.
1.50. Priority Tax Claim means any Claim of a governmental unit of
the kind specified in section 507(a)(8) of the Bankruptcy Code.
1.51. Prospectus means that certain prospectus dated as of January
13, 1994, under which the Existing Senior Subordinated Notes were offered for
sale by Heileman Acquisition Company (the predecessor in interest to G.
Heileman Brewing Company, Inc.) as the same may have been supplemented.
1.52. Ratable Proportion means, with reference to any distribution
on account of any Allowed Claim or Allowed Equity Interest in any class or
subclass or any beneficial interest in Escrow A or Escrow B, as applicable, a
distribution equal in amount to the ratio (expressed as a percentage) that the
amount of such Allowed Claim or Allowed Equity Interest or such beneficial
interest in Escrow A or Escrow B, as applicable, bears to the aggregate amount
<PAGE>
of Allowed Claims or Allowed Equity Interests of the same class or subclass or
the aggregate beneficial interests in Escrow A or Escrow B, as applicable.
1.53. Releasees means (a) (i) Hicks, Muse, Tate & Furst
Incorporated, (ii) Hicks, Muse, Tate & Furst Equity Fund II, L.P. and (iii)
their respective successors, predecessors, assignors, assignees, parents and
subsidiaries, (b) all present and former officers, directors, trustees,
partners, employees, attorneys, accountants, financial advisors, investment
bankers, appraisers, engineers, stockholders, affiliates, heirs, receivers,
conservators, beneficiaries, executors, administrators, agents and advisors of
or to any of the entities identified in clause (a) above, and (c) any Affiliate
of any entity specified in clause (a) or (b) above.
1.54. Reorganization Cases means the cases commenced under chapter
11 of the Bankruptcy Code by the Debtors on the Petition Date.
1.55. Restructuring Transactions means, collectively, the
transactions described on Schedule 1.55 hereto.
1.56. Schedules means the schedules of assets and liabilities and
the statements of financial affairs filed by the Debtors under section 521 of
the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules
as such schedules and statements have been or may be supplemented or amended.
1.57. Secured Claim means a Claim secured by a Lien on Collateral to
the extent of the value of such Collateral, as determined in accordance with
section 506(a) of the Bankruptcy Code or, in the event that such Claim is
subject to setoff under section 553 of the Bankruptcy Code, to the extent of
such setoff.
1.58. Securities Act means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
1.59. Senior Secured Claim means any Secured Claim governed by the
Existing Credit Agreement or evidenced by any of the promissory notes issued
thereunder.
1.60. Subordinated Unsecured Claim means a Claim governed by the
Existing Indenture or evidenced by any of the Existing Senior Subordinated
Notes issued thereunder.
1.61. Subsidiary Equity Interests means the Equity Interests in any
of the Debtors held by G. Heileman Brewing Company, Inc.
1.62. Transaction means the acquisition of substantially all of the
properties and interests in property of the Debtors by The Stroh Brewery
Company in accordance with the terms and subject to the conditions of the
Acquisition Agreement.
1.63. Unsecured Claim means any Claim against a Debtor that is not
an Administration Expense Claim, a Priority Non-Tax Claim, a Priority Tax Claim
or a Secured Claim.
1.64. U.S. Trustee means the United States Trustee appointed under
section 581, title 28, United States Code to serve in the District of Delaware.
<PAGE>
1.65. Warrant Allocation Schedule means that certain schedule for
allocating the New Warrants between the holders of Allowed Subordinated
Unsecured Claims and holders of Allowed Equity Interests in G. Heileman Brewing
Company, Inc. in the form of Schedule 1.65 annexed hereto.
B. Interpretation; Application of
Definitions and Rules of Construction.
Unless otherwise specified, all section, schedule or exhibit
references in this Plan of Reorganization are to the respective section in,
article of, or schedule or exhibit to, this Plan of Reorganization, as the same
may be amended, waived, or modified from time to time. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to
this Plan of Reorganization as a whole and not to any particular section,
subsection or clause contained in this Plan of Reorganization. A term used
herein that is not defined herein shall have the meaning assigned to that term
in the Bankruptcy Code. The rules of construction contained in section 102 of
the Bankruptcy Code shall apply to the construction of this Plan of
Reorganization. The headings in this Plan of Reorganization are for
convenience of reference only and shall not limit or otherwise affect the
provisions hereof.
SECTION 2. PROVISIONS FOR PAYMENT OF
ADMINISTRATION EXPENSE CLAIMS
AND PRIORITY TAX CLAIMS
2.1. Administration Expense Claims.
On the Consummation Date, each holder of an Allowed Administration
Expense Claim shall be distributed on account of such Allowed Administration
Expense Claim an amount in Cash equal to the amount of such Allowed
Administration Expense Claim, except to the extent that any entity entitled to
payment of any Allowed Administration Expense Claim agrees to a different
treatment of such Administration Expense Claim; provided, that Administration
Expense Claims representing liabilities incurred in the ordinary course of
business by the Debtors in Possession or liabilities arising under loans or
advances to or other obligations incurred by the Debtors in Possession (other
than loans or advances to or other obligations incurred by the Debtors in
Possession under that certain Credit Agreement dated as of April 3, 1996 among
the Debtors, various Banks and Bankers Trust Company as Agent and any
agreement, instrument or other document executed and delivered in connection
therewith), whether or not incurred in the ordinary course of business, shall
be assumed and paid by the Consolidated Company in accordance with the terms
and subject to the conditions of any agreements governing, instruments
evidencing or other documents relating to such transactions.
2.2. Compensation and Reimbursement Claims.
All entities seeking an award by the Bankruptcy Court of compensation
for services rendered or reimbursement of expenses incurred through and
including the Consummation Date under sections 503(b)(2), 503(b)(3), 503(b)(4)
or 503(b)(5) of the Bankruptcy Code (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred by the date that is 45 days after the
Consummation Date and, if granted such an award by the Bankruptcy Court, (b)
shall be paid in full in such amounts as are allowed by the Bankruptcy Court
<PAGE>
(i) upon the later of (A) the Consummation Date and (B) the date upon which the
order relating to any such Administration Expense Claim becomes a Final Order
or (ii) upon such other terms as may be mutually agreed upon between such
holder of an Administration Expense Claim and the Debtors or, on and after the
Consummation Date, the Consolidated Company.
The Consolidated Company shall pay (i) the reasonable fees of and
expenses incurred by the professionals retained by the Creditors' Committee by
order of the Bankruptcy Court and (ii) the reasonable expenses incurred by the
members of the Creditors' Committee, upon the submission of a final invoice to
the Consolidated Company for services rendered after the Consummation Date and
before the dissolution of the Creditors' Committee under section 13.1 hereof.
2.3. Priority Tax Claims.
On the Consummation Date, each holder of an Allowed Priority Tax
Claim shall be distributed on account of such Allowed Priority Tax Claim a
payment in Cash equal to the amount of such Allowed Priority Tax Claim.
<PAGE>
SECTION 3. CLASSIFICATION OF CLAIMS
AND EQUITY INTERESTS
Claims against and Equity Interests in the Debtors are divided into
the following classes:
Class 1 - Priority Non-Tax Claims
Class 2 - Senior Secured Claims
Class 3 - Other Secured Claims
Subclass 3A - G. Heileman Brewing Company, Inc.
Subclass 3B - Heileman Holding Company
Subclass 3C - Blitz-Weinhard Brewing Company, Inc.
Subclass 3D - Carling National Brewing Company, Inc.
Subclass 3E - Christian Schmidt Brewing Company, Inc.
Subclass 3F - GHB Souvenir Sales, Inc.
Subclass 3G - Heileman Air Services, Inc.
Subclass 3H - Heileman Brewing Company, Inc.
Subclass 3I - Heileman Export Marketing, Inc.
Subclass 3J - HBC Leasing Company, Inc.
Subclass 3K - Lone Star Brewing Company, Inc.
Subclass 3L - Rainier Brewing Company, Inc.
Class 4 - General Unsecured Claims
Subclass 4A - G. Heileman Brewing Company, Inc.
Subclass 4B - Heileman Holding Company
Subclass 4C - Blitz-Weinhard Brewing Company, Inc.
Subclass 4D - Carling National Brewing Company, Inc.
Subclass 4E - Christian Schmidt Brewing Company, Inc.
Subclass 4F - GHB Souvenir Sales, Inc.
Subclass 4G - Heileman Air Services, Inc.
Subclass 4H - Heileman Brewing Company, Inc.
Subclass 4I - Heileman Export Marketing, Inc.
Subclass 4J - HBC Leasing Company, Inc.
Subclass 4K - Lone Star Brewing Company, Inc.
Subclass 4L - Rainier Brewing Company, Inc.
Class 5 - Intercompany Affiliate Unsecured Claims
Subclass 5A - G. Heileman Brewing Company, Inc.
Subclass 5B - Heileman Holding Company
Subclass 5C - Blitz-Weinhard Brewing Company, Inc.
Subclass 5D - Carling National Brewing Company, Inc.
Subclass 5E - Christian Schmidt Brewing Company, Inc.
Subclass 5F - GHB Souvenir Sales, Inc.
Subclass 5G - Heileman Air Services, Inc.
Subclass 5H - Heileman Brewing Company, Inc.
Subclass 5I - Heileman Export Marketing, Inc.
Subclass 5J - HBC Leasing Company, Inc.
Subclass 5K - Lone Star Brewing Company, Inc.
Subclass 5L - Rainier Brewing Company, Inc.
Class 6 - Subordinated Unsecured Claims
<PAGE>
Class 7 - Equity Interests
Subclass 7A - G. Heileman Brewing Company, Inc.
Subclass 7B - Heileman Holding Company
Subclass 7C - Subsidiary Equity Interests
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN
4.1. Priority Non-Tax Claims (Class 1).
On the Consummation Date, each holder of an Allowed Priority Non-Tax
Claim shall be distributed on account of such Allowed Priority Claim a payment
in Cash equal to the amount of its Allowed Priority Non-Tax Claim.
4.2. Senior Secured Claims (Class 2).
(a) Allowance of Senior Secured Claims. Each Senior Secured Claim
shall be allowed as of the Petition Date in the amount scheduled opposite the
name of each holder of such Claims on Schedule 4.2 hereto, each such amount to
be subject to adjustment to give effect to any payments made on account of such
Claims after the Petition Date and to any increase in the amount of such Claims
after the Petition Date.
(b) Treatment of Certain Senior Secured Claims. On the Consummation
Date, each holder of an Allowed Senior Secured Claim (including any successor
or assign of any holder identified on Schedule 4.2 hereto), including, without
limitation, an Allowed Senior Secured Claim consisting of a Tranche C
Obligation (as such term is defined in the Existing Credit Agreement) shall be
distributed on account of such Allowed Senior Secured Claim a payment in Cash
equal to such Allowed Senior Secured Claim, which shall include accrued and
unpaid interest (including, without limitation, accrued and unpaid interest on
and after the Petition Date) at the applicable non-default rate under the
Existing Credit Agreement. On the Consummation Date, the Consolidated Company
shall cause all letters of credit issued and outstanding under the Existing
Credit Agreement to be replaced to the reasonable satisfaction of Bankers Trust
Company as agent under the Existing Credit Agreement. After the Consummation
Date, the Consolidated Company shall also pay in Cash any obligations arising
under the Existing Credit Agreement to the extent not paid on the Consummation
Date, including, without limitation, any fees and expenses incurred after the
Consummation Date in connection with the implementation and consummation of
this Plan of Reorganization and obligations arising prior to the Consummation
Date which were not determined or otherwise not paid as of the Consummation
Date, as long as such fees and expenses are disclosed in writing to the
Consolidated Company and counsel to the Creditors' Committee within 15 days
after the Consummation Date.
4.3. Other Secured Claims (Class 3).
On the Consummation Date, each Allowed Other Secured Claim in each
subclass of Class 3 shall be assumed by the Consolidated Company in accordance
with the Acquisition Agreement and the Assumption Agreement contemplated
thereby.
4.4. General Unsecured Claims (Class 4).
<PAGE>
On the Consummation Date, each Allowed General Unsecured Claim in
each subclass of Class 4 shall be assumed by the Consolidated Company in
accordance with the Acquisition Agreement and the Assumption Agreement
contemplated thereby and each holder of an Allowed General Unsecured Claim
shall be entitled to payment in Cash in an amount equal to such Allowed General
Unsecured Claim in accordance with such Assumption Agreement.
4.5. Intercompany Affiliate Unsecured Claims (Class 5).
On the Consummation Date, each holder of an Allowed Intercompany
Affiliate Unsecured Claim in each subclass of Class 5 shall be treated in
accordance with Schedule 1.55 hereto governing the Restructuring Transactions.
4.6. Subordinated Unsecured Claims (Class 6).
(a) Treatment of Subordinated Unsecured Claims. On the Consummation
Date, each holder of an Allowed Subordinated Unsecured Claim shall, in
accordance with Schedule 1.55 hereto governing the Restructuring Transactions,
be distributed on account of such Allowed Subordinated Unsecured Claim its
Ratable Proportion of (i) the beneficial interest in Escrow A allocated to
holders of Subordinated Unsecured Claims thereunder, which escrow shall contain
(a) $70,000,000 in aggregate original principal amount of the New Senior
Subordinated Notes issued to the Debtors (other than Heileman Holding Company)
in accordance with the Acquisition Agreement, subject to adjustment to decrease
such amount in accordance with Sections 2.2 and 2.3 of the Acquisition
Agreement and Schedule 2.2(a) thereto as of the Consummation Date and (b)
$5,000,000 in aggregate original principal amount of the New Junior
Subordinated Notes issued to the Debtors (other than Heileman Holding Company)
in accordance with the Acquisition Agreement, subject to adjustment to decrease
or increase such amount in accordance with Sections 2.2 and 2.3 of the
Acquisition Agreement as of the Consummation Date and (ii) the beneficial
interest in Escrow B allocated to the holders of Subordinated Unsecured Claims
thereunder, which escrow shall contain (a) 706,000 of the New Warrants issued
to the Debtors (other than Heileman Holding Company) in accordance with the
Acquisition Agreement, subject to allocation between the holders of Allowed
Subordinated Unsecured Claims and holders of Allowed Equity Interests in
Subclass 7A (G. Heileman Brewing Company) in accordance with the Warrant
Allocation Schedule and (b) 44,000 of the New Warrants issued to the Debtors
(other than Heileman Holding Company) in accordance with the Acquisition
Agreement, subject to allocation between the holders of Allowed Subordinated
Unsecured Claims and holders of Allowed Equity Interests in Subclass 7A (G.
Heileman Brewing Company, Inc.) in accordance with the agreement governing
Escrow B. In the event that the aggregate original principal amount of the New
Junior Subordinated Notes issued to the Debtors (other than Heileman Holding
Company) in accordance with the Acquisition Agreement after giving effect to
adjustments thereto in accordance with Sections 2.2 and 2.3 of the Acquisition
Agreement exceeds $5,000,000, then each holder of a beneficial interest in
Escrow A distributed on account of an Allowed Subordinated Unsecured Claim
shall be distributed from, and on account of such beneficial interest in,
Escrow A its Ratable Proportion of New Junior Subordinated Notes in an original
aggregate principal amount equal to $5,000,000 together with interest thereon
from the date of deposit into Escrow A, plus 85.0% of such excess, together
with interest thereon from the date of deposit into Escrow A.
(b) Timing and Allocation of Distributions. In accordance with the
Acquisition Agreement, the New Senior Subordinated Notes, the New Junior
<PAGE>
Subordinated Notes and the New Warrants shall be delivered on the Consummation
Date to the Escrow Agent. Distributions to holders of Allowed Subordinated
Unsecured Claims shall be effected in accordance with sections 7.1 and 7.2
hereof. The distributions on account of Allowed Subordinated Unsecured Claims
hereunder shall be allocated first to the principal portion of the Existing
Senior Subordinated Notes and second to accrued and unpaid interest on the
Existing Senior Subordinated Notes.
4.7. Equity Interests (Class 7).
(a) G. Heileman Brewing Company, Inc. (Subclass 7A). On the
Consummation Date, each holder of an Allowed Equity Interest in G. Heileman
Brewing Company, Inc. shall, in accordance with Schedule 1.55 hereto governing
the Restructuring Transactions, be distributed on account of such Allowed
Equity Interest its Ratable Proportion of (i) the beneficial interest in Escrow
A allocated to holders of Equity Interests in G. Heileman Brewing Company, Inc.
and (ii) the beneficial interest in Escrow B allocated to holders of Equity
Interests in G. Heileman Brewing Company, Inc. In the event that the aggregate
original principal amount of the New Junior Subordinated Notes issued to the
Debtors (other than Heileman Holding Company) in accordance with the
Acquisition Agreement after giving effect to adjustments thereto in accordance
with Sections 2.2 and 2.3 of the Acquisition Agreement exceeds $5,000,000, then
each holder of a beneficial interest in Escrow A distributed on account of an
Allowed Equity Interest in Subclass 7A (G. Heileman Brewing Company, Inc.)
shall be distributed from, and on account of such beneficial interest in,
Escrow A its Ratable Proportion of New Junior Subordinated Notes in an original
aggregate principal amount equal to 15.0% of such excess, together with
interest thereon from the date of deposit into Escrow A.
(b) Heileman Holding Company (Subclass 7B). On the Consummation
Date, each holder of an Allowed Equity Interest in Heileman Holding Company
shall be distributed, after giving effect to the Restructuring Transactions, on
account of such Allowed Equity Interest its Ratable Proportion of the (i) the
beneficial interest in Escrow A and (ii) the beneficial interest in Escrow B
distributed on account of the Allowed Equity Interests in G. Heileman Brewing
Company, Inc. under section 4.7(a) hereof.
(c) Subsidiary Equity Interests (Subclass 7C). On the Consummation
Date, each holder of an Allowed Subsidiary Interest shall be treated in
accordance with Schedule 1.55 governing the Restructuring Transactions.
SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS
AND INTERESTS IMPAIRED AND NOT
IMPAIRED UNDER THE PLAN; ACCEPTANCE
OR REJECTION OF THE PLAN
5.1. Holders of Claims and Equity Interests Entitled to Vote.
Each of Classes 2 (Senior Secured Claims), 3 (Other Secured Claims),
4 (General Unsecured Claims), 5 (Intercompany Affiliate Unsecured Claims), 6
(Subordinated Unsecured Claims) and 7 (Equity Interests) and, as applicable,
each subclass thereof are impaired hereunder, and the holders of Claims or
Equity Interests in such classes and, as applicable, each subclass thereof are
entitled to vote on this Plan of Reorganization.
<PAGE>
Each holder of an Allowed Claim or an Allowed Equity Interest in an
impaired class or subclass of Claims against or Equity Interests in any Debtor
shall be entitled to vote separately to accept or reject this Plan of
Reorganization as provided in the order entered by the Bankruptcy Court
governing the voting and balloting procedures applicable to this Plan of
Reorganization. For purposes of calculating the number of Allowed Claims held
by holders of Allowed Claims that have voted to accept or reject this Plan of
Reorganization under section 1126(c) of the Bankruptcy Code, all Allowed Claims
held by any entity or any Affiliate thereof that acquired record ownership of
such Allowed Claims after the Petition Date shall be aggregated and treated as
one Allowed Claim.
5.2. Subtraction and Addition of Classes and Subclasses.
(a) Deletion of Classes and Subclasses. Any class or subclass of
Claims that does not contain as an element thereof an Allowed Claim or a Claim
temporarily allowed under Bankruptcy Rule 3018 as of the date of the
commencement of the Confirmation Hearing shall be deemed deleted from this Plan
of Reorganization for purposes of voting to accept or reject this Plan of
Reorganization and for purposes of determining acceptance or rejection of this
Plan of Reorganization by such class or subclass under section 1129(a)(8) of
the Bankruptcy Code.
(b) Addition of Classes and Subclasses. In the event that any
subclass of Class 3 (Other Secured Claims) would contain as elements thereof
two or more Secured Claims collateralized by different properties or interests
in property or collateralized by liens against the same property or interest in
property having different priority, such Claims shall be divided into separate
subclasses of such subclass of Class 3 (Other Secured Claims).
5.3. Nonconsensual Confirmation.
If any impaired class of Claims or Equity Interests shall not accept
this Plan of Reorganization by the requisite statutory majorities provided in
sections 1126(c) or 1126(d) of the Bankruptcy Code, as applicable, the Debtors
reserve the right, subject to their obligations under the Acquisition
Agreement, to amend this Plan of Reorganization in accordance with section 15.2
hereof.
5.4. Severability of Plan of Reorganization.
This Plan of Reorganization is, severally, a plan of reorganization
for each of the Debtors. In the event that this Plan of Reorganization is not
confirmed for all Debtors, then this Plan of Reorganization may not be
confirmed for any Debtor; provided, that, notwithstanding the foregoing, if
this Plan of Reorganization is not confirmed for any or all of the Debtors
other than Heileman Holding Company and G. Heileman Brewing Company, Inc., the
other Debtors may, subject to their obligations under the Acquisition
Agreement, waive this limitation and this Plan of Reorganization may be
confirmed for such other Debtors.
5.5. Revocation of Plan of Reorganization.
<PAGE>
The Debtors reserve the right to revoke and withdraw this Plan of
Reorganization as to any or all Debtors at any time prior to entry of the
Confirmation Order, subject to their obligations under the Acquisition
Agreement. In the event that this Plan of Reorganization is so revoked or
withdrawn as to any or all Debtors, then this Plan of Reorganization shall be
deemed null and void as it relates to each such Debtor.
SECTION 6. MEANS OF IMPLEMENTATION
6.1. Closing of Transaction.
On the Consummation Date, the closing of the Transaction shall occur
in accordance with the Acquisition Agreement and, on the terms and subject to
the conditions contained in the Acquisition Agreement, the Debtors (other than
Heileman Holding Company) shall receive the consideration provided therein and
shall make the distributions provided hereunder and in accordance with Schedule
1.55 hereto governing the Restructuring Transactions. On the Consummation Date
and in accordance with the Restructuring Transactions, Heileman Holding Company
shall make the distributions provided hereunder.
6.2. Restructuring Transactions.
Each of the Restructuring Transactions shall be effected in the order
and manner in which scheduled to occur as provided on Schedule 1.55 hereto.
6.3. Board of Directors of the Consolidated Company.
The initial members of the Board of Directors of the Consolidated
Company are or shall be stated in the Disclosure Statement under "GENERAL
INFORMATION - Board of Directors and Executive Officers of the Consolidated
Company" or an amendment or supplement to the Disclosure Statement or such
other filing as may be made with the Bankruptcy Court.
6.4. Officers of the Consolidated Company.
The initial officers of the Consolidated Company are stated in the
Disclosure Statement under "GENERAL INFORMATION - Board of Directors and
Executive Officers of the Consolidated Company." The selection of officers of
the Consolidated Company after the Consummation Date shall be as provided in
the articles or certificates of incorporation and bylaws.
6.5. Oversight Committee.
(a) Function of Oversight Committee. After the Consummation Date,
the rights and functions of the Debtors under the Acquisition Agreement shall
be delegated to and exercised by the Oversight Committee. Such delegation and
exercise shall not constitute an assumption of any liability or obligation of
the Debtors under the Acquisition Agreement, including, without limitation, the
indemnification obligations under Section 9.3 of the Acquisition Agreement.
(b) Constitution of the Oversight Committee. The Oversight
Committee shall at all times consist of a designee of Hicks, Muse, Tate & Furst
Incorporated and a designee of Houlihan, Lokey, Howard & Zukin with the
assistance of M.L. Lowenkron, Daniel J. Schmid, Jr. and Randy J. Smith.
<PAGE>
(c) Expenses Incurred on or After the Consummation Date. Any fees
and expenses incurred by the Oversight Committee or the members thereof on or
after the Consummation Date (including, without limitation, any taxes) and any
compensation and expense reimbursement claims (including, without limitation,
reasonable fees and expenses of counsel) made by the Oversight Committee or the
members thereof, shall be paid in accordance with, and subject to the $200,000
aggregate limitation contained in, Section 2(c) of the Escrow Agreement
contemplated by the Acquisition Agreement.
(d) Exculpation. Each member of the Oversight Committee, from and
after the Consummation Date, hereby is exculpated by all entities, including,
without limitation, holders of Claims against and Equity Interests in the
Debtors and other parties in interest from any and all claims, causes of action
and other assertions of liability (including, without limitation, breach of
fiduciary duty) arising out of the discharge by such member of the Oversight
Committee of the powers and duties conferred upon it hereby or any order of the
Bankruptcy Court entered in accordance with or in furtherance hereof, or
applicable law. No holder of a Claim against or an Equity Interest in any
Debtor or other party in interest shall have the right to pursue any claim or
cause of action against the Oversight Committee or any member thereof for
implementing the terms of the Acquisition Agreement. In the event that,
notwithstanding the exculpation contained in this section 6.5(d), any entity
pursues any claim or cause of action against the Oversight Committee or any
member thereof, the Oversight Committee may have recourse against the monies,
if any, distributed from Escrow B to the Debtors (other than Heileman Holding
Company) and the holders of Allowed Subordinated Unsecured Claims and Allowed
Equity Interests after exhausting the funds to be reserved as provided in
section 6.5(c) hereof.
SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS
7.1. Date of Distributions.
Any distributions and deliveries to be made hereunder shall be made
on the Consummation Date or as soon as practicable thereafter. After giving
effect to the distribution of the beneficial interests in Escrow A and Escrow B
to the holders of Claims and Equity Interests in Class 6 (Subordinated
Unsecured Claims) and Class 7 (Equity Interests) provided hereunder, the
Debtors shall have no further interest in such escrows. All distributions of
the New Senior Subordinated Notes, the New Junior Subordinated Notes and the
New Warrants shall be made in accordance with the Acquisition Agreement and the
agreements governing Escrow A and Escrow B, as applicable. In the event that
any payment or act under this Plan of Reorganization is required to be made or
performed on a date that is not a Business Day, then the making of such payment
or the performance of such act may be completed on the next succeeding Business
Day, but shall be deemed to have been completed as of the required date.
7.2. Entities to Exercise Function of Disbursing Agent.
All distributions under this Plan of Reorganization shall be made by
the Consolidated Company as Disbursing Agent or such other entity designated by
the Consolidated Company as a Disbursing Agent. A Disbursing Agent shall not
be required to give any bond or surety or other security for the performance of
its duties unless otherwise ordered by the Bankruptcy Court; and, in the event
that a Disbursing Agent is so otherwise ordered, all costs and expenses of
procuring any such bond or surety shall be borne by the Consolidated Company.
<PAGE>
7.3. Surrender and Cancellation of Instruments.
Each holder of a promissory note or other instrument evidencing a
Claim (other than a holder of a promissory note issued under the Existing
Credit Agreement) shall surrender such promissory note or instrument to the
Disbursing Agent, and the Disbursing Agent shall distribute or shall cause to
be distributed to the holder thereof the appropriate distribution hereunder.
No distribution hereunder shall be made to or on behalf of any holder of such a
Claim unless and until such promissory note or instrument is received or the
unavailability of such note or instrument is reasonably established to the
satisfaction of the Disbursing Agent. In accordance with section 1143 of the
Bankruptcy Code, any such holder of such a Claim that fails to (a) surrender or
cause to be surrendered such promissory note or instrument or to execute and
deliver an affidavit of loss and indemnity reasonably satisfactory to the
Disbursing Agent and (b) in the event that the Disbursing Agent requests,
furnish a bond in form and substance (including, without limitation, amount)
reasonably satisfactory to the Disbursing Agent, within 5 years from and after
the Consummation Date shall be deemed to have forfeited all rights, claims and
interests and shall not participate in any distribution hereunder.
7.4. Delivery of Distributions.
Subject to Bankruptcy Rule 9010, all distributions to any holder of
an Allowed Claim shall be made at the address of such holder as scheduled on
the Schedules filed with the Bankruptcy Court unless the Consolidated Company
has been notified in writing of a change of address, including, without
limitation, by the filing of a proof of claim by such holder that relates an
address for such holder different from the address reflected on such Schedules
for such holder. In the event that any distribution to any holder is returned
as undeliverable, the Disbursing Agent shall use reasonable efforts to
determine the current address of such holder, but no distribution to such
holder shall be made unless and until the Disbursing Agent has determined the
then current address of such holder, at which time such distribution shall be
made to such holder without interest; provided that such distributions shall be
deemed unclaimed property under section 347(b) of the Bankruptcy Code at the
expiration of one year from the Consummation Date. After such date, all
unclaimed property or interest in property other than property or an interest
in property distributable on account of the Allowed Subordinated Unsecured
Claims shall revert to the Consolidated Company and all unclaimed property or
interest in property distributable on account of the Allowed Subordinated
Unsecured Claims shall be allocated ratably to the other holders of Allowed
Subordinated Unsecured Claims, and the claim of any other holder to such
property or interest in property shall be discharged and forever barred. The
distributions to be made on the Consummation Date to each holder of an Allowed
Senior Secured Claim shall be made to Bankers Trust Company, as agent under the
Existing Credit Agreement, for distribution to holders of Allowed Senior
Secured Claims in accordance with the provisions of the Existing Credit
Agreement.
7.5. Manner of Payment Under Plan of Reorganization.
At the option of the Consolidated Company, any Cash payment to be
made hereunder may be made by a check or wire transfer or as otherwise required
or provided in applicable agreements.
7.6. Distributions After Consummation Date.
<PAGE>
Distributions made after the Consummation Date to holders of Claims
that are not Allowed Claims as of the Consummation Date but which later become
Allowed Claims shall be deemed to have been made on the Consummation Date.
7.7. No Fractional Distributions.
No fractional New Warrants will be issued to the beneficial owners of
Allowed Senior Subordinated Claims or Allowed Existing Equity Interests.
Fractional New Warrants will be rounded to the next greater or next lower
number of New Warrants, as follows: (a) fractions of 1/2 or greater will be
rounded to the next higher whole number, and (b) fractions of less than 1/2
will be rounded to the next lower whole number. No fraction of 1/2 or less
will be rounded to zero and, accordingly, extinguish the distribution of New
Warrants to any entity as an entirety.
7.8. Rights And Powers Of Disbursing Agent.
(a) Powers of the Disbursing Agent. The Disbursing Agent shall be
empowered to (a) effect all actions and execute all agreements, instruments and
other documents necessary to implement this Plan of Reorganization (b) make
distributions contemplated hereby, (c) liquidate property as required to make
distributions contemplated hereby, (d) comply herewith and the obligations
hereunder, (e) employ professionals to represent it with respect to its
responsibilities, and (f) exercise such other powers as may be vested in the
Disbursing Agent by order of the Bankruptcy Court, pursuant to this Plan of
Reorganization, or as deemed by the Disbursing Agent to be necessary and proper
to implement the provisions hereof.
(b) Expenses Incurred on or After the Consummation Date. Except as
otherwise ordered by the Bankruptcy Court, the amount of any fees and expenses
incurred by the Disbursing Agent on or after the Consummation Date (including,
without limitation, taxes) and any compensation and expense reimbursement
claims (including, without limitation, reasonable fees and expenses of counsel)
made by the Disbursing Agent, shall be paid in Cash by the Consolidated
Company.
(c) Exculpation. Each Disbursing Agent, from and after the
Consummation Date, is hereby exculpated by all entities, including, without
limitation, holders of Claims and Equity Interests and other parties in
interest from any and all claims, causes of action and other assertions of
liability (including, without limitation, breach of fiduciary duty) arising out
of the discharge by such Disbursing Agent of the powers and duties conferred
upon it hereby or any order of the Bankruptcy Court entered pursuant to or in
furtherance hereof, or applicable law, except solely for actions or omissions
arising out of the gross negligence or willful misconduct of such Disbursing
Agent. No holder of a Claim or an Equity Interest or other party in interest
shall have or pursue any claim or cause of action against the Disbursing Agent
for making payments in accordance herewith or for implementing the terms
hereof.
SECTION 8. PROCEDURES FOR TREATING DISPUTED
CLAIMS UNDER THE PLAN OF REORGANIZATION
8.1. Objections to Claims.
<PAGE>
The Stroh Brewery Company and, after the Consummation Date, the
Consolidated Company shall be entitled to object to Claims.
8.2. No Distributions Pending Allowance.
Notwithstanding any other provision hereof, if any portion of a Claim
is a Disputed Claim, no payment or distribution provided hereunder shall be
made on account of the portion of such Claim that is a Disputed Claim unless
and until such Disputed Claim becomes an Allowed Claim but the payment or
distribution provided hereunder shall be made on account of the portion of such
Claim that is an Allowed Claim.
8.3. Distributions After Allowance.
Payments and distributions to each holder of a Disputed Claim or any
other Claim that is not an Allowed Claim, to the extent that such Claim
ultimately becomes an Allowed Claim, shall be made in accordance with the
provisions hereof governing the class or subclass of Claims in which such Claim
is classified, including, without limitation, the Restructuring Transactions to
the extent applicable to such class or subclass of Claims. As soon as
practicable after the date that the order or judgment of the Bankruptcy Court
allowing any Disputed Claim or any other Claim that is not an Allowed Claim
becomes a Final Order, the Disbursing Agent shall distribute to the holders of
such Claim any payment or property that would have been distributed to such
holder if the Claim had been allowed on the Consummation Date, without any
interest thereon.
SECTION 9. PROVISIONS GOVERNING EXECUTORY CONTRACTS
AND UNEXPIRED LEASES UNDER THE PLAN
9.1. General Treatment.
This Plan of Reorganization constitutes a motion by the Debtors
governed by this Plan of Reorganization to assume and assign to the
Consolidated Company, as of the Consummation Date, all executory contracts and
unexpired leases to which any of the Debtors are parties, except for an
executory contract or unexpired lease that (a) has been assumed or rejected
pursuant to Final Order of the Bankruptcy Court, (b) is specifically rejected
on Schedule 9.1 hereto filed by the Debtors with the consent of The Stroh
Brewery Company on or before the commencement of the hearing on approval of the
Disclosure Statement or such later date as may be fixed by the Bankruptcy
Court, (c) is the subject of a separate motion filed under section 365 of the
Bankruptcy Code by the Debtors with the consent of The Stroh Brewery Company
prior to the filing of the schedule described in section 9.1(b) hereof or (d)
is otherwise assumed hereunder. This Plan of Reorganization constitutes a
motion by the Debtors governed by this Plan of Reorganization to assume that
certain engagement letter dated September 29, 1995, as amended by that certain
letter agreement dated April 2, 1996, between G. Heileman Brewing Company, Inc.
and Houlihan Lokey Howard & Zukin and pay the fee provided therein. For
purposes hereof, each executory contract and unexpired lease listed on Schedule
9.1 hereto that relates to the use of occupancy of real property shall include
(a) modifications, amendments, supplements, restatements, or other agreements
made directly or indirectly by any agreement, instrument, or other document
that in any manner affects such executory contract or unexpired lease, without
regard to whether such agreement, instrument or other document is listed on
Schedule 9.1 hereto and (b) executory contracts or unexpired leases appurtenant
<PAGE>
to the premises listed on Schedule 9.1 hereto including all easements,
licenses, permits, rights, privileges, immunities, options, rights of first
refusal, powers, uses, usufructs, reciprocal easement agreements, vault, tunnel
or bridge agreements or franchises, and any other interests in real estate or
rights in rem relating to such premises to the extent any of the foregoing are
executory contracts or unexpired leases, unless any of the foregoing agreements
are assumed.
9.2. Amendments to Schedule; Effect of Amendments.
The Debtors shall assume and, as applicable, assign each of the
executory contracts and unexpired leases not listed on Schedule 9.1 hereto;
provided, that the Debtors may at any time on or before the first Business Day
before the date of the commencement of the Confirmation Hearing amend Schedule
9.1 hereto to delete or add any executory contract or unexpired lease thereto,
in which event such executory contract or unexpired lease shall be deemed to
be, respectively, assumed and, if applicable, assigned as provided therein, or
rejected. The Debtors shall provide notice of any amendments to Schedule 9.1
hereto to the parties to the executory contracts or unexpired leases affected
thereby and to parties on the primary service list or master service list, as
applicable. The fact that any contract or lease is scheduled on Schedule 9.1
hereto shall not constitute or be construed to constitute an admission by any
Debtor or the Consolidated Company that any Debtor or the Consolidated Company
has any liability thereunder.
9.3. Bar to Rejection Damage Claims.
In the event that the rejection of an executory contract or unexpired
lease by any of the Debtors results in damages to the other party or parties to
such contract or lease, a Claim for such damages, if not heretofore evidenced
by a filed proof of claim, shall be forever barred and shall not be enforceable
against the Debtors or the Consolidated Company, or their respective properties
or interests in property as agents, successors, or assigns, unless a proof of
claim is filed with the Bankruptcy Court and served upon counsel for the
Debtors and the Consolidated Company on or before 30 days after the earlier to
occur of (a) the giving of notice to such party under section 9.1 hereof and
(b) the entry of an order by the Bankruptcy Court authorizing rejection of a
particular executory contract or lease.
SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION
DATE AND CONSUMMATION DATE
10.1. Conditions Precedent to Confirmation of Plan of Reorganization.
The confirmation of this Plan of Reorganization is subject to
satisfaction of the following conditions precedent:
(a) Acquisition Agreement. The Acquisition Agreement shall then be
in full force and effect; and
(b) Plan Undertaking Agreement. The Plan Undertaking Agreement
shall then be in full force and effect.
10.2. Conditions Precedent to Consummation Date of Plan of Reorganization.
<PAGE>
The occurrence of the Consummation Date of this Plan of
Reorganization is subject to satisfaction of the following conditions
precedent:
(a) Finality of the Confirmation Order. The Clerk of the Bankruptcy
Court shall have entered the Confirmation Order, and the Confirmation
Order shall have become a Final Order;
(b) Execution and Delivery of Documents. All other actions and
documents necessary to implement the terms and provisions hereof shall
have been effected or executed and delivered; and
(c) Acquisition Agreement. All conditions precedent to the
obligations of the Buyer (as such term is defined in the Acquisition
Agreement) and the Sellers (as such term is defined in the Acquisition
Agreement) shall have been satisfied or waived in accordance with the
Acquisition Agreement.
10.3. Waiver of Conditions Precedent.
Each of the conditions precedent in sections 10.1 and 10.2 hereof may
be waived, in whole or in part, by the Debtors, with the consent of The Stroh
Brewery Company. Any such waiver of a condition precedent in section 10.1 or
10.2 hereof may be effected at any time, without notice, without leave or order
of the Bankruptcy Court and without any formal action other than proceeding to
consummate this Plan of Reorganization.
SECTION 11. EFFECT OF CONFIRMATION
11.1. General Authority.
Until the Consummation Date, the Bankruptcy Court shall retain
custody and jurisdiction of each of the Debtors, its properties and interests
in property and its operations. On the Consummation Date, each of the Debtors,
its properties and interests in property and its operations shall be released
from the custody and jurisdiction of the Bankruptcy Court, except as provided
in section 15.1 hereof.
11.2. Discharge of Debtors.
Subject to section 11.5 hereof, the treatment of all Claims against
or Equity Interests in each of the Debtors hereunder shall, to the fullest
extent permitted under applicable law, be in exchange for and in complete
satisfaction, discharge and release of all Claims against or Equity Interests
in such Debtor of any nature whatsoever, known or unknown, including, without
limitation, any interest accrued or expenses incurred thereon from and after
the Petition Date, or against its estate or properties or interests in
property. Except as otherwise provided herein, upon the Consummation Date, all
Claims against and Equity Interests in each of the Debtors will be satisfied,
discharged and released in full exchange for the consideration provided
hereunder. All entities shall be precluded from asserting against any Debtor
or the Consolidated Company or their respective properties or interests in
property, any other Claims based upon any act or omission, transaction or other
activity of any kind or nature that occurred prior to the Consummation Date,
except to the extent expressly assumed under the Acquisition Agreement and the
Assumption Agreement contemplated thereby.
<PAGE>
11.3. Injunction.
Except as otherwise expressly provided in the Confirmation Order, all
entities who have held, hold or may hold Claims against or Equity Interests in
any of the Debtors are permanently enjoined, on and after the Consummation Date
from directly or derivatively (a) commencing or continuing in any manner any
action or other proceeding of any kind relating to any such Claim or Equity
Interest against any such Debtor, (b) the enforcement, attachment, collection
or recovery by any manner or means of any judgment, award, decree or order
against any such Debtor (c) creating, perfecting, or enforcing any encumbrance
of any kind against any such Debtor or against the property or interests in
property of any such Debtor on account of any such Claim, and (d) asserting any
right of setoff, subrogation, or recoupment of any kind against any obligation
due any such Debtor or against the property or interests in property of any
such Debtor on account of any such Claim. The benefits of such injunction
shall extend to the Consolidated Company, except to the extent liability on a
Claim is expressly assumed under the Acquisition Agreement and the Assumption
Agreement contemplated thereby, the Releasees and their respective properties
and interests in property. In connection therewith, such injunction shall
permanently enjoin and restrain all entities from effecting any of the
following actions (other than actions commenced to enforce any right or
obligation provided hereby): commencement or continuation of any action or
proceeding against or affecting any Debtor or the Consolidated Company or any
property or interest in property of such Debtor or the Consolidated Company,
and commencement or continuation of any action or proceeding against or
affecting any of the Releasees or any property or interest in property of the
Releasees in connection herewith.
11.4. Term of Injunctions or Stays.
Unless otherwise provided, all injunctions or stays provided for in
the Reorganization Cases under sections 105 or 362 of the Bankruptcy Code, or
otherwise, and in existence on the Confirmation Date, shall remain in full
force and effect until the Consummation Date.
11.5. Indemnification Obligations.
For purposes hereof, the obligations of the Debtors to indemnify its
present and all former directors or officers that were directors or officers,
respectively, at any time preceding the Petition Date against any obligations
pursuant to certificates or articles of incorporation, bylaws, applicable state
law or any of the foregoing shall survive confirmation of this Plan of
Reorganization, remain unaffected thereby and not be discharged in accordance
with section 1141 of the Bankruptcy Code, irrespective of whether
indemnification is owed in connection with an event occurring before, on or
after the Petition Date; provided, that nothing in this Section 11.5 shall in
any manner affect the rights and obligations of the Consolidated Company under
the Acquisition Agreement.
SECTION 12. RELEASES AND WAIVER OF CLAIMS
12.1. General Release of Releasees.
Effective as of the Consummation Date, each of the Debtors and
Debtors in Possession releases the Releasees from any and all costs, expenses,
<PAGE>
claims, causes of action or liability whatsoever, known or unknown, liquidated
or unliquidated, matured or not matured, contingent or direct, and whether
arising at common law, in equity, or under any statute which such Debtor has as
of, or prior to, the Consummation Date against the Releasees which in any way
relate to such Debtor or the applicable Reorganization Case.
12.2. Release from Claims and Liabilities.
(a) Except for those obligations arising hereunder, effective as of
the Consummation Date, each of the Debtors hereby is released and discharged
from any and all claims and liabilities arising from or in connection with, by
reason of, or related in any way to, such Debtor, the Senior Secured Claims,
the Existing Credit Agreement, the Existing Indenture, the Existing Senior
Subordinated Notes, any other Claim, the Reorganization Case of such Debtor or
this Plan of Reorganization, and the Releasees hereby are released and
discharged from any and all claims or liabilities arising from actions effected
in their capacity as present or, in the event applicable, former officers and
directors of any of the Debtors and their Affiliates, and from any and all
Causes of Action of any entity, including, without limitation, each holder of a
Senior Secured Claim, an Existing Senior Subordinated Note or any other Claim
and all of the successors, predecessors, assignors, assignees, parents,
subsidiaries, present and former directors, trustees, officers, employees,
agents, attorneys, advisors, accountants, financial advisors, investment
bankers, appraisers, engineers, stockholders, partners, affiliates, heirs,
receivers, conservators, beneficiaries, executors and administrators of or to
the holders of Senior Secured Claims, or Existing Senior Subordinated Notes or
other Claims, arising from or in connection with, by reason of, or related in
any way to, such Debtor, the Senior Secured Claims, the Existing Credit
Agreement, the Existing Indenture, the Existing Senior Subordinated Notes, any
other Claim, the Reorganization Case of such Debtor or this Plan of
Reorganization, including, without limitation, in each case any claims arising
from,
(i) the offer, sale, purchase, resale or ownership of the
Existing Senior Subordinated Notes, the Prospectus, any
sales brochure, registration statement, preliminary
prospectus, prospectus, appraisal, report or inspection, or
any disclosure or omission related to any of the foregoing,
and any engagement, underwriting, placement agency or other
role of, or services rendered by, any entity in connection
with any of the foregoing;
(ii) the involvement of any Releasee in or with the sale of the
Existing Senior Subordinated Notes;
(iii) the ownership, management, and operation of the Debtors by
any Releasee;
(iv) the preparation by any Releasee of financial statements in
respect of any or all of the Debtors;
(v) the actions, payments and obligations, if any required of
any of the Releasees under, among other things, the
Existing Indenture, the Existing Senior Subordinated Notes
and all agreements, instruments and other documents
executed and delivered in connection with any of the
foregoing;
<PAGE>
(vi) the use of proceeds by the Releasees from the Existing
Senior Subordinated Notes; and
(vii) the actions by the Releasees to restructure the Existing
Senior Subordinated Notes, including, without limitation,
any actions in connection with or related to the
formulation, negotiation, preparation, dissemination,
confirmation or consummation of this Plan of Reorganization
and any agreement, instrument or other document issued
hereunder or related hereto.
(b) Effective as of the Consummation Date, the Releasees are
released and discharged from any and all claims, obligations, rights, causes of
action and liabilities which any holder of a Claim against or Equity Interest
in any of the Debtors may be entitled to assert, whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, based in whole or in
part upon any act or omission or other event occurring on or at any time prior
to the Consummation Date in any way relating to the Debtors, the Reorganization
Cases or this Plan of Reorganization.
(c) Nothing contained herein shall affect any rights of the
Releasees to assert and prosecute (i) any direct claim, counterclaim, cross-
claim, separate action, or similar claim against any entity which maintains
that it has a cause of action of the kind described in this section 12.2 (other
than a claim described in clause (ii) immediately below) against a Releasee
that has not been released and discharged hereunder or (ii) any claim for
indemnification, contribution or otherwise, however denominated, against any
entity relating to any cause of action against such Releasee that has not been
released and discharged hereunder.
(d) Each holder of a Claim, including, without limitation, a Senior
Secured Claim or a Subordinated Unsecured Claim shall be deemed to have agreed
to the provision of this section 12.2, and shall be bound thereby, by reason
of, among other things, its acceptance of this Plan of Reorganization and its
receipt of any distributions hereunder.
12.3. Avoidance Actions.
Effective as of the Consummation Date, the Debtors waive the right to
prosecute and release any avoidance or recovery actions under sections 545,
547, 548, 549, 550, 551 and 553 of the Bankruptcy Code, that belong to the
Debtors or Debtors in Possession, other than any such actions that may be
pending on such date. The Consolidated Company shall retain and may prosecute
any such actions that may be pending on such date.
SECTION 13. CREDITORS' COMMITTEE
13.1. Dissolution of Creditors' Committee.
In the event that the Formula Amount of the New Senior Subordinated
Notes reflected on the Closing Statement to be delivered under section 2.3(a)
of the Acquisition Agreement equals or exceeds $70,000,000, the Creditors'
Committee shall automatically dissolve on the date of the delivery of such
Closing Statement. In the event that the Formula Amount of the New Senior
Subordinated Notes reflected on the Closing Statement to be delivered under
section 2.3(a) of the Acquisition Agreement does not equal or exceed
<PAGE>
$70,000,000, the Creditors' Committee shall continue to exist after the date of
the delivery of such Closing Statement solely for the purposes of (a)
participating in any matters pending before the Bankruptcy Court to which the
Creditors' Committee is party until such matters are resolved by Final Order,
(b) prosecuting objections to any fee applications filed in accordance with
section 330 of the Bankruptcy Code or Claims for fees and expenses of
professionals employed by the Debtors or agreed to be paid by the Debtors or
the Consolidated Company and (c) insuring that the initial distributions to
holders of Allowed General Unsecured Claims and Allowed Subordinated Unsecured
Claims provided hereunder have actually been made; provided, that upon the
conclusion of all functions described in clauses (a), (b) and (c), the
Creditors' Committee shall be automatically dissolved.
13.2. Exculpation.
Each member of the Creditors' Committee or any informal committee of
holders of the Existing Senior Subordinated Notes or both and each of their
respective advisors and attorneys, effective as of the Consummation Date, is
hereby exculpated by all entities, including, without limitation, holders of
Claims against and Equity Interests in any of the Debtors and other parties in
interest, from any and all Claims, Causes of Action and other assertions of
liability (including, without limitation, breach of fiduciary duty), whether
known or unknown, foreseen or unforeseen, existing or arising hereafter,
arising out of or related to the Debtors, the Reorganization Cases or the
exercise by such entities of their functions as members of or advisors to or
attorneys for any such committee or otherwise under applicable law, including,
without limitation, in connection with or related to the formulation,
negotiation, preparation, dissemination, confirmation and consummation of this
Plan of Reorganization and any agreement, instrument or other document issued
hereunder or related hereto.
SECTION 14. RETENTION OF JURISDICTION
14.1. Retention of Jurisdiction.
The Bankruptcy Court may retain jurisdiction of and, if the
Bankruptcy Court exercises its retained jurisdiction, shall have exclusive
jurisdiction of all matters arising out of, and related to, the Reorganization
Cases and this Plan of Reorganization pursuant to, and for the purposes of,
sections 105(a) and 1142 of the Bankruptcy Code and for, among other things,
the following purposes:
(a) To hear and determine pending applications for the assumption or
rejection of executory contracts or unexpired leases, if any are pending,
and the allowance of Claims resulting therefrom;
(b) To determine any and all adversary proceedings, applications and
contested matters;
(c) To ensure that distributions to holders of Allowed Claims are
accomplished as provided herein;
(d) To hear and determine any timely objections to Administration
Expense Claims or to proofs of claim and equity interests filed, both
before and after the Confirmation Date, including, without limitation, any
<PAGE>
objections to the classification of any Claim or Equity Interest, and to
allow or disallow any Disputed Claim, in whole or in part;
(e) To enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified,
or vacated;
(f) To issue such orders in aide of execution of this Plan of
Reorganization, to the extent authorized by section 1142 of the Bankruptcy
Code;
(g) To consider any amendments to or modifications of this Plan of
Reorganization, to cure any defect or omission, or reconcile any
inconsistency in any order of the Bankruptcy Court, including, without
limitation, the Confirmation Order;
(h) To hear and determine all applications for awards of
compensation for services rendered and reimbursement of expenses incurred
prior to the Consummation Date;
(i) To hear and determine disputes arising in connection with the
interpretation, implementation, or enforcement of this Plan of
Reorganization, including, without limitation, Escrow A or Escrow B;
(j) To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;
(k) To hear any other matter not inconsistent with the Bankruptcy
Code;
(l) To issue injunctions and effect any other actions that may be
necessary or desirable to restrain interference by any entity with the
consummation or implementation of this Plan of Reorganization; and
(m) To enter a final decree closing the Reorganization Cases.
14.2. Amendment of Plan of Reorganization.
Subject to the Acquisition Agreement, amendments of this Plan of
Reorganization may be proposed in writing by the Debtors at any time before
confirmation, provided that this Plan of Reorganization, as amended, satisfies
the conditions of sections 1122 and 1123 of the Bankruptcy Code, and the
Debtors shall have complied with section 1125 of the Bankruptcy Code. Subject
to the Acquisition Agreement, this Plan of Reorganization may be amended at any
time after confirmation and before substantial consummation, provided that this
Plan of Reorganization, as amended, satisfies the requirements of sections 1122
and 1123 of the Bankruptcy Code and the Bankruptcy Court, after notice and a
hearing, confirms this Plan of Reorganization as amended under section 1129 of
the Bankruptcy Code and the circumstances warrant such amendments. A holder of
a Claim or Equity Interest that has accepted this Plan of Reorganization shall
be deemed to have accepted this Plan of Reorganization as amended if the
proposed amendment does not materially and adversely change the treatment of
the Claim or Equity Interest of such holder.
<PAGE>
SECTION 15. MISCELLANEOUS PROVISIONS
15.1. Payment of Statutory Fees.
All fees payable under section 1930 of title 28 of the United States
Code, as determined by the Bankruptcy Court at the Confirmation Hearing, shall
be paid on the Consummation Date. Any such fees accrued after the Consummation
Date will constitute an Allowed Administration Expense Claim and be treated in
accordance with section 2.1 hereof.
15.2. Retiree Benefits.
On and after the Consummation Date, pursuant to section 1129(a)(13)
of the Bankruptcy Code, the Consolidated Company shall, subject to the
provisions of section 9.4 hereof, continue to pay all retiree benefits (within
the meaning of section 1114 of the Bankruptcy Code), at the level established
in accordance with subsection (e)(1)(B) or (g) of section 1114 of the
Bankruptcy Code, at any time prior to the Confirmation Date, for the duration
of the period each Debtor has obligated itself to provide such benefits.
15.3. Compliance with Tax Requirements.
(a) Withholding. In connection with the consummation of this Plan
of Reorganization, the Debtors and the Consolidated Company, as applicable,
shall comply with all withholding and reporting requirements imposed by any
taxing authority, and all distributions hereunder shall be subject to such
withholding and reporting requirements.
(b) Authorization. The Consolidated Company hereby is authorized,
effective as of the Consummation Date, on behalf of the Debtors, to request
expedited determination of taxes under section 505(b) of the Bankruptcy Code
for all taxable periods of the Debtors ending after the Petition Date,
including, without limitation, the taxable year ending on the Consummation
Date.
15.4. Recognition of Guarantee Rights.
The classification of and manner of satisfying all Claims hereunder,
including, without limitation, the Restructuring Transactions, take into
account (a) the existence of guarantees by certain Debtors of obligations of
other Debtors and (b) the fact that the Debtors may be joint obligors with each
other or other entities with respect to an obligation. All Claims against the
Debtors based upon any such guarantees or joint obligations shall be discharged
in the manner provided in the Plan; provided, that no creditor shall be
entitled to receive more than a single satisfaction of its Allowed Claims.
15.5. Waiver of Subordination.
Subject to the consummation of the distributions to be effected on
account of the Allowed Senior Secured Claims under section 4.2(b) hereof, the
distributions on account of the Subordinated Unsecured Claims shall not be
subject to levy, garnishment, attachment or other legal process by any holder
of Senior Debt (as such term is defined in the Existing Indenture) by reason of
claimed subordination rights and, on the Consummation Date, all holders of
Claims shall be deemed to have waived any and all contractual subordination
rights which they may have relating to such distributions, and the Bankruptcy
Court in the Confirmation Order will permanently enjoin, effective as of the
<PAGE>
Consummation Date, all holders of Senior Debt from enforcing or attempting to
enforce any such rights with respect to such distribution to the holders of the
Subordinated Unsecured Claims.
15.6. Severability of Plan Provisions.
In the event that, prior to the Confirmation Date, any term or
provision of this Plan of Reorganization is held by the Bankruptcy Court to be
invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of
the Debtors and The Stroh Brewery Company, have the power to alter and
interpret such term or provision to make it valid or enforceable to the maximum
extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void or unenforceable, and such term or provision
shall then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms and
provisions hereof shall remain in full force and effect and shall in no way be
affected, impaired or invalidated by such holding, alteration or
interpretation. The Confirmation Order shall constitute a judicial deter-
mination and shall provide that each term and provision hereof, as it may have
been altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
15.7. Governing Law.
Except to the extent that the Bankruptcy Code or other federal law is
applicable, or to the extent an Exhibit hereto provides otherwise, the rights,
duties and obligations arising under this Plan of Reorganization shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York.
15.8. Notices.
All notices, requests, and demands to or upon the Debtors to be
effective shall be in writing (including by facsimile transmission) and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as follows:
If to the Debtors:
G. Heileman Brewing Company, Inc.
9399 West Higgins Road, Suite 700
Rosemont, Illinois 60018
Attn: Randy J. Smith, Esq.
Senior Vice President,
General Counsel & Secretary
Telephone: (847) 292-2100
Telecopier: (847) 292-2103
-and-
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Edward A.C. Sutherland, Esq.
Adam C. Rogoff, Esq.
<PAGE>
Telephone: (212) 310-8000
Telecopier: (212) 310-8007
-and-
Weil, Gotshal & Manges LLP
100 Crescent Court
Dallas, Texas 75201
Attn: Glenn D. West, Esq.
Telephone: (214) 746-7700
Telecopier: (214) 746-7777
-and-
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Attn: Thomas L. Ambro, Esq.
Telephone: (302) 658-6541
Telecopier: (302) 658-6548
-and-
The Stroh Brewery Company
100 River Place
Detroit, Michigan 48207
Attn: George E. Kuehn, Esq.
Telephone: (313) 446-2000
Telecopier: (313) 446-2756
-and-
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10012
Attn: David B. Chapnick, Esq.
Mark Thompson, Esq.
Telephone: (212) 455-2000
Telecopier: (212) 455-2502
Dated: Wilmington, Delaware
May 6, 1996
<PAGE>
Respectfully submitted,
G. HEILEMAN BREWING COMPANY,
INC., ET AL.
By:___________________________
Daniel J. Schmid, Jr.
Title:
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
-and-
100 Crescent Court
Dallas, Texas 75201
(214) 746-7700
-and-
RICHARDS, LAYTON & FINGER, P.A.
Attorneys for the Debtors
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
By:___________________________
Thomas L. Ambro (No. 677)
<PAGE>
Table of Contents
SECTION 1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . 1
A. Definitions . . . . . . . . . . . . . . . . . . . . . 1
B. Interpretation; Application of
Definitions and Rules of Construction . . . . . . . . 8
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS . . . . . . . . 8
2.1. Administration Expense Claims . . . . . . . . . . . . 8
2.2. Compensation and Reimbursement Claims . . . . . . . . 8
2.3. Priority Tax Claims . . . . . . . . . . . . . . . . . 9
SECTION 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS . . . . . . . . 10
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN . . . . . . . . . 11
4.1. Priority Non-Tax Claims (Class 1) . . . . . . . . . . 11
4.2. Senior Secured Claims (Class 2) . . . . . . . . . . . 11
(a) Allowance of Senior Secured Claims . . . . . . 11
(b) Treatment of Certain Senior Secured Claims . . 11
4.3. Other Secured Claims (Class 3) . . . . . . . . . . . . 11
4.4. General Unsecured Claims (Class 4) . . . . . . . . . . 11
4.5. Intercompany Affiliate Unsecured Claims
(Class 5) . . . . . . . . . . . . . . . . . . . . . . 12
4.6. Subordinated Unsecured Claims (Class 6). . . . . . . . 12
(a) Treatment of Subordinated Unsecured Claims. . 12
(b) Timing and Allocation of Distributions. . . . 12
4.7. Equity Interests (Class 7) . . . . . . . . . . . . . . 13
(b) Heileman Holding Company (Subclass 7B). . . . 13
(c) Subsidiary Equity Interests (Subclass 7C). . . 13
SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS
AND INTERESTS IMPAIRED AND NOT IMPAIRED
UNDER THE PLAN; ACCEPTANCE OR REJECTION
OF THE PLAN . . . . . . . . . . . . . . . . . . . . . 13
5.1. Holders of Claims and Equity Interests Entitled to
Vote . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2. Subtraction and Addition of Classes and Subclasses . . 14
(a) Deletion of Classes and Subclasses. . . . . . 14
(b) Addition of Classes and Subclasses. . . . . . 14
5.3. Nonconsensual Confirmation. . . . . . . . . . . . . . 14
5.4. Severability of Plan of Reorganization . . . . . . . . 14
5.5. Revocation of Plan of Reorganization . . . . . . . . . 14
SECTION 6. MEANS OF IMPLEMENTATION . . . . . . . . . . . . . . . . . . . . 15
6.1. Closing of Transaction . . . . . . . . . . . . . . . . 15
6.2. Restructuring Transactions . . . . . . . . . . . . . . 15
6.3. Board of Directors . . . . . . . . . . . . . . . . . . 15
6.4. Officers of the Consolidated Company . . . . . . . . . 15
6.5. Oversight Committee . . . . . . . . . . . . . . . . . 15
(a) Function of Oversight Committee. . . . . . . . 15
(b) Constitution of the Oversight Committee. . . . 15
<PAGE>
(c) Expenses Incurred on or After the Consummation
Date. . . . . . . . . . . . . . . . . . . . . 16
(d) Exculpation. . . . . . . . . . . . . . . . . 16
SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS . . . . . . . . . . . . . . 16
7.1. Date of Distributions . . . . . . . . . . . . . . . . 16
7.2. Entities to Exercise Function of Disbursing Agent . . 16
7.3. Surrender and Cancellation of Instruments . . . . . . . 17
7.4. Delivery of Distributions . . . . . . . . . . . . . . 17
7.5. Manner of Payment Under Plan of Reorganization . . . . 17
7.6. Distributions After Consummation Date . . . . . . . . 17
7.7. No Fractional Distributions. . . . . . . . . . . . . . 18
7.8. Rights And Powers Of Disbursing Agent . . . . . . . . 18
(a) Powers of the Disbursing Agent. . . . . . . . 18
(b) Expenses Incurred on or After the Consummation
Date. . . . . . . . . . . . . . . . . . . . . 18
(c) Exculpation. . . . . . . . . . . . . . . . . . 18
SECTION 8. PROCEDURES FOR TREATING DISPUTED CLAIMS
CLAIMS UNDER THE PLAN OF REORGANIZATION . . . . . . . 18
8.1 Objections to Claims . . . . . . . . . . . . . . . . . 18
8.2. No Distributions Pending Allowance . . . . . . . . . . 19
8.3. Distributions After Allowance . . . . . . . . . . . . 19
SECTION 9. PROVISIONS GOVERNING EXECUTORY CONTRACTS
AND UNEXPIRED LEASES UNDER THE PLAN . . . . . . . . . 19
9.1. General Treatment . . . . . . . . . . . . . . . . . . 19
9.2. Amendments to Schedule; Effect of Amendments . . . . . 20
9.3. Bar to Rejection Damage . . . . . . . . . . . . . . . 20
SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION
DATE AND CONSUMMATION DATE . . . . . . . . . . . . . . 20
10.1. Conditions Precedent to Confirmation of
Plan of Reorganization . . . . . . . . . . . . . . . . 20
10.2. Conditions Precedent to Consummation Date
of Plan of Reorganization . . . . . . . . . . . . . . 20
10.3. Waiver of Conditions Precedent . . . . . . . . . . . . . . . 21
SECTION 11. EFFECT OF CONFIRMATION . . . . . . . . . . . . . . . . . . . . 21
11.1. General Authority . . . . . . . . . . . . . . . . . . . . . . 21
11.2. Discharge of Debtors . . . . . . . . . . . . . . . . . . . . 21
11.3. Injunction . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.4. Term of Injunctions or Stays . . . . . . . . . . . . . . . . 22
11.5. Indemnification Obligations . . . . . . . . . . . . . . . . . 22
SECTION 12. RELEASES AND WAIVER OF CLAIMS . . . . . . . . . . . . . . . . . 22
12.1. General Release of Releasees . . . . . . . . . . . . . . . . 22
12.2. Release from Claims and Liabilities . . . . . . . . . . . . . 23
12.3. Avoidance Actions. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 13. CREDITORS' COMMITTEE . . . . . . . . . . . . . . . . . . . . . 24
13.1. Dissolution of Creditors' Committee . . . . . . . . . . . . . 24
13.2. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 14. RETENTION OF JURISDICTION . . . . . . . . . . . . . . . . . . . 25
14.1. Retention of Jurisdiction . . . . . . . . . . . . . . . . . . 25
14.2. Amendment of Plan of Reorganization . . . . . . . . . . . . . 26
<PAGE>
SECTION 15. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 27
15.1. Payment of Statutory Fees . . . . . . . . . . . . . . . . . . 27
15.2. Retiree Benefits . . . . . . . . . . . . . . . . . . . . . . 27
15.3. Compliance with Tax Requirements . . . . . . . . . . . . . . 27
15.4. Recognition of Guarantee Rights . . . . . . . . . . . . . . . 27
15.5. Waiver of Subordination . . . . . . . . . . . . . . . . . . . 27
15.6. Severability of Plan Provisions . . . . . . . . . . . . . . . 28
15.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 28
15.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Acquisition Agreement
Schedule 1.55 - Restructuring Transactions
Schedule 1.65 - Warrant Reallocation Schedule
Schedule 4.2 - Allowance of Senior Secured Claims
Schedule 9.1 - Certain Executory Contracts and Unexpired Leases
EXHITIT T3E-2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
-----------------------------------x
:
In re : Chapter 11 Case Nos.
: 96-501 (PJW) and
G. HEILEMAN BREWING COMPANY, INC., : 96-503 (PJW) through
et al., : 96-513 (PJW)
: (Jointly Administered)
:
Debtors. :
:
-----------------------------------x
DISCLOSURE STATEMENT RELATING TO
AMENDED JOINT PLAN OF REORGANIZATION
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
and Debtors in Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
and
100 Crescent Court
Dallas, Texas 75201
(214) 746-7700
and
RICHARDS, LAYTON & FINGER, P.A.
Attorneys for the Debtors
and Debtors in Possession
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
Dated: Wilmington, Delaware
May 6, 1996
<PAGE>
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
(THE "BANKRUPTCY COURT") UNDER SECTION 1125(b) OF THE
BANKRUPTCY CODE FOR USE IN THE SOLICITATION OF ACCEPTANCES
OF THE PLAN OF REORGANIZATION DESCRIBED HEREIN.
ACCORDINGLY, THE FILING AND DISTRIBUTION OF THIS DISCLOSURE
STATEMENT IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS A
SOLICITATION OF ACCEPTANCES OF SUCH PLAN OF REORGANIZATION.
THE INFORMATION CONTAINED HEREIN SHOULD NOT BE RELIED UPON
FOR ANY PURPOSE BEFORE A DETERMINATION BY THE BANKRUPTCY
COURT THAT THIS DISCLOSURE STATEMENT CONTAINS "ADEQUATE
INFORMATION" WITHIN THE MEANING OF SECTION 1125(a) OF THE
BANKRUPTCY CODE.1/
1/Legend to be removed upon entry by the Clerk of the Bankruptcy
Court of Order of the Bankruptcy Court approving this Disclosure
Statement.
<PAGE>
I.
INTRODUCTION
A. General Information
G. Heileman Brewing Company, Inc. (the "Company"),
Heileman Holding Company, the direct parent corporation of
the Company ("Holding"), Blitz-Weinhard Brewing Company,
Inc., Carling National Brewing Company, Inc., Christian
Schmidt Brewing Company, Inc., GHB Souvenir Sales, Inc.,
Heileman Air Services, Inc., Heileman Brewing Company, Inc.,
Heileman Export Marketing, Inc., HBC Leasing Company, Inc.,
Lone Star Brewing Company, Inc. and Rainier Brewing Company,
Inc. (individually, a "Debtor" and, collectively, the
"Debtors") hereby are soliciting acceptances (the
"Solicitation") of the Amended Joint Plan of Reorganization
of even date herewith (the "Plan of Reorganization").
(Terms used herein and not defined herein are used herein as
defined in the Plan of Reorganization.) This Disclosure
Statement is being distributed in connection with the
Solicitation.
Attached as Exhibits to or accompanying this
Disclosure Statement are copies of the following:
The Plan of Reorganization (Exhibit A);
Order of the Bankruptcy Court, dated May 6, 1996,
approving this Disclosure Statement (Exhibit B);
Liquidation Analysis (Exhibit C); and,
The Ballot for the acceptance or rejection of the
Plan of Reorganization.
The Plan of Reorganization contemplates and is
conditioned on consummation of the acquisition of all or
substantially all of the properties and interests in
property of the Company and the other Debtors (other than
Holding) and the assumption of substantially all of the
liabilities of the Debtors other than certain liabilities
for certain indebtedness for borrowed money and certain
other specific liabilities (the "Transaction") by The Stroh
Brewery Company ("Stroh" and, after giving effect to the
Transaction, the "Consolidated Company"), a direct
subsidiary of The Stroh Companies, Inc. ("Stroh Holding").
The Asset Purchase Agreement dated as of April 1, 1996 (the
1
<PAGE>
"Acquisition Agreement") governing the Transaction is
annexed to the Plan of Reorganization as Exhibit A thereto.
On May 6, 1996, after notice and a hearing, the
United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court") approved this Disclosure Statement
as containing adequate information to enable hypothetical,
reasonable investors typical of the holders of Claims
against and Equity Interests in the Debtors to make an
informed judgment to accept or reject the Plan of
Reorganization.
APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT,
HOWEVER, CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT
AS TO THE FAIRNESS OR MERITS OF THE PLAN OF REORGANIZATION,
INCLUDING, WITHOUT LIMITATION, THE TRANSACTIONS CONTEMPLATED
THEREBY. UNDER THE PLAN OF REORGANIZATION, CLAIMS EVIDENCED
BY THE EXISTING SENIOR SUBORDINATED NOTES ISSUED BY THE
COMPANY ARE NOT BEING PAID IN FULL ALTHOUGH THE EXISTING
SENIOR SUBORDINATED NOTES ARE NOT SUBORDINATED TO GENERAL
UNSECURED CLAIMS THAT ARE BEING ASSUMED AND PAID IN FULL AND
DISTRIBUTIONS ARE BEING MADE ON ACCOUNT OF THE EQUITY
INTERESTS IN THE COMPANY. HOLDERS OF SUBORDINATED UNSECURED
CLAIMS SHOULD REFER TO SECTION IV ENTITLED "JOINT PLAN OF
REORGANIZATION -- PROVISIONS FOR TREATMENT OF CLAIMS AND
EQUITY INTERESTS UNDER THE PLAN OF REORGANIZATION --
SUBORDINATED UNSECURED CLAIMS (CLASS 6)" FOR A DESCRIPTION
OF THE TREATMENT OF THE SUBORDINATED UNSECURED CLAIMS UNDER
THE PLAN OF REORGANIZATION.
A copy of the order, dated May 6, 1996 (the
"Solicitation Order"), of the Bankruptcy Court and a notice
of, among other things, voting procedures, including,
without limitation, the fixing of the record date for voting
purposes, and the dates fixed for objections to and the
hearing on confirmation of the Plan of Reorganization (the
"Notice of the Confirmation Hearing") are also being
transmitted with this Disclosure Statement. The
Solicitation Order and the Notice of the Confirmation
Hearing set forth in detail the deadlines, procedures and
instructions for voting to accept or reject the Plan of
Reorganization and for filing objections to confirmation of
the Plan of Reorganization, the treatment for balloting pur-
poses of certain types of Claims, and the principles for
tabulating ballots. In addition, detailed voting instruc-
tions accompany each ballot. Each holder of a Claim or an
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Equity Interest should read the Disclosure Statement, the
Plan of Reorganization, the Solicitation Order, the Notice
of the Confirmation Hearing and the instructions
accompanying the ballots in their entirety before voting on
the Plan of Reorganization. These documents contain, among
other things, important information concerning the
classification of Claims and Equity Interests for voting
purposes and the tabulation of votes. No solicitation of
votes to accept or reject the Plan of Reorganization may be
made except pursuant to this Disclosure Statement and
section 1125 of the Bankruptcy Code.
Holders of Claims and Equity Interests Entitled to Vote
Under the Bankruptcy Code, only classes of Claims
or Equity Interests that are impaired are entitled to vote
to accept or reject the Plan of Reorganization. The Claims
and Equity Interests in each of Class 2 (Senior Secured
Claims), Class 3 (Other Secured Claims) and each subclass
thereof, Class 4 (General Unsecured Claims) and each
subclass thereof, Class 5 (Intercompany Affiliate Claims)
and each subclass thereof, Class 6 (Subordinated Unsecured
Claims) and Class 7 (Equity Interests) and each subclass
thereof under the Plan of Reorganization are impaired and,
accordingly, may vote on the Plan of Reorganization by
completing and mailing the enclosed ballot to the address
specified on the ballot. See section IV entitled "The Joint
Plan of Reorganization" and section XI entitled "Voting
Procedures and Requirements."
To become effective, the Plan of Reorganization
must be accepted by the holders of certain classes or
subclasses of Claims and it must be confirmed by order of
the Bankruptcy Court. Generally, a class of claims has
accepted a plan of reorganization if holders of at least
two-thirds in amount, and more than one-half in number, of
the claims of that class that are actually voted for
acceptance or rejection of the Plan of Reorganization are
voted to accept the Plan of Reorganization. Votes cast by
holders of Claims in each subclass of a class under the Plan
of Reorganization will be tabulated separately by subclass,
and a subclass will have accepted the Plan of Reorganization
if holders of at least two-thirds in amount, and more than
one-half in number, of the Claims of each such subclass that
are actually voted for acceptance or rejection of the Plan
of Reorganization are voted to accept the Plan of
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Reorganization. Under the Bankruptcy Code, acceptance by a
class of equity interest holders requires the acceptance by
the holders of two-thirds of the total number of shares held
by the equity interest holders that actually cast ballots
for acceptance or rejection of the Plan of Reorganization.
For a discussion of these matters, see section XI entitled
"Voting Procedures and Requirements," and section XII,
entitled "Confirmation of the Plan of Reorganization."
Liabilities incurred in the ordinary course of
business by the Debtors in Possession since the Petition
Date, and indebtedness or obligations arising under loans or
advances to or other obligations incurred by the Debtors in
Possession (other than loans or advances to or other
obligations incurred by the Debtors in Possession under the
Post-Petition Credit Agreement (as such term is hereinafter
defined) and any agreement, instrument or other document
executed and delivered in connection therewith, whether or
not incurred in the ordinary course of the Debtors'
business, that are described in the Plan of Reorganization
as Administration Expense Claims will be assumed and paid by
the Consolidated Company in accordance with the terms and
subject to the conditions of any agreements governing,
instruments evidencing or other documents relating to such
transactions. Loans or advances to or other obligations
incurred by the Debtors in Possession under the Post-
Petition Credit Agreement and any agreement, instrument or
other document executed and delivered in connection
therewith will be paid or otherwise satisfied on the
Consummation Date by the Debtors in Possession. Holders of
Administration Expense Claims will not vote on the Plan of
Reorganization.
Voting Procedures
A ballot, appropriate to the Claim or Equity
Interest held, is enclosed for voting on the Plan of
Reorganization. If a holder holds Claims in more than one
class and is entitled to vote such Claims, separate ballots
must be used for each class of Claims. TO BE COUNTED AS
VOTES TO ACCEPT OR REJECT THE PLAN OF REORGANIZATION,
BALLOTS MUST BE PROPERLY EXECUTED AND RECEIVED BY 4:30 P.M.
(MOUNTAIN STANDARD TIME) ON JUNE 17, 1996 (THE "VOTING
DEADLINE") BY CLAUDIA KING & ASSOCIATES, INC. AS PROVIDED ON
THE BALLOT. ANY EXECUTED BALLOT RECEIVED BY THE BALLOTING
AGENT WHICH DOES NOT INDICATE EITHER AN ACCEPTANCE OR
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REJECTION OF THE PLAN OF REORGANIZATION SHALL BE DEEMED TO
CONSTITUTE AN ACCEPTANCE OF THE PLAN OF REORGANIZATION. See
section XI entitled "Voting Procedures and Requirements."
The Solicitation Order provides, among other things, that
any entity entitled to vote to accept or reject the Plan of
Reorganization may change its vote before the Voting
Deadline (4:30 p.m. (Mountain Standard Time) on June 17,
1996), by simply casting another ballot so that it is
received on or before such deadline. Entities desiring to
change their votes after the Voting Deadline may do so, if
they satisfy the conditions of Bankruptcy Rule 3018(a), by
filing a motion with the Bankruptcy Court with sufficient
notice so that it can be heard at the Confirmation Hearing.
Any Claim or Equity Interest in an impaired class
as to which an objection is pending or which is scheduled by
the Debtors as unliquidated, disputed or contingent is not
entitled to vote unless the holder of such Claim or Equity
Interest has obtained an order of the Bankruptcy Court
temporarily allowing the Claim or Equity Interest for the
purpose of voting on the Plan of Reorganization. See
section XI entitled "Voting Procedures and Requirements --
Parties in Interest Entitled to Vote."
The Bankruptcy Court entered an order fixing
May 6, 1996 at 8:00 a.m. as the record date and time for
voting on the Plan of Reorganization. Accordingly, only
holders of record as of May 6, 1996 at 8:00 a.m. that are
otherwise entitled to vote under the Plan of Reorganization
will be distributed a ballot and may vote.
Entities not voting to accept the Plan of
Reorganization may be bound by the Plan of Reorganization if
it is accepted by the requisite holders of Claims and Equity
Interests as described in section XI entitled "Voting
Procedures and Requirements" and confirmed. See section XII
entitled "Confirmation of the Plan of Reorganization."
Questions about the procedures for voting, should
be directed to Claudia King & Associates, Inc. at
(602) 596-4972:
B. Summary of Distributions Under the Plan of
Reorganization
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The following is a summary of the distributions
under the Plan of Reorganization. It is qualified in its
entirety by reference to the full text of the Plan of
Reorganization, which is annexed to this Disclosure
Statement as Exhibit A hereto. In addition, for a more
detailed description of the terms and provisions of the Plan
of Reorganization, see section IV entitled "The Joint Plan
of Reorganization." The Plan of Reorganization is a plan of
reorganization for each of the Debtors. The Plan of
Reorganization generally provides that if the Plan of
Reorganization is not confirmed for all Debtors, then the
Plan of Reorganization may not be confirmed for any Debtor;
however, the Plan of Reorganization provides that if the
Plan of Reorganization is not confirmed for any or all of
the Debtors other than Heileman Holding Company and G.
Heileman Brewing Company, Inc., the other Debtors may,
subject to their obligations under the Acquisition
Agreement, seek to have the Plan of Reorganization confirmed
for such other Debtors.
The Plan of Reorganization designates classes and
subclasses of Claims and classes of Equity Interests. These
classes and subclasses give effect to the differing priority
under the Bankruptcy Code of the different Claims and Equity
Interests.
C. The Confirmation Hearing
The Bankruptcy Court has scheduled a hearing to
consider the confirmation of the Plan of Reorganization (the
"Confirmation Hearing") on June 26, 1996, at 2:30 p.m.,
before the Honorable Peter J. Walsh, United States
Bankruptcy Judge, at the United States Bankruptcy Court, 824
Market Street, 6th Floor, Wilmington, Delaware 19801. The
Bankruptcy Court has directed that objections, if any, to
confirmation of the Plan of Reorganization be served and
filed on or before June 17, 1996, at 4:30 p.m., in the
manner described under section XI entitled "Voting
Procedures and Requirements." The Confirmation Hearing may
be adjourned from time to time by the Bankruptcy Court
without further notice except for an announcement of the
adjournment date made at the Confirmation Hearing or at any
subsequent adjourned Confirmation Hearing.
In the event that a class or subclass of Claims or
Equity Interests does not accept the Plan of Reorganization,
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the Debtors have the right to request confirmation of the
Plan of Reorganization under section 1129(b) of the
Bankruptcy Code. Section 1129(b) of the Bankruptcy Code
permits the confirmation of a plan of reorganization not-
withstanding the nonacceptance of such plan of
reorganization by one or more impaired classes of claims or
interests. Under that section, a plan of reorganization may
be confirmed by a bankruptcy court if it does not
discriminate unfairly and is "fair and equitable" with
respect to the nonaccepting class. In the event that any
class fails to accept the Plan of Reorganization by the
requisite majorities required under section 1126(c) or
1126(d) of the Bankruptcy Code, as applicable, the Debtors
may move the Bankruptcy Court to confirm the Plan of
Reorganization in accordance with section 1129(b) of the
Bankruptcy Code without amendment or modification. See
section XII entitled "Confirmation of the Plan of
Reorganization."
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATE-
MENT ARE MADE AS OF THE DATE HEREOF UNLESS ANOTHER TIME IS
SPECIFIED HEREIN, AND THE DELIVERY OF THIS DISCLOSURE STATE-
MENT SHALL NOT CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION CONTAINED HEREIN SINCE THE DATE
HEREOF. ALTHOUGH THIS DISCLOSURE STATEMENT HAS BEEN
GENERALLY PREPARED BY THE DEBTORS. CERTAIN INFORMATION,
PRINCIPALLY CONSISTING OF THE DESCRIPTION OF THE BUSINESS
PRESENTLY OPERATED BY STROH, THE MANAGEMENT OF STROH AND THE
FINANCIAL INFORMATION RELATING TO THE CONSOLIDATED COMPANY
HAS BEEN PREPARED AND PROVIDED BY STROH. HOLDERS OF CLAIMS
AND EQUITY INTERESTS SHOULD READ CAREFULLY THIS DISCLOSURE
STATEMENT IN ITS ENTIRETY PRIOR TO VOTING ON THE PLAN OF
REORGANIZATION.
FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND
EQUITY INTERESTS, THIS DISCLOSURE STATEMENT SUMMARIZES THE
TERMS OF THE PLAN OF REORGANIZATION, BUT THE PLAN OF
REORGANIZATION ITSELF QUALIFIES ALL SUMMARIES. IF ANY
INCONSISTENCY EXISTS BETWEEN THE PLAN OF REORGANIZATION AND
THE DISCLOSURE STATEMENT, THE TERMS OF THE PLAN OF
REORGANIZATION ARE CONTROLLING. THE DISCLOSURE STATEMENT
MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE
WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN OF
REORGANIZATION, AND NOTHING CONTAINED HEREIN SHALL
CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY
PARTY, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE
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DEBTORS OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE EVIDENCE
OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN OF
REORGANIZATION ON THE DEBTORS OR HOLDERS OF CLAIMS OR EQUITY
INTERESTS. CERTAIN OF THE STATEMENTS CONTAINED IN THIS
DISCLOSURE STATEMENT, BY NATURE, ARE FORWARD LOOKING AND
CONTAIN ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO
ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL
OUTCOMES. ALL HOLDERS OF CLAIMS AND EQUITY INTERESTS SHOULD
READ CAREFULLY AND CONSIDER FULLY THE "RISK FACTORS" SECTION
HEREOF BEFORE VOTING TO ACCEPT OR REJECT THE PLAN OF
REORGANIZATION.
THE DEBTORS BELIEVE THAT THE PLAN OF
REORGANIZATION PROVIDES THE BEST POSSIBLE RECOVERIES TO
HOLDERS OF CLAIMS AND EQUITY INTERESTS. THE STATUTORY
COMMITTEE OF UNSECURED CREDITORS HAS ADVISED THE DEBTORS
THAT IT INTENDS TO RECOMMEND THAT HOLDERS OF UNSECURED
CLAIMS VOTE TO ACCEPT THE PLAN OF REORGANIZATION.
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II.
GENERAL INFORMATION
A. Business of the Consolidated Company
After giving effect to consummation of the
Transaction, the Consolidated Company will continue to
operate the businesses presently operated by the Company,
Stroh and their respective subsidiaries. It is
contemplated, however, that, following the consummation of
the Transaction, the Consolidated Company will implement a
strategic plan intended to create and enhance economies of
scale and synergies in the business operations of the
Consolidated Company.
Additional information regarding the businesses
presently operated by each of the Company and Stroh,
including those that will be operated by the Consolidated
Company after the Consummation Date, is contained below.
B. Business Presently Operated by the Company
The following is a brief description of the significant
businesses operated by each of the Debtors:
General
Founded in 1858 by Gottlieb Heileman, the Company
is the fifth largest brewer of malt beverages in the United
States with 1995 production of approximately 9.33 million
barrels, consisting of 7.61 million barrels of Company-owned
malt beverage brands and 1.72 million barrels of both malt
and non-malt beverages under contract production
arrangements. The Company owns and operates five breweries
located in La Crosse, Wisconsin; Baltimore, Maryland;
Portland, Oregon; Seattle, Washington; and San Antonio,
Texas. The Company also owns and operates a beverage
production facility in Perry, Georgia.
In the early 1960s, the Company embarked upon a
program of expansion through acquisitions. By 1987, the
Company had purchased twelve regional brands or breweries or
both located throughout the United States. The Company also
diversified its business by acquiring bakeries and snack
food operations throughout the midwestern United States.
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In October 1987, Bond Corporation Holdings
Limited, an Australian corporation ("BCHL"), acquired the
Company in an approximately $1.3 billion transaction
financed with approximately $1.1 billion of debt. BCHL
subsequently divested the non-beverage businesses of the
Company in 1988 for approximately $204 million. During its
four years of ownership by BCHL the malt beverage shipments
of the Company declined at a compound annual growth rate of
approximately 11.5% compared to an industry-wide compound
annual growth rate of approximately 0.4% during the same
period.
On January 24, 1991, the Company filed a petition
for reorganization under chapter 11 of the Bankruptcy Code.
Under its plan of reorganization, which was confirmed on
November 20, 1991, the Company reduced the aggregate
outstanding principal amount of its long-term debt from
approximately $1.2 billion (including, without limitation,
advances from BCHL or affiliates thereof) to approximately
$325 million.
On January 21, 1994, the Company was acquired by
Holding Company through a merger of the Company and Heileman
Acquisition Company, a wholly owned subsidiary of Holding,
with the Company being the survivor of such merger, in an
approximate $410.0 million transaction financed with $340.0
million of debt. Holding was formed by Hicks, Muse, Tate &
Furst Incorporated ("HMT&F"), a private investment firm and
controlling shareholder of Holding, for the purpose of
acquiring the Company. See Section III entitled "The
Reorganization Cases -- Events Preceding Commencement of the
Reorganization Cases."
Products
The Company currently produces, markets and sells
approximately 40 different brands of malt beverages. The
Company focuses its marketing efforts on nine of its 40
brands: CHAMPALE, COLT 45, HENRY WEINHARD'S, LONE STAR,
MICKEY'S, OLD STYLE, RAINIER, SCHMIDT'S, and SPECIAL EXPORT.
In general, each of the core brands consists of a family of
products that includes a principal brand and one or more
line extensions such as light, draft, dark, ice, red, ale or
non-alcoholic extensions.
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Core Brands
The Company produces, markets and sells nine core
brand families. A brief summary of each of the nine core
brand families is as follows:
CHAMPALE is a super-premium, flavored malt liquor
(malt liquors are beers, like ice beers, with slightly
higher alcohol content) that is marketed and distributed
principally in the central and eastern United States. The
CHAMPALE brand family consists of CHAMPALE, CHAMPALE GOLD,
CHAMPALE PINK and CHAMPALE EXTRA DRY.
COLT 45 is a premium malt liquor that is
distributed on a national basis. The COLT 45 brand family
consists of COLT 45 MALT LIQUOR, COLT 45 DOUBLE MALT, COLT
ICE and COLT PREMIUM. Company sales of COLT 45 are
strongest in the northeastern and southeastern United
States.
HENRY WEINHARD'S ("Henry's") is a super-premium
beer that is marketed and distributed principally in the
northwestern United States and in California. The Henry's
brand family consists of HENRY WEINHARD'S PRIVATE RESERVE,
HENRY WEINHARD'S LIGHT, WEINHARD'S PALE ALE, WEINHARD'S RED,
WEINHARD'S ICE ALE, WEINHARD'S HEFEWEIZEN and WEINHARD'S
DARK. Henry's is positioned by the Company as a super-
premium beer of the highest quality that is marketed to
appeal to middle and upper income individuals.
LONE STAR is a popular-priced beer that is
marketed and distributed principally in Texas. The LONE
STAR brand family consists of LONE STAR and LONE STAR LIGHT.
LONE STAR is a quality beer designed to appeal to
traditional Texas beer drinkers and to individuals outside
of Texas as the "National Beer of Texas ."
MICKEY'S is a premium malt liquor that is marketed
and distributed largely on a regional basis and is
recognized for its distinctive Big Mouth ( ) bottles.
Company sales of MICKEY'S are strongest in California,
Michigan and Maryland.
OLD STYLE is a premium beer that is marketed and
distributed principally in the midwestern United States.
The OLD STYLE brand family consists of OLD STYLE, OLD STYLE
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LIGHT, OLD STYLE ICE, and non-alcoholic ROYAL AMBER. The
brand is positioned as a high-quality premium beer with
"Real Beer" taste for Midwesterners.
RAINIER is a premium beer that is marketed and
distributed principally in the northwestern United States.
The RAINIER brand family consists of RAINIER, RAINIER LIGHT,
RAINIER DRAFT, RAINIER ICE, RAINIER DRY, RAINIER ALE, non-
alcoholic RAINIER PARKS and microbrew formulations called
EMERALD CITY ALE and YAKIMA RED. The brand is positioned as
a quality beer that is Mountain Fresh and is closely
identified with the Northwest.
SCHMIDT'S is a popular-priced beer that is
marketed and distributed principally in the midwestern,
northwestern and northeastern United States. The SCHMIDT'S
brand family consists of SCHMIDT'S, SCHMIDT'S LIGHT,
SCHMIDT'S GENUINE DRAFT, SCHMIDT'S, non-alcoholic SCHMIDT'S
SELECT and two new line extensions, SCHMIDT'S ICE and
SCHMIDT'S RED. The brand is positioned as a popular-priced
beer and is packaged and marketed to appeal to consumers
with an appreciation for the outdoors.
SPECIAL EXPORT is a premium beer that is marketed
and distributed principally in the midwestern and
northwestern United States. The SPECIAL EXPORT brand family
consists of SPECIAL EXPORT, SPECIAL EXPORT LIGHT, EX LIGHT,
EX BLACK ALE and EX RUBY RED. The brand is positioned as a
high-quality beer and is marketed to convey a contemporary
image designed to appeal to a new generation of beer
drinkers.
Non-Core Brands
The Company produces, markets and sells 31 non-
core brands (including, without limitation, BLACK LABEL,
BLATZ and WIEDEMANN). The Company utilizes these brands to
compete primarily on the basis of price.
The following list sets forth the core and non-
core brands owned and produced by the Company.
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COMPANY-OWNED BRANDS
Core Brands Non-Core Brands
OLD STYLE ALTES MILWAUKEE 1851
COLT 45 BLACK LABEL NATIONAL BOHEMIAN
RAINIER BLATZ NATIONAL PREMIUM
SCHMIDT'S BLITZ-WEINHARD NIGHT STAR
MICKEY'S BURGERMEISTER ORTLIEB
HENRY WEINHARD'S COQUI PFEIFFER
LONE STAR EMERALD CITY RED WHITE AND BLUE
SPECIAL EXPORT HEIDELBERG RHEINGOLD
CHAMPALE J. RUPPERTS RHEINLANDER
KINGSBURY STAG
KNICKERBOCKER WIEDEMANN
MCSORLEY'S
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Distribution and Sales
The Company sells its beer products on a regional
basis to approximately 1,300 independent beer distributors
located throughout the United States. Sales of Company
products to customers outside of the United States are less
than 5% of total sales.
Each of the wholesalers of the Company has a
standard form of agreement with the Company. The
relationship is also governed by the laws of the states
where the wholesalers are located. In many of these states,
a wholesaler may only be terminated by the Company for
"cause" as defined by the applicable law. In 1995, the top
500, 275 and 100 wholesalers respectively purchased the
equivalent of 93.0%, 81.0% and 57.0% of the Company's total
sales. The Company supports its wholesalers with a 100
person field sales force that provides assistance and
monitors wholesaler performance.
The business of the Company is seasonal in nature
with sales in June and July varying by as much as 50% from
sales in December and January.
Although the Company's national market share is
approximately 4.0%, its market share in the north central
and north western states is greater. In the north central
states of Wisconsin, Illinois and Minnesota where OLD STYLE,
SCHMIDT'S and SPECIAL EXPORT are primarily sold, the
Company's 1995 sales share was respectively 12.0%, 10.0% and
9.0%. In the north western states of Washington, Montana
and Oregon where RAINIER, SCHMIDT'S and HENRY WEINHARD'S are
primarily sold, the Company's 1995 market share was
respectively 21.0%, 17.0% and 11.0%. The Company's malt
liquor products are sold primarily in urban markets
throughout the United States.
Contract Production
Pursuant to contractual arrangements with other
brewers and beverage marketers, the Company provides
production, packaging and administrative services for a fee.
Currently, the Company is providing these services to
numerous parties including Hornell Brewing Company (Arizona
brand beverages) and Boston Beer Company and Pabst Brewing
Company. In 1995, sales to Hornell Brewing Company were
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78.0% of total Company contract production sales. The
production agreement of the Company with Hornell is for a
specific term which unless renewed will expire in 1997.
Brandnames and Trademarks
The Company's trademarks are discussed in the
product section above. The Company regards customer
recognition and loyalty as being important to the long-term
success of its business.
Research and Development
The Company is involved in limited research and
development activities related to the development and
improvement of products. The dollar amounts expended by the
Company during the past three years on such research
activities are not considered to be material in relation to
the total business of the Company.
Marketing and Distribution
The Company markets its brands using advertising
media, merchandising campaigns, sponsorships and consumer
promotions. The Company spent approximately 39.0% of its
marketing expenditures in 1995 on advertising media, of
which approximately 49.0% went to television and radio.
Substantially all media expenditures were made in support of
the Company's core brands. The balance of the Company's
1995 marketing expenditures were for merchandising and point
of sale materials, sponsorships, consumer promotions and
packaging designs. Consistent with the Company's overall
strategy to position its brands to capture regional market
share, the Company principally utilizes these marketing
mediums at the local level. In doing so, the Company
endeavors to build regional brand popularity and
recognition. In contrast, the major brewers focus on
building broad national appeal.
Employees
The Company has approximately 2,200 full-time
employees, of whom approximately 680, or 31.0% are non-union
salaried employees. The remaining 1,475 employees are
hourly union workers. The Company is a party to
approximately 20 collective bargaining agreements with
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various union locals throughout the country. The Company
has no national labor contracts and, therefore, at no time
during this period should collective bargaining agreements
at each of the Company's breweries be subject to
renegotiation during the same period. The Company generally
enjoys good labor-management relations; however, work
stoppages have occurred in connection with the renewal of
collective bargaining agreements at two of the Company's
breweries during which salaried employees were utilized from
various brewery locations.
Properties
The Company owns and, through its subsidiaries,
operates five breweries and one beverage production facility
with a total annual rated capacity of approximately 16.9
million barrels, of which 3.7 million barrels is for
beverage products other than beer. In calculating rated
capacity, the Company considers both brewing and packaging
limitations. In those cases where products manufactured
under contract production arrangements do not require
brewing capacity, actual output can be considerably higher
than rated capacity. Management believes that the Company's
breweries are in adequate condition and have sufficient
brewing and packaging capacity to meet projected volume
requirements for the foreseeable future.
La Crosse, Wisconsin: Located in southwestern
Wisconsin, the La Crosse brewery was founded in 1858 by
Gottlieb Heileman. With a rated capacity of 5.2 million
barrels annually, the brewery has a modern, computer
controlled brewhouse constructed in 1982. In addition, a
sterile draft filtration and packaging facility was
constructed in 1991, allowing the production of a variety of
packaged draft products. The brewery employs approximately
500 union and 110 salaried personnel. In addition, the
administrative offices of the Company are located in La
Crosse, employing an additional 200 salaried personnel. The
La Crosse brewery produces a variety of the Company's brand
families, including OLD STYLE, SPECIAL EXPORT, SCHMIDT'S and
COLT 45, with OLD STYLE representing approximately 50.0% of
the brewery's 1995 output.
Baltimore, Maryland: Acquired by the Company in
1979, the Baltimore brewery was originally constructed in
1961 and is located on a 40 acre tract of land west of
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Baltimore. Since acquiring the brewery in 1979, the Company
has undertaken a number of significant capital projects to
both improve efficiencies and increase production capacity,
including a major renovation of the brewhouse in 1992. The
brewery currently employs approximately 450 union employees,
80 salaried personnel and has a rated capacity of 2.3
million barrels annually. The Baltimore brewery produces a
variety of the Company's brand families, including COLT 45,
MICKEY'S, CHAMPALE, and SCHMIDT'S, with COLT 45 representing
approximately 37.0% of the brewery's 1995 output. In
addition, the brewery produces a large number of products
under third party contract production arrangements. The
brewery operated at full capacity during [1994], with the La
Crosse and San Antonio breweries used to balance production
requirements during the peak summer months.
San Antonio, Texas: Known as Lone Star Brewing
Company, the San Antonio brewery was originally constructed
in 1933. Since its acquisition in 1983, the Company has
renovated and modernized both the packaging and brewhouse
facilities, including installation of new pasteurization
units in 1985. The brewery employs approximately 190 union
employees, 35 salaried personnel and has a rated capacity of
1.4 million barrels annually. Principal brand families
produced at the San Antonio brewery consist of LONE STAR,
COLT 45 and MICKEY'S, with LONE STAR representing
approximately 28.0% of the brewery's 1995 output.
Seattle, Washington: Known as Rainier Brewing
Company, the Seattle brewery was originally constructed in
1878. Since the Company's acquisition of the brewery in
1977, capital expenditures have been concentrated on
improving production efficiencies and expanding both product
and packaging capabilities. This included the construction
of a new keg line facility in 1987 and more recently a new
sterile draft beer filtration and packaging system in 1992.
The brewery employs approximately 130 union employees, 35
salaried personnel and has an annual rated capacity of 2.1
million barrels. Principal brand families produced at the
Seattle brewery consist of RAINIER, SCHMIDT'S and HENRY
WEINHARD'S, with RAINIER representing approximately 44.0% of
the brewery's 1995 output.
Portland, Oregon: Known as Blitz-Weinhard
Brewery, the Portland facility was originally constructed in
1856 by Henry Weinhard. Prior to the Company's acquisition
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of the brewery in 1983, significant capital improvements in
the brewing and packaging areas had been made by the former
owners. Since 1983, capital expenditures have been focused
on maintenance and production efficiencies. The brewery
employs approximately 175 union employees, 30 salaried
personnel and has an annual rated capacity of 2.2 million
barrels. Principal brand families produced at the Portland
brewery consist of HENRY WEINHARD'S, RAINIER, COLT 45,
MICKEY'S, SCHMIDT'S and BLITZ, with HENRY WEINHARD's
representing approximately 33.0% of the brewery's 1995
output.
Perry, Georgia: This former brewery was reopened
exclusively as a beverage production facility in 1995. It
has the capacity to produce 3.7 million barrels.
C. Business Presently Operated by Stroh
The following is a brief description of the
significant businesses operated by Stroh. This description
was prepared and provided by Stroh, and the Company has not
independently investigated the information set forth in this
section, although certain of such information is reflected
in various trade and industry reports.
General
Stroh was founded in Detroit, Michigan in 1850 by
Bernhard Stroh, whose family had been in the brewing
business in Germany since the 1770s. Stroh remains owned by
the descendants of Bernhard Stroh, making Stroh the largest
family-owned brewing company in the United States.
Before giving effect to the consummation of the
Transaction, Stroh was the fourth largest brewer of malt
beverages in the United States. In the fiscal year ended
March 31, 1996, Stroh produced approximately 13.4 million
barrels of beverages, consisting of approximately 10.5
million barrels of its own malt beverage brands and
approximately 2.8 million barrels of malt beverages and
other products for other brand owners under contract
manufacturing arrangements. Stroh owns and operates five
breweries located in Lehigh Valley, Pennsylvania; Winston-
Salem, North Carolina; St. Paul, Minnesota; Longview, Texas;
and Tampa, Florida. Stroh maintains its major sales offices
at its principal corporate office in Detroit, Michigan and
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in Englewood, Colorado; and Atlanta, Georgia. Stroh also
operates distribution centers in Portland, Oregon and
Ontario, California to service the west coast.
Stroh made two significant acquisitions of
breweries and brands, both in the early 1980s. In 1981,
Stroh acquired The F. & M. Schaefer Brewing Company and, in
1982, Stroh acquired Jos. Schlitz Brewing Company.
Products
The Stroh Brewery Company presently produces,
markets and sells approximately 20 different brands and
brand families of beers, non-alcoholic malt beverages and
teas in the domestic United States. The substantial
majority of marketing resources are applied against three
core brand families, STROH'S, OLD MILWAUKEE and SCHLITZ MALT
LIQUOR and the specialty brand families of AUGSBURGER, FIRST
RESERVE and RED RIVER VALLEY. In addition, resources are
allocated to the development of new brands and proprietary
packaging. In general, each of Stroh's brand families
consists of a principal brand and line extensions such as
light, dark, ice, red and non-alcoholic brews. The
specialty brand families will have more specialized
extensions such as Weiss, Oktoberfest, Bock, and Honey
Brown, among others.
Major Brands and Brand Families
Five core brand families account for nearly 95.0%
of the Stroh's domestic volume. These are STROH'S, OLD
MILWAUKEE, SCHLITZ MALT LIQUOR, SCHLITZ AND SCHAEFER. A
brief synopsis of these brand families and selected other
significant products of Stroh follows.
The STROH's brand is a sub-premium priced beer
with regional strength in the Midwest, Western Pennsylvania
and Western New York. The brand family consists of STROH'S,
STROH'S LIGHT and STROH'S NON-ALCOHOLIC. The brands are
positioned as beers with more taste and more character with
a communication message that focuses on the flavor imparted
by Stroh's fire-brewing process and the more than 200 year
brewing heritage of the Stroh family.
The OLD MILWAUKEE brand is a leading sub-premium
price beer that is marketed and distributed nationally.
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This brand family is Stroh's largest, accounting for 48% of
total domestic volume. The brand family consists of OLD
MILWAUKEE, OLD MILWAUKEE LIGHT, OLD MILWAUKEE NA, OLD
MILWAUKEE ICE and OLD MILWAUKEE RED. The brand family is
marketed as quality beers that are down to earth,
unpretentious and a good value. They appeal primarily to
blue collar males aged 25+ in smaller cities and rural
areas. OLD MILWAUKEE NA is presently the third best selling
non-alcoholic malt beverage in the United States.
SCHLITZ MALT LIQUOR is a leading premium malt
beverage in the malt liquor category. The brand is
popularly known as "The Bull" and the bull icon is used
prominently in its packaging and advertising. The brand is
distributed nationally, however, sales are strongest in the
Southeastern and South Central regions of the country. The
brand is marketed under "The Bull is Taking Charge" theme
with a positioning as the malt liquor that is social, fun
and appropriate in a wide variety of situations. RED BULL
MALT LIQUOR and BULL ICE are additional malt liquor brands
associated with the SCHLITZ MALT LIQUOR brand.
The SCHLITZ brand is a leading value-priced beer
that is distributed nationally, but is strongest in the
southern part of the United States and in certain northern
urban areas such as Chicago. The brand family consists of
SCHLITZ, SCHLITZ LIGHT, SCHLITZ ICE and SCHLITZ NA. The
brand is positioned as a classic American beer and uses
packaging and advertising that are evocative of the brand's
heyday in the 1940's and 1950's. This imagery is designed
to draw on the residual equity the brand has with consumers
that are 50+ and to build a new franchise with younger legal
age drinkers by tapping into the popularity of "retro"
design and imagery. To this end, the slogans "The Beer That
Made Milwaukee Famous" and "Just the Kiss of the Hops"
continue to be used.
The SCHAEFER brand is a leading value-priced beer
that is distributed nationally; however, the brand has
regional strength in the Northeast and in the South Central
United States. The brand family consists of SCHAEFER and
SCHAEFER LIGHT. Marketing support for these brands is very
limited.
Stroh produces, markets and sells a number of
super-premium, specially crafted beers under the brand names
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AUGSBURGER, RED RIVER VALLEY, FIRST RESERVE and SIGNATURE.
These beers are distributed regionally. The AUGSBURGER
brand family consists of AUGSBURGER GOLDEN, AUGSBURGER DARK,
AUGSBURGER BOCK, and AUGSBURGER RED, all of which are
distributed year-round. The brand family is marketed as
high quality, finely crafted specialty beers and a variety
of seasonal beers are produced to reinforce this image.
These seasonal brews include AUGSBURGER ALT, AUGSBURGER
DOPPELBOCK, AUGSBURGER OKTOBERFEST and AUGSBURGER WEISS.
RED RIVER VALLEY, although distributed primarily in the
Midwest and Western regions of the United States, is in the
process of a gradual national expansion. The brand has a
product-based positioning through the use of barley malts
grown in the Red River Valley region of the Upper Midwest.
RED RIVER HONEY BROWN is a recently introduced line
extension. FIRST RESERVE has limited distribution in North
and South Carolina. The brand has a strong southern
heritage and appeal with a recipe based on those used by
southern brewers during the Civil War era. The beer is
brewed with molasses added giving it a crafted beer feel and
taste. The packaging is heavily reminiscent of the Civil
War era and reinforces its position as a southern microbrew.
SIGNATURE is positioned as a super-premium beer of the
highest quality using only imported hops. The brand is
distributed primarily in the state of Michigan. These
brands are considered important to Stroh's overall marketing
efforts not because of their volume, but rather because
their positioning gives them higher sales margins.
Accordingly, Stroh devotes a disproportionate share of its
marketing resources when compared to total volume generated
by these brands. In the fiscal year ended March 31, 1996,
these brands accounted for approximately 0.3% of domestic
volume.
All Brands
The following list sets forth the core and other
brands of malt beverages and iced teas owned and produced by
Stroh, without regard to line extensions:
STROH'S FIRST RESERVE LOST RIVER
OLD MILWAUKEE SIGNATURE RIDLEY'S
SCHLITZ MALT LIQUOR GOEBEL CHAOS ICED TEA
SCHLITZ PIELS CAPTIVA ICED TEA
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SCHAEFER SILVER THUNDER MALT JASPER CREEK ICED TEA
AUGSBURGER LIQUOR
RED RIVER VALLEY PRIMO
AMERICA'S BEST
Distribution and Sales
Domestic
Stroh sells its malt beverage products through a
network of approximately 840 independently owned beer
wholesalers located throughout the United States. Beer
wholesalers, which must be licensed by the state in which
they operate, in turn sell the beer products to licensed
retailers. Typically, wholesalers of Stroh beer products
also act as wholesalers for the beer products of other
domestic and international competitive suppliers.
Approximately 440 of Stroh's current wholesalers also
distribute products of the Company.
Stroh uses a limited number of standard form
contracts to define its relationship with its wholesalers.
Approximately 35 states have specific legislation governing
the terms of the relationship between beer manufacturers and
wholesalers in such states. Depending upon the statute in
question and its date of enactment, the provisions of these
statutes may supersede the provisions of the wholesaler
agreement where there is a conflict between the agreement
and the statute.
In the fiscal year ending March 31, 1996, the top
500, 275 and 100 wholesalers of Stroh products respectively
purchased the equivalent of approximately 98.0%, 85.0%, and
61.0% of Stroh's sales in barrels. Stroh has a field sales
force of approximately 80 people who provide assistance to
and monitor the performance of Stroh wholesalers and retail
customers.
Stroh and its wholesalers use the proprietary
STROH-NET electronic communications system for orders, order
confirmations, shipment information, inventory information,
and retail sales reporting and general communications.
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For calendar year 1995, Stroh's national market
share of shipments was approximately 5.4%. Stroh's sales
are strongest in the North Central region of the United
States, including the states of Iowa, Minnesota, Nebraska,
North Dakota, and South Dakota, where Stroh has a sales
share of approximately 10.3%. Stroh's sales are also strong
in the Southeast region of the United States, including the
states of Florida, Georgia, North Carolina, South Carolina,
and Virginia, where Stroh has a sales share of approximately
7.4%. Stroh's sales are weakest in the West and Northwest,
including the states of Alaska, California, Washington,
Oregon, Idaho, and Hawaii, where Stroh has a sales share of
approximately 0.7%. Stroh's sales are also below national
share in New England, including the states of Connecticut,
Maine, Massachusetts, New Hampshire, Rhode Island, and
Vermont, where Stroh has a sales share of approximately
2.2%.
International
Stroh believes it is the second largest exporter
of beer from the United States.
International shipments represent approximately
10.0% of Stroh's volume, and is a growing segment of Stroh's
business. Stroh sells its products in over 80 countries.
Stroh's largest export markets are Russia, Canada, Brazil,
and Japan, accounting for approximately 75.0% of Stroh's
exports. Stroh maintains a 14 person international sales
group dedicated to international sales efforts, and utilizes
local agents hired under consulting arrangements to provide
local, knowledgeable sales assistance.
Sales in most export markets are made through
independent sales brokers. Sales in Canada, however, are
made through provincial authorities using Stroh employees
operating from Canadian sales offices. Stroh also maintains
sales offices in Hong Kong, London, Panama and Sydney.
Contract Production
Under various types of contractual arrangements,
Stroh produces malt and other beverages (principally teas
and fruit juices) for other companies which own the brands
produced. Stroh also provides administrative services (e.g.
order taking and invoicing) for some of its contract
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customers. Contract production of malt beverages has been
growing, while contract production of teas and other
beverages has been declining. Stroh's contract production
of non-malt beverages amounts to less than 2.0% of Stroh's
contract production business. Stroh believes that it is the
world's largest contract producer of malt beverages.
Contract production represents approximately 20.0%
of Stroh's production, and accounts for approximately 18% of
gross sales revenue for the fiscal year ended March 31,
1996. Major contract customers of Stroh include PABST,
MCKENZIE RIVER PARTNERS, PETE'S BREWING and BOSTON BEER. In
addition, Stroh produces malt beverages for more than 10
other companies. Stroh's largest contract customer has
minimum purchase obligations that account for approximately
50.0% of Stroh's total contract production. Stroh's four
largest contract customers account for over 95.0% of Stroh's
contract production. Stroh has a significant partnership
interest in its second largest contract customer, and Stroh
owns warrants to purchase approximately 10.0% of the stock
of its third largest contract customer.
Brands and Trademarks
Stroh has registered for trademark protection in
the United States and internationally the brandnames and
slogans used by it in the marketing of beers. Brandname
protection and recognition of brandnames remains an
important element in long-term success.
Stroh utilizes trade names on various brands
produced by it. For example, the Augsburger brand uses the
name Augsburger Brewing Company. These trade names, which
have been appropriately registered with governmental
authorities, are believed by Stroh to be valuable to the
sales efforts and imagery associated with the brands which
use them.
Research and Development
Stroh maintains a highly qualified brewing
department which expends a significant amount of time in
connection with the development of formulations and taste
profiles for new beer products. However, the dollar amounts
required for this function are not material in relation to
Stroh's business as a whole.
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Marketing
Stroh markets its brands using advertising media,
price promotions, merchandising at point of purchase,
sponsorships and consumer promotions. Approximately 12.0%
of gross sales revenue in the fiscal year ended March 31,
1996 was spent on marketing. Of this amount, approximately
60.0% was for price promotion spending and approximately
40.0% was for other forms of marketing expense. Measured
media advertising (television, radio and outdoor) accounted
for approximately 7.5% of Stroh's total marketing expense.
Television advertising purchased by Stroh is principally
regional by marketing area and on cable television as
opposed to national network advertising. Substantially all
media expenditures were made in support of the Stroh's, Old
Milwaukee and Schlitz Malt Liquor brands. There were minor
purchases of media for the Schlitz, Schaefer, and First
Reserve brands. Expenditures were directed to the
respective geographic regions in which those brands are
strongest. The balance of marketing expenditures were for
merchandising and point of sale materials, sponsorships,
consumer promotions, packaging, coupons, and, in the case of
non-alcoholic malt beverages, sampling programs.
Employees
Stroh has approximately 712 full-time salaried
employees and 1,527 hourly employees. Hourly employees are
covered by collective bargaining agreements with
approximately 14 local unions located near plant sites.
Stroh is a party to a master agreement with the Teamsters
Union. That agreement expires on May 31, 1997. Stroh
generally enjoys good labor-management relations; however,
work stoppages have occurred in connection with the renewal
of collective bargaining agreements. The last time Stroh
experienced a strike, which was in 1982, the breweries were
operated by salaried employees.
Properties
Stroh owns and operates five breweries with a
total annual rated capacity of approximately 15.1 million
barrels. In calculating rated capacity, Stroh considers
both brewing and packaging limitations. Actual output may
be lower or higher than rated capacity. Management believes
that Stroh's breweries are in good condition and have
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sufficient brewing and packaging capacity to meet projected
volume requirements for the foreseeable future. Stroh's
breweries are as follows:
Lehigh Valley, Pennsylvania: Located in Eastern
Pennsylvania, near Allentown. This brewery was built in
1971 by The F. & M. Schaefer Brewing Company. This brewery
has an annual rated capacity of 3.2 million barrels. There
are approximately 73 salaried and 384 hourly employees at
this brewery. The brewery produces a variety of brands and
packages for Stroh and contract customers. The brewery has
a special bottle line to package Stroh brands for Canada.
Stroh expanded the brewery in 1982, a $30.0 million project
that included a new computer-controlled brewhouse and new
packaging and pasteurizing equipment.
Winston-Salem, North Carolina: This brewery was
built in 1969 and was acquired by Stroh in 1982 when it
acquired Jos. Schlitz Brewing Company. There are
approximately 82 salaried and 436 hourly employees at this
brewery. The brewery produces more brands and packages than
any other Stroh-owned brewery. Rated capacity of the
brewery is 4.1 million barrels. Since acquiring the plant,
Stroh has upgraded its packaging capabilities, added
equipment to produce non-alcoholic malt beverages, and
installed a distillation system to recover ethanol alcohol
from waste beer.
Tampa, Florida: This brewery was acquired by
Stroh when Stroh acquired Jos. Schlitz Brewing Company,
then, in satisfaction of a divestiture imposed by consent
decree with the United States government, transferred to
Pabst Brewing Company in 1983 in exchange for the St. Paul
brewery, and then re-acquired from Pabst in 1988. The
brewery, built in 1958, has a rated capacity of 1.5 million
barrels. There are approximately 37 salaried and 141 hourly
employees employed at this brewery. The brewery primarily
produces Old Milwaukee, Schlitz, and Schlitz Malt Liquor
brands, and certain brands for Stroh's largest contract
customer.
Longview, Texas: This brewery, located in east
Texas, was built in 1966, and has a rated capacity of 3.6
million barrels. The brewery produces a variety of brands
and packages for domestic use and export shipments. Since
acquiring the plant, Stroh has made substantial capital
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expenditures to improve production capabilities. Recent
additionals include a new bottle labeler, new equipment for
its waste treatment plant, and a major improvement to the
process water system.
St. Paul, Minnesota: This brewery, built by Hamms
Brewing Company in the late 1800s, was acquired by Stroh
from Pabst in 1983. The brewery employs approximately 73
salaried employees and 286 hourly employees. In addition to
producing most Stroh brands, the brewery produces the
Augsburger, Red River Valley, and Signature brands, as well
as all products for Stroh's fourth largest contract
customer. Since 1983, Stroh has made major improvements to
the bottle, can and keg production capabilities of the
brewery and has substantially upgraded the power house.
D. Certain Elements Common to the Business Presently
Operated by Each of the Company and Stroh.
The Brewing Process
Beer is produced from malt, corn products, hops,
yeast and water. Malt, the main ingredient of malt
beverages, is produced when barley is moistened, allowed to
germinate and then dried. Malt and other grains such as
corn, which give beer body and help reduce the malt
character of the brew, are then crushed and placed in
mashing tubs. Water is mixed with the grain and exposed to
varying temperatures. Straining the mixture in the mash tub
or lauter tub leaves the spent grains behind producing a
clear amber liquid called wort. Wort is pumped from the
lauter tub to brew kettles and hops are added, which add
bitterness and variety to the brew. Wort is boiled with the
hops, which produces a smooth, tangy flavor. The hops are
then strained in the whirlpool tank and the wort cooled.
Once cool, the mixture is placed in a fermenting tank where
specially cultured yeast is introduced to begin the
fermentation process. Under careful temperature regulation,
the beer is fermented and then transferred to the aging
tanks where full flavor is developed and clarification takes
place for an extended period of time. After aging, the
finished beer is filtered and packaged in barrels, bottles
and cans. The entire brewing process from the conversion of
raw materials in the brewhouse to finishing is typically
completed in 30-45 days, depending on the formulation of the
product being brewed.
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The principal ingredients used to brew malt
beverages (malted barley, corn, hops, yeast and water)
historically have represented approximately 10.0% to 15.0%
of the Company's total cost of goods sold. Packaging
materials, consisting principally of bottles, cans and
paperboard, historically have represented approximately
55.0% to 65.0% of the Company's total costs of goods sold.
All the Company's breweries are capable of packaging its
products in a variety of bottles, cans and kegs. The choice
of packaging is driven by consumer tastes and the Company's
efforts to meet certain price points. The Company has been
a leader in the innovation of new forms of packaging,
including the Big Mouth ( ) bottle and the 22-ounce bottle.
The Company fulfills its agricultural material and
packaging supply requirements through purchases from a
variety of sources under contractual arrangements and on the
open market. The Company believes that sufficient
agricultural and packaging material supplies are available
at acceptable prices, but cannot predict the future
availability or prices of these products. The commodities
markets have experienced and are likely to continue to
experience major price fluctuations. The price and supply
of agricultural materials will be determined by, among other
factors, the level of crop production, weather conditions,
export demand and governmental regulations and legislation
affecting agriculture.
Stroh uses a special fire-brewing process for its
Stroh's, Stroh's Light, and Signature brands. Under this
process, direct flame, rather than steam, is used to heat
the wort. Stroh believes that fire-brewed beers impart a
distinctly different, richer flavor than beers made using
steam heat. Stroh is the only major brewer in the United
States to use the fire-brewing process.
Stroh also uses a process to make its non-
alcoholic malt beverages that is unique to the production of
non-alcoholic beverages in the United States. Typically,
non-alcoholic malt beverages are made by either brewing a
"beverage" that is not fermented, or by eliminating the
alcohol from a fully brewed beer, thus producing a malt
beverage without the alcohol. Unlike many competitive non-
alcoholic malt beverages, Stroh's non-alcoholic beverages
are made from fully brewed beers. The alcohol is removed
from the fully brewed and fermented beer just before
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packaging using imported Alfa-Laval Centritherm (TM)
technology. Stroh believes this brewing process gives its
non-alcoholic malt beverages an integrity and taste
advantage not found in competitive non-alcoholic malt
beverages.
The principal ingredients used to brew malt
beverages (malted barley, corn, hops, and water)
historically have represented approximately 10.0% to 15.0%
of Stroh's total cost of goods sold. Packaging materials,
consisting principally of bottles, cans, and paperboard,
historically represented approximately 50.0% to 60.0% of
Stroh's total costs of goods sold. All Stroh's breweries
are capable of packaging products in a variety of bottle and
can configurations, and in kegs. The choice in packaging is
driven by consumer tastes and Stroh's efforts to meet
desired price points.
Competition
The domestic malt beverage industry is highly
competitive. Each of the Company and Stroh competes on the
basis of quality, price, brand recognition and distribution.
Each of the Company and Stroh competes with other
manufacturers of malt beverages not only for brand
recognition and consumer acceptance, but also for shelf
space in retail stores and marketing focus by their
respective wholesalers. The products of each of the Company
and Stroh compete generally with other alcoholic and non-
alcoholic beverages, many of the manufacturers of which have
greater financial resources than either the Company or
Stroh. The principal competitors of each of the Company and
Stroh include Anheuser-Busch, Inc., Miller Brewing Co. (a
subsidiary of Phillip Morris Company, Inc.), Coors Brewing
Co., and S & P Co. (Pabst Breweries), and, to a lesser
degree, manufacturers of imported beers and craft micro-
brewers, which produce and market super-premium regional
brands. In addition, the Company and Stroh are competitors
of each other.
Regulatory Matters
Federal laws and regulations govern the operation
of breweries. Federal and state laws and regulations govern
trade practices, advertising, marketing practices,
relationships with distributors and related matters.
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Governmental entities also levy various taxes, license fees
and other similar charges and may require bonds to ensure
compliance with applicable laws and regulations. The
Company and Stroh also must comply with numerous federal,
state and local environmental protection laws, compliance
with which has not historically required material
expenditures by the Company. Under certain environmental
laws, in particular the Comprehensive Environmental
Response, Compensation and Liability Act, a person or
company identified as a potentially responsible party
("PRP") at a "Superfund" site can be held jointly and
severally liable for all costs associated with cleaning up
the contamination at such a site. The Company generates
limited amounts of hazardous wastes that are disposed of at
offsite facilities and has been alleged by the Environmental
Protection Agency to be a PRP at one federal Superfund site.
The Company intends to contest such allegations. There can
be no assurance that other or more restrictive legislation
or regulations will not be enacted in the future.
The federal government and each of the states levy
excise taxes on alcoholic beverages, including malt
beverages. The federal excise tax is currently $18.00 per
barrel ($1.30 per case of 24-12 oz. containers) and the
state excise taxes range in rate from $34.41 per barrel to
$0.62 per barrel. Federal excise taxes are typically
included in the price charged by the Company and Stroh,
respectively to their distributors, whereas state excise
taxes are typically included in the price charged to
retailers by the distributors. All excise taxes are
typically included in the price charged to retailers by the
distributors. All excise taxes are ultimately passed on to
the consumer. It is possible that in the future, the rate
of excise taxation could be increased by both the federal
government and a number of the states. In addition,
increased excise taxes on beverage alcohol products have
been discussed in connection with past health care reform
proposals. Further increases in excise taxes on malt
beverages if enacted, could materially and adversely affect
the financial condition and results of operations of the
Company, Stroh and the Consolidated Company.
Ten states have adopted restrictive beverage
packaging laws and regulations that require deposits on
beverage containers. Congress and a number of additional
state or local jurisdictions may adopt similar legislation
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in the future. It is the brewing industry's experience that
such legislation results in a reduction of malt beverage
sales on a temporary basis.
Stroh generates limited amounts of hazardous
wastes that are disposed of at offsite facilities. Stroh is
currently a PRP at various federal and state Superfund
sites, Stroh believes that its ultimate liability in clean-
up participation costs will not be material.
E. Board of Directors and Executive Officers of the
Company
The following is a list of the current directors
and officers of the Company:
Directors
Thomas O. Hicks
Mr. Hicks (age 50) is presently Chairman of the Board of
Directors and has served in such capacity since January 5,
1995 and as a director since January 1994. Mr. Hicks is
Chairman and Chief Executive Officer of HMTF, a Dallas-based
investment firm specializing in strategic investments,
leveraged acquisitions and recapitalizations. From 1984 to
May 1989, Mr. Hicks was Co-Chairman of the Board and Co-
Chief Executive Officer of Hicks & Haas Incorporated, a
Dallas-based private investment firm. Mr. Hicks serves as a
director of Life Partners Group, Inc., Sybron Corporation,
Berg Electronics, Inc., Dr. Pepper Bottling Company of Texas
and Neodata Services Inc.
Charles W. Tate
Mr. Tate (age 51) has served as a director since January
1994 and is also Chairman of the Executive Committee of the
Company. Mr. Tate is a Managing Director and Principal of
HMTF. Before joining HMTF in 1991, Mr. Tate had over 19
years of experience in investment and merchant banking with
Morgan Stanley & Co. Incorporated, including ten years in
the mergers and acquisitions department and the last two and
one-half years as a Managing Director in Morgan Stanley's
merchant banking group. Mr. Tate serves as a director of
The Morningstar Group Inc., Berg Electronics, Inc., Hat
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Brands, Inc., DESA International and International Wire
Holdings, Heritage Brands and Crain Industries.
M.L. Lowenkron
Mr. Lowenkron (age 64) is presently the President and Chief
Executive Officer of the Company and has served in this
capacity since January 5, 1995. Mr. Lowenkron has been a
Director since February 4, 1994. Mr. Lowenkron has a total
of 39 years of experience in the soft drink industry. Mr.
Lowenkron served as Chairman of the Board and Chief
Executive Officer of A & W Brands, Inc. ("A & W") from
December 1991 to October 1993, and had served as President
of A & W and its predecessors, from 1980 to October 1993.
Mr. Lowenkron is a director of Hat Brands, Inc., Triarc
Companies Inc. and The National Easter Seals Society.
Jim L. Turner
Mr. Turner (age 50) has served as a Director since February
4, 1994 and as a member of the compensation and audit
committees since March 15, 1994. Mr. Turner has served as
Chairman of the Board of Dr. Pepper Bottling Holdings, Inc.
and Chairman of the Board, President and Chief Executive
Officer of Dr. Pepper Bottling Company of Texas since 1985.
Dr. Pepper Bottling Company of Texas is the third largest
bottler and distributor for Dr. Pepper/Seven Up Companies,
Inc. In addition, Mr. Turner is a director of The
Morningstar Group Inc.
Executive Officers
Of the directors, M.L. Lowenkron is also an executive offi-
cer of the Company. In addition, the following were also
executive officers as at December 31, 1995:
Daniel J. Schmid - Executive Vice President, Chief Financial
Officer, Treasurer & Assistant Secretary
Mr. Schmid (age 48) has served as Executive Vice President,
Chief Financial Officer, Treasurer & Assistant Secretary of
Heileman since 1988, having previously served as Vice
President - Finance from April 1987 to May 1988 and as Vice
President and Controller from April 1981 to April 1987.
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Randy J. Smith - Senior Vice President, General Counsel and
Secretary
Mr. Smith (age 47) has served as Secretary since 1987,
having previously served as Vice President since 1986 and
General Counsel since 1983. Mr. Smith has been employed by
the Company for 21 years.
C. Foster Walton - Senior Vice President - Operations and
Business Development
Mr. Walton (age 47) has served as Vice President -
Operations and Business Development of Heileman since July
1989 having previously served as Vice President and General
Manager of Pittsburgh Brewing Co. for over five years.
Billy Apple - Senior Vice President - Operations
Mr. Apple (age 57) has served as Senior Vice President -
Operations since joining the Company in 1995 and was
formerly Vice President-Operations of Miller Brewing
Company.
Messrs. Schmid, Smith and Walton constitute the
Board of Directors of each of Blitz-Weinhard Brewing
Company, Inc., Carling National Brewing Company, Inc.,
Christian Schmidt Brewing Company, Inc., GHB Souvenir Sales,
Inc., Heileman Brewing Company, Inc., Heileman Export
Marketing, Inc., HBC Leasing Company, Inc., Lone Star
Brewing Company, Inc., and Rainier Brewing Company, Inc.,
with Mr. Schmid acting as the Chairman of each such Board of
Directors.
Mr. Schmid and Mr. Walton are, respectively, the
Chairman of the Board and Treasurer and the President of
each of such corporations with the exception that Randy L.
Hull is the President of each of GHB Souvenir Sales, Inc.
and Heileman Export Marketing, Inc. Bruce T. Oishi is the
Vice President of Blitz-Weinhard Brewing Company, Inc.
David J. McFarland is the Vice President of Carling National
Brewing Company, Inc. Michael T. Newstrom is the Vice
President of Heileman Brewing Company, Inc., Richard D.
Anderson is the Vice President of Lone Star Brewing Company,
Inc. Steven N. Sarich is the Vice President of Rainier
Brewing Company, Inc. John A. Massa is the Secretary and
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Mr. Smith is the Assistant Secretary of each of such
corporations.
Mr. Schmid is the sole director of Heileman Air
Services, Inc. and President, Vice President, Secretary and
Treasurer of such corporation. Mr. Smith is the Assistant
Secretary of such corporation.
Certain Severance and Bonus Arrangements
Under severance and bonus arrangements approved by
the Board of Directors of the Company on January 31, 1996,
Messrs. Lowenkron, Schmid and Smith were granted severance
entitlements equal to $1,000,000, $570,000 and $540,000,
respectively, and awarded bonus entitlements equal to
$250,000, $250,000, and $150,000, respectively.
Consummation of the Transaction, which will involve a change
of control of the Company, will obligate the Company to pay
such entitlements. Under the Acquisition Agreement, the
obligation to pay such entitlements is assumed by Stroh. By
order dated April 23, 1996, the Bankruptcy Court authorized
and approved such severance and bonus arrangements and other
retention and severance programs for other employees.
F. Board of Directors and Executive Officers of Stroh
Directors
Stroh has advised the Company that, effective as of May 21,
1996, the Board of Directors of Stroh shall consist of the
following individuals:
Roger Fridholm (age 55)
President, The St. Clair Group, a private investment
company. Director of MCN Corporation and Comercia Bank -
Detroit. Trustee of Henry Ford Health System and member of
the Quality Committee.
William L. Henry (age 47)
President and Chief Executive Officer, The Stroh Brewery
Company. Vice President, The Stroh Companies, Inc. Member,
Executive Committee of the Board of Directors of the Stroh
Brewery Company. Director, Apex Bioscience, Inc. Director
of Metropolitan Affairs Corporation (a Detroit civic
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organization), and The Century Council (an association of
alcoholic beverage companies for the purpose of reducing
alcohol abuse).
William K. Howenstein (age 62)
Chairman and Chief Executive Officer, Copper and Brass
Sales, Inc. (a privately owned processor and distributor of
metals). Director of United Way Community Service
(Detroit), Economic Club of Detroit, and Detroit Chamber of
Commerce. Advisory Board Member of Boys/Girls Club (Metro
Detroit).
John W. Stroh, Jr. (age 61)
Member of the Executive, Compensation, and Audit Committees
of the Board of Directors of The Stroh Companies, Inc.
Member of the Compensation Committee of the Board of
Directors of The Stroh Brewery Company. First Vice Chairman
of The Stroh Companies, Inc. and of The Stroh Brewery
Company, Co-Trustee of numerous trusts for the benefit of
certain members of the Stroh family.
John W. Stroh, III (age 36)
Manager, Brewing Development, The Stroh Brewery Company.
President, The Stroh Foundation. Director, River Place
Financial Corp. Director, Michigan Jobs Commission (a
public/private partnership for Michigan job growth).
President, Founder Junior Council auxiliary of the Founders
Society.
Peter W. Stroh (age 67)
Chairman and Chief Executive Officer, The Stroh Companies
Inc. Member of the Executive Committee of the Board of
Directors of The Stroh Companies, Inc. and of The Stroh
Brewery Company. Chairman, The Stroh Brewery Company.
Chairman and a Director, Apex Bioscience, Inc. Director,
NBD Bancorp, Inc., Masco Corporation, Detroit Renaissance,
Inc., The Detroit Medical Center, Detroit Economic Growth
Corporation, the Atlantic Salmon Federation (U.S.),
Conservation International. Trustee of McGregor Fund.
Member of the Board of Visitors, Duke University Marine
Laboratory Advisory Board. Co-Trustee of numerous trusts
for the benefit of various members of the Stroh family.
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Executive Officers
William L. Henry - President and Chief Executive Officer
Mr. Henry (age 47) has served as the President and Chief
Executive Officer since January 1995 having previously
served as President and Chief Operating Officer from June
1991 to December 1994, Executive Vice President and Chief
Operating Officer from August 1990 to May 1991, Senior Vice
President, Finance and Chief Financial Officer from August
1989 to July 1990, Vice President, Sales and Marketing
Administration from April 1985 to August 1989, Vice
President, Financial Planning and Analysis from January 1983
to March 1985 and Director, Financial Planning from
September 1981 to December 1983.
James R. Avery - Senior Vice President, Operations
Mr. Avery (age 56) has served as the Senior Vice President,
Operations since August 1989 having previously served as
Vice President, Operations Planning & Control from July 1984
to August 1989.
Joseph J. Franzem - Senior Vice President, Customer
Marketing and Administration
Mr. Franzem (age 52) has served as Senior Vice President,
Customer Marketing and Administration since June 1993,
having previously served as Senior Vice President, Sales and
Administration from August 1991 to May 1993, Senior Vice
President, Administration from June 1991 to August 1991,
Senior Vice President, Corporate Services from August 1989
to May 1991 and Vice President, Corporate Services from July
1984 to August 1989.
George E. Kuehn - Senior Vice President, General Counsel and
Secretary
Mr. Kuehn (age 49) has served as Senior Vice President,
General Counsel and Secretary since August 1989, having
previously served as Vice President, General Counsel and
Secretary from June 1987 to 1989, Vice President, General
Counsel and Assistant Secretary from June 1983 to June 1987,
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Vice President and General Counsel from June 1982 to June
1983, and General Counsel from August 1981 to June 1982.
Christopher T. Sortwell - Senior Vice President, Finance and
Chief Financial Officer
Mr. Sortwell (age 39) has served as Senior Vice President,
Finance and Chief Financial Officer since August 1990,
having previously served as Vice President, Corporate
Planning and Development from July 1987 to July 1990 and
Director, Corporate Planning and Development from October
1985 to June 1987.
G. Board of Directors and Executive Officers of the
Consolidated Company
After the Consummation Date, it is anticipated
that the Board of Directors and the executive officers of
the Consolidated Company will consist of substantially the
same individuals identified in the immediately preceding
section as Directors and Executive Officers of Stroh. It is
also anticipated that the existing Stroh officer group will
be augmented with additions from current management of the
Company.
H. Existing Financing Transactions of the Debtors
Existing Credit Agreement
The Senior Secured Claims are governed by that
certain Credit Agreement dated as of January 21, 1994 (as
amended, the "Existing Credit Agreement") among Heileman
Holding Company, Heileman Acquisition Company, various banks
(collectively, the "Senior Lenders") and Bankers Trust
Company as agent.
Under the Existing Credit Agreement, the Senior
Lenders committed to fund $125.0 million Tranche A Term
Loans and $55.0 million Tranche B Term Loans and extend a
$25.0 million Revolving Credit Facility. Loans under the
Existing Credit Agreement bear interest at floating rates,
equalling base rates or LIBOR rates plus certain applicable
margins.
Loans under the Existing Credit Agreement are
secured by (i) a first priority perfected pledge of all the
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capital stock and promissory notes owned by Holding, the
Company and its subsidiaries and (ii) a first priority
perfected security interest in all other properties and
interests in property (including, without limitation,
receivables, contracts, contract rights, securities,
patents, trademarks, other intellectual property, inventory,
equipment and real estate) owned by Holding, the Company and
its subsidiaries, other than properties and interests in
property that secure the existing industrial revenue bond
financing of the Company in the aggregate outstanding
principal amount of approximately $1.0 million. Loans under
the Existing Credit Agreement are also guaranteed by Holding
and each domestic subsidiary thereof.
Under the Seventh Amendment to the Credit
Agreement; Amendment to Various Security Documents; and
Acknowledgements and Agreements with respect to Guaranties
and Security Documents dated as of September 11, 1995 (the
"Seventh Amendment") among Heileman Holding Company, G.
Heileman Brewing Company (as successor by merger to the
Heileman Acquisition Company), each Subsidiary Guarantor and
the Senior Lenders and Bankers Trust Company as agent,
Bankers Trust Company committed to fund an additional $30.0
million term loan under the Existing Credit Agreement (the
"Tranche C Obligations"). In connection with such
commitment, the Senior Lenders and Hick, Muse, Tate & Furst
Equity Fund II, L.P. ("Fund II") executed and delivered that
certain Put and Call Agreement dated as of September [11],
1995 (the "Put and Call Agreement"). Under the Put and Call
Agreement, Bankers Trust Company has the right, but not the
obligation, to put the Tranche C Obligations to the Fund,
and the Fund has the right, but not the obligation, to call
the Tranche C Obligations from the Senior Lenders. As of
the date hereof, Bankers Trust Company has not exercised its
put rights under the Put and Call Agreement and the Fund has
not exercised any of its call rights under the Put and Call
Agreement.
Existing Senior Subordinated Notes
The Existing Senior Subordinated Notes were issued
under an indenture (the "Existing Indenture"), dated as of
January 15, 1994, by and between Heileman Acquisition
Company, a predecessor in interest to the Company, and
United States Trust Company of New York, as trustee (the
"Trustee"). The following summary of certain provisions of
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the Existing Indenture does not purport to be complete and
is subject to, and is qualified in its entirety by reference
to, the Trust Indenture Act of 1939, as amended (the "TIA"),
and to all of the provisions of the Existing Indenture,
including the definitions of certain terms therein and those
terms made a part of the Indenture by reference to the TIA
as in effect on the date of the Indenture.
The Existing Senior Subordinated Notes are
unsecured obligations of the Company, ranking subordinate in
right of payment to all Senior Debt of the Company.
Principal, Maturity and Interest. The Existing
Senior Subordinated Notes are limited to aggregate principal
amount to $160,000,000 and are stated to mature on January
31, 2004. Interest on the Existing Senior Subordinated
Notes accrues at the fixed annual rate of 9-5/8% and is
payable semiannually on each January 31 and July 31
commencing on July 31, 1994, to the entities that are
registered holders at the close of business on the January
15 and July 15 immediately preceding the applicable interest
payment date. Interest on the Existing Senior Subordinated
Notes accrues from the most recent date to which interest
has been paid or, if no interest has been paid, from the
date of issuance. Interest is computed on the basis of a
360-day year comprised of twelve 30-day months. No interest
has been paid on the Existing Senior Subordinated Note since
July 31, 1995. On January 31, 1996, the Company defaulted
on the payment of interest then due and payable on the
Existing Senior Subordinated Notes. Under the terms of the
Existing Indenture, such default matured into an Event of
Default (as such term is defined in the Existing Indenture)
thereunder 30 days thereafter. Total accrued and unpaid
interest on the Existing Senior Subordinated Notes as at the
Petition Date aggregated approximately $10.4 million.
Subordination. The payment of all obligations on
the Existing Senior Subordinated Notes is subordinated and
junior in right of payment to the prior payment in full in
cash or cash equivalents (or such payment shall be duly
provided for to the satisfaction of the holders of the
Senior Debt (as such term is defined in the Existing
Indenture) of all obligations on the Senior Debt. The
obligations of the Company under the Existing Credit
Agreement are included within the meaning of Senior Debt
contained in the Existing Indenture.
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The Existing Indenture governing the Existing
Senior Subordinated Notes also contains covenants relating
to limitation on the incurrence of additional indebtedness,
restricted payments, asset sales, transactions with
affiliates, dividend and other payment restrictions
affecting subsidiaries, issuance of preferred stock of
subsidiaries, liens, guarantees by subsidiaries, and
mergers, consolidations and sales of assets. The Indenture
also prohibits the incurrence of certain additional senior
subordinated indebtedness.
The Existing Indenture governing the Existing
Senior Subordinated Notes also contains events of default
that entitle the Trustee or, in certain circumstances,
holders of the Existing Senior Subordinated Notes to
exercise rights and remedies thereunder and as available
under applicable law.
Trade Financing. In addition to working capital
and term financing, the Debtors obtain financial support
from merchandise vendors. The Debtors presently intend to
undertake to obtain an order of the Bankruptcy Court
authorizing and approving the payment of purchase orders
dated before the Petition Date relating to goods delivered
after the Petition Date.
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III.
THE REORGANIZATION CASES
A. Events Preceding Commencement of the Reorganization
Cases
In 1993, after approximately two years of improved
earnings and cash flow since the prior reorganization of the
Company, the then Board of Directors of the Company received
multiple, unsolicited proposals to acquire the Company. In
response thereto, the Board of Directors of the Company
retained Merrill, Lynch, Pierce, Fenner & Smith Incorporated
to evaluate such proposals and solicit expressions of
interest from a select group of additional potential
acquirors. HMT&F was solicited primarily because of the
prior success of the firm with niche players in the soft
drink industry, including Dr. Pepper, Seven-Up and A&W Root
Beer.
In October 1993, HMT&F executed a definitive
agreement to acquire the Company for approximately $410.0
million, including transaction expenses. This price
represented a multiple of approximately 5.6x 1993 earnings
before interest, taxes, depreciation and amortization
("EBITDA") and 5.4x projected 1994 EBITDA. The transaction,
which closed on January 21, 1994, was financed with $180.0
million of senior secured term loans, $160.0 million of
senior subordinated notes and $70.0 million of equity (of
which approximately $39.0 million was funded by Fund II).
Turner & Partners, a management services affiliate of HMT&F
controlled by William J. Turner, was designated to manage
the operations of the Company.
Original Investment Strategy
The Company represented an attractive investment
opportunity to HMT&F for the following four reasons. First,
the Company was a strong niche player in the beer industry
with (i) a leading position in the malt liquor category
(COLT 45, MICKEY'S), (ii) several strong regional brands
with growth potential (HENRY WEINHARD'S, SPECIAL EXPORT,
LONE STAR) and (iii) a major share of the expanding contract
production business (Arizona Tea, Boston Beer Company). In
addition, malt liquor and contract production, which
accounted for approximately 40.0% of the volume and
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approximately 50.0% of the cash flow of the Company, were
niches for the most part neglected by the major brewers
(Anheuser-Busch, Miller and Coors). Second, since
consummation of the plan of reorganization in the prior
reorganization, the Company had experienced a dramatically
improved volume trend -- declining approximately 2.5%
annually compared to a decline of approximately 11.5%
annually during the years of control by BCHL. In addition,
EBITDA of the Company during the 1991 - 1993 period had been
very stable in the $67.0 - $78.0 million range. Third,
within the brand portfolio of the Company, growing brands
represented approximately 43.0% of the volume of the Company
while mature, declining brands accounted for the remaining
57.0%. Because the growth brands such as HENRY WEINHARD'S
and COLT 45 carried significantly higher margins than the
declining brands and because a growing contract production
business was offsetting declines in overall volume of the
owned brands of the Company, it was projected that this
trade-up in mix would generate a modestly growing EBITDA.
Finally, the possible consolidation of second tier brewers -
- the Company, Stroh, Pabst and, possibly, Coors -
represented a significant opportunity by reason of the cost
savings that would result from closing excess brewing
capacity and eliminating redundant sales and administrative
functions.
1994 Events
In 1993, the year prior to the acquisition of the
Company by HMT&F, the Company generated EBITDA of $68.6
million. In the first six months of 1994, the Company
generated EBITDA of $34.2 million, which was in line with
historical results and the budget for the Company. EBITDA
declined, however, to $13.6 million in the third quarter of
1994 and negative $12.5 million in the fourth quarter of
1994. Shortly after the December 1994 meeting of the Board
of Directors of the Company, at which these results were
made known to the Board of Directors of the Company, Mr.
William Turner resigned as Chairman of the Board and Co-
Chief Executive Officer.
The significant decline of EBITDA in the second
half of 1994 was primarily due to price reductions on malt
liquor products, excessive expenditures on new product
development and a lack of focus on the nine core brands of
the Company.
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1995 Events
In January 1995, following the resignation of Mr.
William Turner as Chairman and Co-Chief Executive Officer of
the Company, the Board of Directors of the Company named
Thomas O. Hicks as Chairman and M.L. Lowenkron as President
and Chief Executive Officer.
Coincident with this management change and based
upon the expectation of improved performance in 1995, in
January 1995, equity holders in Heileman Holding Company
indirectly invested an additional $25.0 million of equity in
the Company to solve a liquidity problem caused by the poor
financial performance in the second half of 1994.
Although the performance of the Company in 1995
improved significantly from the loss experienced in the
fourth quarter of 1994, the financial results were below
expectations primarily by reason of (i) a decline in
contract production volumes of ready-to-drink tea and juice
products and (ii) the inability of the Company to increase
prices in a highly competitive beer market notwithstanding
an approximately 30.0% increase in the cost of purchased
aluminum cans and a substantial increase in the cost of
corrugated packaging materials.
Notwithstanding the poor financial performance in
1995 (EBITDA totaled approximately $13.6 million), the year
was not without significant accomplishments. As stated
above, the performance of the Company rebounded from the
loss in the fourth quarter of 1994 after absorbing a
tremendous increase in certain raw material costs and losing
significant contract production volumes. In addition, a
renewed focus by the new management on the core brands of
the Company led to an improved volume trend. The decline in
the nine core brands of the Company slowed to 5.1% in 1995
as compared to 6.9% in 1994, and, through February of 1996,
the core brand volumes were 5.2% ahead of 1995 levels.
The Restructuring
By early summer 1995, the Board of Directors of
the Company recognized that the capital structure of the
Company did not conform to the earnings power and cash flow
generation of the Company. Accordingly, HMT&F and the Board
of Directors of the Company unsuccessfully undertook to
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engineer a merger of the Company and Stroh. Such
discussions were terminated in August, 1995.
In September, 1995, the Company experienced
another liquidity problem, and Fund II agreed to support
financially a $30.0 million addition to the senior bank
facility extended to the Company through the put and call
arrangement described above.
The Company then retained Weil, Gotshal & Manges
LLP and The Blackstone Group L.P. as legal and financial
restructuring advisors, respectively, and, together with
HMT&F, ultimately developed and analyzed an array of
restructuring options.
In a letter dated October 1995, the Company
received an unsolicited proposal from Stroh to acquire all
or substantially all of the properties and interests in
property of the Company for approximately $280.0 million.
This initial proposal, subject to, among other conditions,
satisfactory due diligence review and requisite governmental
approval, was for a $300.0 million purchase price,
consisting of $215.0 million in cash and a combination of
debt and equity securities. The purchase price was subject
to adjustment to reflect any negative working capital
position of the Company. The Company estimated that such
adjustment would reduce the purchase price payable by
approximately $20.0 million. Stroh would not assume any of
the debt or tax liabilities of the Company which would
further reduce the net distributable value to holders of the
Existing Senior Subordinated Notes and Equity Interests
realized from a sale of the Company. Because the Company
was just beginning to formulate and analyze its potential
restructuring options, the Board of Directors of the Company
responded to Stroh that the Company was not presently for
sale but advised Stroh that the Company remained open to
further discussions between the companies.
During the fourth quarter of 1995, an informal
committee of holders of the Existing Senior Subordinated
Notes (the "Informal Noteholders' Committee") was organized
in connection with a restructuring of the obligations
evidenced by the Existing Senior Subordinated Notes. As of
February 29, 1996, the Informal Noteholders' Committee
consisted of representatives of Falcon Asset Management,
Merrill Lynch Phoenix Fund, Inc., Oppenheimer Strategic
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Funds Trust for the account of Oppenheimer Strategic Income
Fund, Oppenheimer High Yield Fund, Oppenheimer Champion
Income Fund, Prudential High Yield Fund, The Prudential
Insurance Company of America, as Investment Manager for the
General Motors Retirement Program for Salaried Employees
High Yield Account, RH Capital Associates, Romulus Holdings,
and York Capital Management, L.P. The Informal Noteholders'
Committee has engaged, at the Company's expense, Stroock &
Stroock & Lavan as counsel and Houlihan Lokey Howard & Zukin
as financial advisor in connection with such restructuring.
By agreement dated December 12, 1995, the Company
and the Informal Noteholders' Committee agreed to a
confidentiality period expiring on January 31, 1996, during
which the Informal Noteholders' Committee would maintain
confidential all information disclosed to the Informal
Noteholders' Committee by the Company in connection with the
negotiation of a possible restructuring and the Company
would disclose certain confidential information in the form
of a press release to be issued on the day following the
expiration of the confidentiality period.
The Company then provided the legal and financial
advisors to the Informal Noteholders' Committee certain
materials including a business plan for the Company through
1996, a restructuring proposal the Company had received from
its principal equity holder, Fund II, and certain proposals
the Company had received from Stroh for the acquisition of
the Company.
The Letter of Intent
After evaluating multiple restructuring proposals,
the Company, HMT&F and the Informal Noteholders' Committee
agreed to undertake to negotiate a satisfactory transaction
with Stroh. On February 28, 1996, the Company and Stroh
executed a letter of intent relating to the Transaction (the
"Letter of Intent"). The Letter of Intent contemplated the
purchase by Stroh of all or substantially all of the
properties and interests in property of the Company and the
other Debtors and the assumption of substantially all of the
liabilities of the Company and the other Debtors (other than
Holding) other than the Existing Senior Subordinated Notes,
the Existing Credit Agreement and the Post-Petition Credit
Agreement and certain other limited liabilities of the
Debtors.
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The Letter of Intent further provided that the
Transaction would be implemented through a plan of
reorganization under the chapter 11 of the Bankruptcy Code
providing for the distributions herein provided and that the
definitive agreement governing the Transaction would be
conditioned on confirmation of such plan of reorganization.
The Letter of Intent further provided that it was
terminable at the option of either the Company or Stroh
after March 31, 1996 in the event that a definitive
agreement governing the Transaction had not then been
executed and delivered. The Letter of Intent contemplated
that each of the Company and Stroh would agree to use its
reasonable best efforts in good faith and on an exclusive
basis to prepare, negotiate and execute definitive
agreements and documents relating to the Transaction.
In connection with the execution of the Letter of
Intent, HMT&F executed in favor of Stroh an agreement to
support the Transaction and vote to accept the plan of
reorganization herein described. In connection therewith,
Stroh agreed that the definitive agreement governing the
Transaction would provide that Stroh would not agree to
waive or modify such condition in any manner that would
adversely alter the consideration to be distributed on
account of the Equity Interests in the Company and that such
agreement would be in favor of the holders of such Equity
Interests.
The Allocation Agreement
By agreement dated February 28, 1996 among the
Company and each of the members of the Informal Noteholders'
Committee (the "Allocation Agreement"), the parties thereto
agreed to undertake to negotiate an acquisition of the
Company by Stroh. Under the Allocation Agreement, the
Company agreed to undertake to consummate such transaction
and the Informal Noteholders' Committee agreed to support
such transaction and recommend it to all holders of the
Existing Senior Subordinated Notes provided that, as a
consequence of such transaction, all of the senior debt,
including, without limitation, the Tranche C Obligations
under the Existing Credit Agreement would be fully repaid
and there would be a minimum net distributable value
available for the holders of the Existing Senior
Subordinated Notes and for the Existing Equity Interests as
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provided therein and as reflected in the Plan of
Reorganization, unless the Company and the Informal
Noteholders' Committee mutually agreed to pursue an
alternative transaction.
Under the Allocation Agreement, the Company and
the Informal Noteholders' Committee agreed to allocations of
net distributable value effectively consistent with the
Letter of Intent.
The Allocation Agreement also acknowledged that
the Board of Directors of the Company reserved the right to
receive and accept any other offer to the exclusion of any
proposal by Stroh and terminate the Allocation Agreement.
The Allocation Agreement contained other provisions relating
to, among other things, forbearance by the Informal
Noteholders' Committee from the exercise of rights and
remedies, limitations on the transfer of Existing Senior
Subordinated Notes by the Informal Noteholders' Committee,
other events of termination and certain extensions of
confidentiality limitations.
Concurrently with the execution of the Allocation
Agreement, HMT&F and the Informal Noteholders' Committee
agreed that HMT&F would accept and agree to the
distributions and allocations contained in the Allocation
Agreement, agree to support the transaction with Stroh and,
in the event that such transaction were to be incorporated
in a plan of reorganization, agree to vote any equity
interests held by it in favor of such plan of reorganization
and agree to limitations on the transfer of such equity
interests, provided that the holders of the Existing Equity
Interests were distributed the consideration provided under
the Allocation Agreement. Each of such agreement and the
Allocation Agreement terminated by their terms on March 31,
1996.
The Acquisition Agreement
The following is a summary of certain terms and
provisions of the Acquisition Agreement. This summary of
the Acquisition Agreement is qualified in its entirety by
reference to the full text of the Acquisition Agreement,
which is annexed to the Plan of Reorganization as Exhibit A
thereto. Certain terms contained in the following summary
have the meanings provided in the Acquisition Agreement.
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Purchase of Properties and Interests in Property and
Assumption of Liabilities
The Acquisition Agreement provides that, upon the
satisfaction of certain conditions contained therein,
including the entry of the Confirmation Order, Stroh will
purchase and assume from the Company and the Debtors other
than Holding (collectively, the "Sellers") all or
substantially all of the properties and interests in
property of such entities and certain liabilities of such
entities.
Closing Date
Unless the Acquisition Agreement is terminated as
provided therein, the closing of the transactions
contemplated thereby (the "Closing") will occur on the
eleventh day after the Confirmation Order is entered by the
Clerk of the Bankruptcy Court or such later date when the
conditions to the Closing have been satisfied or waived, or
at such other time as the Sellers and Stroh mutually agree
(the "Closing Date").
Purchase of Assets; Assumption of Liabilities; Purchase
Price
Purchase and Sale of Assets. The Sellers will
assign to Stroh and Stroh will acquire from the Sellers all
of the assets, rights, properties, claims, contracts,
business and goodwill of the Sellers (the "Company
Business"), except, any capital stock of the Sellers (the
"Excluded Assets").
Assumption of Liabilities. On the Closing Date,
Stroh will deliver to the Sellers an undertaking (the
"Assumption Agreement") under which it assumes and agrees to
pay, perform and discharge when due, except as provided in
the immediately following sentence, all the liabilities and
obligations of the Sellers (excluding any agreements
relating to the fees or expenses of any advisors or counsel
to creditors of the Sellers or Holding other than the
advisors or counsel to the Statutory Creditors' Committee
(as such term is hereinafter defined)), whether arising
before or after the Closing Date and whether known or
unknown, fixed or contingent, to the extent the same are
unpaid, undelivered or unperformed on the Closing Date
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(collectively, the "Assumed Liabilities"), including,
without limitation, trade payables, pension, severance,
welfare, retiree medical benefits and all other employee
liabilities of the Sellers (whether or not such liabilities
or pension, severance, welfare, retiree medical or other
employee liabilities relate to active, discontinued or
acquired businesses of the Sellers), including without
limitation, all items scheduled on Schedule 3.1(o) to the
Acquisition Agreement, liabilities for Taxes and the
following liabilities: fees and expenses incurred in
connection with the transactions contemplated by the
Acquisition Agreement (including, without limitation, fees
and expenses incurred in the Reorganization Cases), amounts
outstanding under the bonds issued under that certain City
of LaCrosse, Wisconsin Industrial Revenue Bond, Series A,
Bond Agreement, dated as of August 10, 1978 (the "IRB Debt")
and taxes payable to the Internal Revenue Service (the
"IRS") under the plan of reorganization confirmed on the
prior reorganization case of the Company. The Assumed
Liabilities will not include the following (collectively,
the "Excluded Liabilities"): liabilities of the Sellers
under the Existing Senior Subordinated Notes; liabilities of
the Sellers to HMT&F or any other affiliate (except another
Seller) with certain exceptions; liabilities arising out of
or related to the Excluded Assets; liabilities of the
Sellers for which the Sellers have insurance coverage to the
extent of such coverage, including, without limitation,
under certain scheduled policies; liabilities of the Sellers
under the Existing Credit Agreement, including, without
limitation, the Tranche C Obligations, and the Post-Petition
Credit Agreement; liabilities or obligations relating to the
fees and expenses of any advisors or counsel to creditors of
the Sellers or Holdings, other than the advisors or counsel
to the Statutory Creditors' Committee; liabilities of the
Sellers to any Company Business employees retained by the
Sellers after the Closing Date with certain exceptions; and,
except as otherwise provided in the Acquisition Agreement,
any obligations or liabilities of Holding.
Purchase Price and Payment. On the Closing Date,
Stroh will (i) assume the Assumed Liabilities, (ii) deliver
to the Escrow Agent a global certificate representing the
New Senior Subordinated Notes issued under the New Senior
Subordinated Notes Indenture in a principal amount of $70.0
million, subject to adjustments, (iii) deliver to the Escrow
Agent a global certificate representing the New Junior
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Subordinated Notes in a principal amount of $5.0 million,
subject to adjustments, (iv) deliver to the Company a
warrant certificate to purchase 750,000 shares of common
stock, no par value per share, of the Consolidated Company
(representing in the aggregate 7.5% of the outstanding
shares of the Consolidated Company on a fully-diluted basis)
issued under the New Warrant Agreement (valued at $6.5
million under the Acquisition Agreement) and (v) pay to the
Company, for immediate repayment by the Company to the
lenders under the Existing Credit Agreement and the Post-
Petition Credit Agreement an amount equal to all obligations
outstanding under the Existing Credit Agreement, including,
without limitation, the Tranche C Obligations, and the Post-
Petition Credit Agreement. The above value tendered by
Stroh, as adjusted below, is referred to as the "Purchase
Price".
Calculation of Aggregate Released Original
Principal Amount of New Senior Subordinated Notes. The
adjusted aggregate principal amount of the New Senior
Subordinated Notes to be released from Escrow A after giving
effect to certain post-closing adjustments to the $70.0
million amount deposited in Escrow A will be calculated in
accordance with Schedule 2.2(a) to the Acquisition Agreement
as the sum of the following four items: (i) $279.37 million
minus (ii) the aggregate amount of the following liabilities
as of the Closing Date, to the extent any of them is not
paid or accrued as a current liability by the Sellers
(collectively, the "Itemized Liabilities"): (a) all
obligations outstanding under the Existing Credit Agreement,
including the Tranche C Obligations thereunder and the Post-
Petition Credit Agreement including all interest and fees
thereon (including any interest accrued during the
Reorganization Cases in accordance with the Plan of
Reorganization); (b) all federal, state and local income
taxes and all transfer taxes payable in connection with the
transfer of the Company Business contemplated by the
Acquisition Agreement pursuant to the allocations contained
therein; (c) all fees and expenses of Holding and the
Sellers incurred in connection with the transactions
contemplated by the Acquisition Agreement (including the
fees and expenses incurred in connection with the
Reorganization Cases); (d) all IRB debt assumed or
refinanced by Stroh; and (e) all taxes payable to the IRS
under the prior plan of reorganization of the Company, plus
(in the event that there is a decrease in the deficiency) or
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minus (in the event that there is an increase in the
deficiency) (iii) the difference of (a) the Net Working
Capital as of the Closing Date, minus (b) $13.125 million,
minus (iv) certain other adjustments. In the event that the
aggregate original principal amount of New Senior
Subordinated Notes to be issued in accordance with the
foregoing formula (the "Formula Amount") is greater than
$70.0 million, then the New Senior Subordinated Notes will
be issued in an aggregate original principal amount equal to
$70.0 million. In the event that the Formula Amount is
equal to or greater than $64.0 million and less than or
equal to $70.0 million, then the New Senior Subordinated
Notes will be issued in an aggregate original principal
amount equal to the Formula Amount. In the event that the
Formula Amount is equal to or greater than $61.25 million
and less than or equal to $64.0 million, then New Senior
Subordinated Notes will be issued in an aggregate original
principal amount equal to $64.0 million. In the event that
the Formula Amount is less than $61.25 million, then New
Senior Subordinated Notes will be issued in an aggregate
original principal amount equal to the difference of (i)
$64.0 million, minus (ii) the difference of (a) $61.25
million, minus (b) the Formula Amount. In connection with
the calculation of the Formula Amount, prior to the Closing
Date, the Sellers will furnish to Stroh a statement (the
"Pre-Closing Statement") reflecting the Sellers' good-faith
estimate of Net Working Capital and the Itemized
Liabilities. (For the Company's projection of the Formula
Amount, see section IV entitled "Joint Plan of
Reorganization -- General Description of the Treatment of
Claims and Equity Interests Under the Plan of Reorganization
-- Provisions for Treatment of Claims and Equity Interests -
- Subordinated Unsecured Claims (Class 6).")
Post-Closing Adjustment. Within 45 days after the
Closing Date, the Consolidated Company will prepare and
deliver to the Sellers a statement (the "Closing Statement")
which will reflect the Net Working Capital and the Itemized
Liabilities as of 12:01 a.m. on the Closing Date (the
"Effective Time") in a manner consistent with the
preparation of the Pre-Closing Statement. The Sellers will,
within 30 days after delivery by the Consolidated Company of
the Closing Statement, review the Closing Statement and
inform the Consolidated Company in writing (the "Sellers'
Objection") if the Sellers dispute the determination by the
Consolidated Company of the Net Working Capital and the
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Itemized Liabilities. The Consolidated Company will then
have 20 days to review and respond to the Sellers'
Objection. If the Sellers and the Consolidated Company are
unable to resolve all disagreements related to same within
20 days of such response, such dispute will be submitted to
KPMG Peat Marwick LLP or another internationally recognized
firm of independent public accountants mutually agreeable to
the Sellers and the Consolidated Company, which will be
directed to use its best efforts to make a binding
determination within 30 days. The Closing Statement, as
adjusted in accordance with the above procedure, will be
referred to as the Adjusted Closing Statement.
In the event the Net Working Capital reflected on
the Adjusted Closing Statement is less than the amount of
Net Working Capital reflected on the Pre-Closing Statement,
the Consolidated Company will be entitled to reduce the
aggregate original principal amount of the New Senior
Subordinated Notes and then the aggregate original principal
amount of the New Junior Subordinated Notes, if necessary,
included as consideration by the amount necessary such that
the aggregate original principal amount of such Notes equals
the aggregate original principal amount that would have been
issued had the Net Working Capital reflected on the Adjusted
Closing Statement been used in calculating the Formula
Amount. In the event the Itemized Liabilities reflected on
the Adjusted Closing Statement are greater than the amount
of Itemized Liabilities reflected on the Pre-Closing
Statement, the Consolidated Company will be entitled to
reduce the principal amount of the New Senior Subordinated
Notes and then the principal amount of the New Junior
Subordinated Notes, if necessary, included as consideration
by the amount necessary so that the aggregate original
principal amount of such Notes equals the aggregate original
principal amount that would have been issued had the
Itemized Liabilities reflected on the Adjusted Closing
Statement been used in calculating the Formula Amount. In
the event the Net Working Capital reflected on the Adjusted
Closing Statement is greater than the amount of Net Working
Capital reflected on the Pre-Closing Statement, the
Consolidated Company will be obligated to increase the
aggregate original principal amount of the New Senior
Subordinated Notes included as consideration by the amount
necessary so that the aggregate original principal amount of
such Notes equals the aggregate original principal amount
that would have been issued had the Net Working Capital
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reflected on the Adjusted Closing Statement been used in
calculating the Formula Amount; notwithstanding the
foregoing, in no event will the aggregate original principal
amount of the New Senior Subordinated Notes exceed $70.0
million. In the event the Itemized Liabilities reflected on
the Adjusted Closing Statement are less than the amount of
Itemized Liabilities set forth on the Pre-Closing Statement,
Buyer will be obligated to increase the principal amount of
the New Senior Subordinated Notes included as consideration
by the amount necessary so that the principal amount of such
Notes equals the principal amount that would have been
issued had the Itemized Liabilities reflected on the
Adjusted Closing Statement been used in calculating the
Formula Amount. Any increase in the principal amount of the
New Senior Subordinated Notes issued to the Sellers will
include interest accrued on such additional New Senior
Subordinated Notes from the Closing Date and will be payable
in cash when due and payable. Notwithstanding the
foregoing, in no event will the principal amount of the New
Senior Subordinated Notes exceed $70.0 million and the sum
of the principal amounts of the New Senior Subordinated
Notes and Junior Subordinated Notes exceed $75.0 million.
Escrow Arrangements. The Sellers and the
Consolidated Company agree to execute those certain escrow
agreements under which the Sellers agree that the New Senior
Subordinated Notes and the New Junior Subordinated Notes and
the New Warrants, respectively, will be placed in escrow at
the Effective Time for the period of time specified in each
such escrow agreement.
Representations and Warranties
The Acquisition Agreement contains certain
representations and warranties of the parties thereto. Such
representations and warranties include representations and
warranties by Holding and the Sellers relating to, among
other things: corporate organization; authority; related
parties; consents, licenses, permits and approvals;
financial statements; title to properties; undisclosed
liabilities; properties, contracts and permits; condition of
plants and equipment; legal proceedings; labor
controversies; intellectual property; compliance with
regulatory requirements; employee benefit plans;
environmental matters; certain fees; non-foreign status;
absence of certain changes; tax matters; inter-company
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transactions; product liability claims; and, certain real
property matters. The Sellers' representations and
warranties expire and are terminated on the first
anniversary of the Closing Date.
Such representations and warranties include
representations and warranties by Stroh relating to, among
other things: corporate organization; authority, consents
and approvals; no conflicts; certain fees; financial
capacity; financial statements; indentures, notes and
warrants; absence of certain changes; employee benefit
plans, environmental matters; and, tax matters. The
representations and warranties of the Consolidated Company
expire and will be terminated on the Closing Date.
The Sellers' liability with respect to Taxes
resulting from the sale of Assets pursuant to the
Acquisition Agreement will expire and be terminated and
extinguished upon the earlier of (i) the final determination
of such Taxes (whether pursuant to a bankruptcy discharge,
the filing of a motion under section 505(b) of the
Bankruptcy Code or otherwise upon a final resolution
pursuant to a closing agreement or final administrative or
judicial determination of such Taxes) or (ii) three years
and six months after the Closing Date; provided, however, in
the event there is an audit or investigation commenced
during such period by any taxing authority, the Sellers'
liability for such Taxes will not expire until the final
determination of the Taxes subject to such audits or
investigations. The Consolidated Company will choose the
method for determining final determination of Sellers'
liabilities for Taxes with respect to the sale of Assets in
accordance with the provisions of Section 8.3 of the
Acquisition Agreement.
Transactions Prior to Closing
By order dated April 23, 1996, the Bankruptcy
Court authorized and directed the Debtors to observe and
perform their obligations under the Acquisition Agreement to
the extent described in this section to the extent such
obligations arise before the Closing Date (as such term is
defined in the Acquisition Agreement.
Access to Information Concerning Properties and
Records. During the period between the execution of the
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Acquisition Agreement and the Closing Date, Holding and
Sellers will provide Stroh with reasonable access to the
properties, books and records of the Company Business;
Holding and Sellers will provide Stroh with such financial
and operating data with respect to the Company Business as
Stroh may reasonably request; Stroh will have reasonable
access to the representatives, officers and employees of the
Holding and Sellers involved with the Company Business; and
Holding and Sellers will permit Stroh to conduct
environmental evaluations of the plants of the Company.
Conduct of the Company Business Pending the
Closing Date. The Sellers agree that during the period
between the execution of the Acquisition Agreement and the
Closing Date, the Sellers will (i) operate the Company
Business only in the usual, regular and ordinary manner, on
a basis consistent with past practice; (ii) maintain the
books, accounts and records relating to the Company Business
in the usual, regular and ordinary manner, on a basis
consistent with past practice; (iii) make capital and
marketing expenditures consistent with, but not to exceed,
the amounts thereof contained in the Sellers' current
business plan; not dispose of any fixed assets other than in
the ordinary course of business; not modify, change in a
material respect, enter into or terminate any material
contract; and not ship inventory to wholesalers in amounts
which would result in days' inventory exceeding the prior
year's levels for the same time period by more than two
days, except in situations where such shipments were made in
anticipation of labor strikes, transportation disruptions or
industry price increases; (iv) not make any material change
in their accounting policies from those applied in the
preparation of the financial statements; and (v) not (a)
permit or allow any portion of the Company Business to
become subject to any encumbrances except Permitted
Encumbrances (as such term is defined in the Acquisition
Agreement); (b) waive any claims or rights relating to the
Company Business, except in the ordinary course of business
and consistent with past practice; (c) grant any increase in
the compensation of the employees of the Company Business,
except for reasonable increases in the ordinary course of
business and consistent with past practice or as a result of
contractual arrangements or sales compensation plans
existing on the date hereof; (d) enter into any agreements
giving rise to obligations on the part of the Sellers
relating to the Company Business in excess of $100,000
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individually or $250,000 in the aggregate, except
commitments to purchase materials and trade, media and other
obligations in the ordinary course of business and
consistent with the 1996 business plan; or (e) enter into
any transaction or agreement or modify any existing
agreement with HMT&F or any other affiliate.
Further Actions. Holding, the Sellers and Stroh
agree to use commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated
by the Acquisition Agreement, including using all reasonable
efforts: (i) to obtain prior to the Closing Date all
licenses, permits, consents, approvals, expirations of
applicable waiting periods, authorizations, qualifications
and orders of governmental authorities and parties to
contracts with Parent or the Sellers as are necessary for
the consummation of the transactions contemplated hereby,
including but not limited to such consents and approvals and
expirations of waiting periods as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Antitrust Improvements Act"); provided,
however, that in no event will either party be required to
dispose of any assets to comply with any condition imposed
by the Federal Trade Commission ("FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust
Division"); (ii) to effect all necessary registrations and
filings; and (iii) to furnish to each other such information
and assistance as reasonably may be requested in connection
with the foregoing. Where the consent of any third party is
required under the terms of any of the leases or contracts
to be assumed by Stroh hereunder, each of Holding or the
Sellers which is a party to such lease or contract will use
commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to obtain such consent on
terms and conditions not materially less favorable than as
in effect on the date hereof or to otherwise provide Stroh
with the benefits of such leases or contracts (without
payment of money or commencement of litigation or an
obligation to defend any litigation challenging such leases
or contracts).
Antitrust Laws. Both the Sellers and Stroh will
timely and promptly make all filings which may be required
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by them under the Antitrust Improvements Act in connection
with the consummation of the transactions contemplated
hereby. The Sellers and the Stroh will furnish to one
another such necessary information and assistance as each
may reasonably request in connection with its preparation of
any necessary filings or submissions to any governmental
agency, including, without limitation, any filings necessary
under the provisions of the Antitrust Improvements Act.
Notification. Holding and the Sellers will
promptly notify Stroh and Stroh will promptly notify Holding
and the Sellers and keep such other party advised as to (i)
any litigation or administrative proceeding pending and
known to such party or, to its knowledge, threatened against
such party which challenges the transactions contemplated
hereby; (ii) any material damage to or destruction of any
portion of the Company Business; and (iii) any material
adverse change in the results of operations or business of
the Company Business or Stroh, as applicable.
No Inconsistent Action. Holding, the Sellers and
Stroh will not take any action inconsistent with their
obligations under the Acquisition Agreement or which could
materially hinder or delay the consummation of the
transactions contemplated thereby.
Exclusivity. From the date of execution of the
Acquisition Agreement until the earlier of the Closing or
the termination of the Acquisition Agreement, neither
Holding or the Sellers nor any of their respective
directors, officers or agents will initiate, solicit or
encourage (including by way of furnishing information or
assistance), or, facilitate, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected
to lead to, any Competing Transaction (as defined below), or
enter into discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers,
directors or employees of the Sellers or any of their
respective subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative
retained by the Sellers or any of their respective
subsidiaries to take any such action. Each of Holding and
the Sellers will promptly notify Stroh of all relevant terms
(including the identity of the person or entity) of any such
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inquiries and proposals received by all or by any such
officer, directors, investment banker, financial advisor,
attorney or accountant, relating to any of such matters and
if such inquiry or proposal is in writing, Holding and the
Sellers will deliver or cause to be delivered to Stroh a
copy of such inquiry or proposal. For purposes of the
Acquisition Agreement, "Competing Transaction" means any of
the following involving Parent or any of the other Sellers:
(i) any merger, consolidation, share exchange, business
combination, or other similar transaction (other than those
transactions contemplated by the Acquisition Agreement); or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 50.0% or more of the assets of the
Sellers, taken as a whole, in a single transaction or series
of transactions.
Casualty Losses and Condemnation. In the event
that, prior to the Closing Date, any plant is destroyed,
contaminated or materially damaged, or if condemnation
proceedings are commenced against any plant or any material
part thereof, then, to the extent that such diminution in
value is not reflected on the Adjusted Closing Statement,
Stroh will be entitled to receive any and all insurance and
condemnation proceeds attributed to such casualty or
condemnation.
Bankruptcy Actions. Not later than three business
days following the date of the Acquisition Agreement,
Holding and the Sellers were required to file and did file,
and will cause certain of their affiliates to file,
petitions with the Bankruptcy Court to commence the
Reorganization Cases. Substantially concurrently with the
filing of such petitions, Holding and the Sellers were
required to file and did file with the Bankruptcy Court the
following: (i) the Plan of Reorganization and this
Disclosure Statement; (ii) certain motions, affidavits and
supporting papers (including forms of orders); (iii) a
motion, supporting papers and a form of Order (the "Break-up
Fee Order") seeking the Bankruptcy Court's approval of the
terms of Sections 4 and 7 of the Acquisition Agreement and
the Sellers' and Stroh's observance and performance of such
terms during the pendency of the proceedings; and (iv) a
motion, affidavit and supporting papers (including forms of
orders and notices to interested parties) (a) scheduling a
hearing under section 1125(b) of the Bankruptcy Code by the
Bankruptcy Court to consider approval of this Disclosure
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Statement, (b) seeking an order approving notice procedures
with respect to establishing a hearing on this Disclosure
Statement and a hearing on confirmation of the Plan of
Reorganization, each in a form reasonably acceptable to
Stroh and (c) scheduling a hearing under section 1128(a) of
the Bankruptcy Code to consider confirmation of the Plan of
Reorganization.
Prosecution and Modification of the Plan; Appeals.
Holding, the Sellers and Stroh will each use their
reasonable best efforts, and cooperate, assist and consult
with each other, to secure approval of the Break-up Fee
Order, this Disclosure Statement and Plan of Reorganization
and consummation of the transactions contemplated by the
Plan of Reorganization and the Acquisition Agreement.
Holding, the Sellers and Stroh will consult with, and seek
the advice of, one another regarding pleadings which either
of them might file, or positions either of them might take,
with the Bankruptcy Court in connection with, or which might
reasonably affect, the approval of the Break-up Fee Order,
this Disclosure Statement and Plan of Reorganization and
consummation of the transactions contemplated by the Plan of
Reorganization and the Acquisition Agreement. None of
Holding, the Sellers or Buyer will file any pleadings or
take any position in the Bankruptcy Court contrary to the
approval of the Break-up Fee Order, the confirmation of the
Plan of Reorganization and consummation of the transactions
contemplated by the Plan of Reorganization and the
Acquisition Agreement unless the other approves such
pleading or position.
Neither the Plan of Reorganization nor this
Disclosure Statement nor any other material document
relating to the transactions contemplated hereby will be
amended, modified, supplemented, withdrawn or revoked
without the mutual consent of the Sellers and Stroh.
If the Confirmation Order or any other orders of
the Bankruptcy Court relating to the Acquisition Agreement,
this Disclosure Statement, the solicitation of acceptances
of the Plan of Reorganization or confirmation of the Plan of
Reorganization is appealed by any party (or a petition for
certiorari or motion for reconsideration, amendment,
clarification, modification, vacation, stay, rehearing or
reargument is filed with respect to any such order),
Holding, the Sellers and Stroh will cooperate in taking such
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steps diligently to defend such appeal, petition or motion
and each of the Sellers and Stroh will use its reasonable
best efforts to obtain an expedited resolution of any such
appeal, petition or motion.
Elimination of Intercompany Arrangements. Except
as otherwise provided, Holding and the Sellers agree to
cause their affiliates to cancel or otherwise eliminate, on
or prior to the Closing, all intercompany and affiliated
liabilities, agreements and obligations owed by Holding or
the Sellers to such affiliates (other than agreements that
are exclusively with another Seller) or the Tranche C
Obligations under the Existing Credit Agreement paid under
the Plan of Reorganization.
Repayment of Existing Credit Agreement and the
Post-Petition Credit Facility. Immediately upon the payment
of the funds to the Sellers in accordance with the
Acquisition Agreement, the Sellers will pay all amounts
outstanding under the Existing Credit Agreement and the
Post-Petition Credit Facility.
Insurance. To the extent that any of Holding or
the Sellers' director and officer liability insurance
policies provide for coverage only on a "claims made" basis,
Holding and the Sellers will amend such policies prior to
the Closing Date to provide coverage on an "occurrence"
basis or to provide for an extended discovery period
thereunder (in either case for a period not less than two
years following the Closing Date) for Holding's or Sellers'
liabilities that are based on acts or omissions occurring on
or prior to the Closing Date.
Conditions Precedent
Conditions Precedent to Obligations of Stroh and
the Sellers. The respective obligations of Stroh and the
Sellers to consummate the transactions contemplated by the
Acquisition Agreement will be subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(i) no preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or
governmental authority or other legal restraint or
prohibition which restrains, enjoins or otherwise prohibits
the transactions contemplated hereby will be in effect; (ii)
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any filings required to be made by Stroh and the Sellers
under the Antitrust Improvements Act will have been made,
and the specified waiting periods thereunder will have
expired; (iii) the New Senior Subordinated Notes Indenture,
the New Junior Subordinated Notes Indenture, the New Warrant
Agreement and the escrow agreements will have been executed
and delivered by the parties thereto; (iv) all permits,
consents, waivers, clearances, approvals and authorizations
of all third parties and governmental bodies will have been
obtained, the absence of which, in the aggregate, would have
a Material Adverse Effect (as such term is defined in the
Acquisition Agreement); (v) Stroh will have received the
funds contemplated by the Commitment Letter or other
acquisition financing in the amounts necessary to consummate
the transactions contemplated by the Acquisition Agreement;
(vi) the Bankruptcy Court will have entered the Confirmation
Order, with such changes as Stroh will agree to in writing,
the time for any appeal of, or rehearing or new trial with
respect to, the Confirmation Order will have expired without
the filing of any appeal or rehearing motion, and such Order
will not be subject to a stay by any court of competent
jurisdiction; and (vii) the New Senior Subordinated Notes
Indenture and the New Junior Subordinated Notes Indenture
will have been qualified under the Trust Indenture Act. (In
connection with clause (ii) of the preceding sentence, the
applicable waiting period under the Antitrust Improvements
Act expired on April 14, 1996.)
Conditions Precedent to Obligations of Stroh. The
obligations of Stroh to consummate the transactions
contemplated by the Acquisition Agreement are subject to the
satisfaction (or waiver by Stroh) at or prior to the Closing
Date of each of the following conditions: (i) all
representations and warranties of Holding and the Sellers
contained therein or in any certificate or document
delivered to Buyer pursuant thereto will be true and correct
in all respects on and as of the Closing Date, with the same
force and effect as though such representations and
warranties had been made on and as of the Closing Date
(except that the filings with the Bankruptcy Court
contemplated by the Acquisition Agreement and Holding's or
the Company's defaults under the Existing Credit Agreement
or the Existing Indenture (provided such defaults do not
result in the acceleration of the indebtedness prior to the
voluntary commencement of the Reorganization Cases) will not
be deemed to breach any of the representations and
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warranties of Holding or the Sellers and except, in either
case, to the extent that any such representation or warranty
is made as of a specified date, in which case such
representation or warranty will have been true and correct
as of such date), except for such inaccuracies which,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; (ii) Holding and
the Sellers will in all material respects have performed all
obligations and agreements, and complied with all covenants
and conditions, contained therein to be performed or
complied with by them prior to or at the Closing Date; (iii)
except for the filings with the Bankruptcy Court, defaults
under the Existing Credit Agreement and conditions generally
affecting the beer industry, since the date of the
Acquisition Agreement, there will not have occurred any
change, occurrence or development that has had, or is
reasonably likely to have, a Material Adverse Effect; (iv)
Stroh will have received a certificate, dated the Closing
Date, of the President or Vice President of Holding and each
Seller to the effect that, to the best of the knowledge,
information and belief of such officers, certain specified
closing conditions have been fulfilled; (v) Stroh will have
received from each Seller a properly executed statement in
the form prescribed by Treasury Regulation Section 1.1445-
2(b)(2); (vi) no modifications or alterations to the Plan of
Reorganization which adversely affect Stroh will have
occurred without the written consent of Stroh; (vii) the
affiliates of the Sellers will have cancelled or otherwise
eliminated all obligations of Holding and the Sellers as
required by the Acquisition Agreement; (viii) the total
commitments under the Existing Credit Agreement and Post-
Petition Credit Facility will have been terminated, all
loans thereunder will have been repaid in cash in full,
together with all accrued interest and fees thereon, all
letters of credit issued thereunder will have been
terminated, all other amounts owing pursuant thereto will
have been repaid in full and all Encumbrances associated
therewith will have been terminated; and (ix) the Sellers
will have provided the notice required under that certain
Right of First Refusal Agreement and such right of first
refusal will have expired without exercise by Minnesota
Brewing Limited Partnership ("MBLP") or its successor, or
the Sellers will have received a waiver executed by MBLP or
its successor waiving all of its rights under such Right of
First Refusal Agreement.
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Conditions Precedent to Obligations of the
Sellers. The obligations of the Sellers to consummate the
transaction contemplated by Acquisition Agreement are
subject to the satisfaction (or waiver by the Sellers) at or
prior to the Closing Date of each of the following
conditions: (i) all representations and warranties of Stroh
contained therein or in any certificate or document
delivered to Sellers pursuant thereto will be true and
correct in all respects on and as of the Closing Date, with
the same force and effect as though such representations and
warranties had been made on and as of the Closing Date
(except as contemplated or permitted by the Acquisition
Agreement and except to the extent that any such
representation or warranty is made as of a specified date,
in which case such representation or warranty will have been
true and correct as of such date), except, in either case,
for such inaccuracies which, individually or in the
aggregate, would not reasonably be expected to have a
material adverse effect on the ability of Stroh to perform
its obligations hereunder; (ii) Stroh will in all material
respects have performed all obligations and agreements, and
complied with all covenants and conditions, contained
therein to be performed or complied with by it prior to or
at the Closing Date; (iii) the Sellers will have received a
certificate, dated the Closing Date, of the President or a
Vice President of Stroh to the effect that, to the best of
the knowledge, information and belief of such officer,
certain specified closing conditions have been fulfilled;
(iv) Stroh will have executed and delivered to the Sellers
the Assumption Agreement; (v) except for conditions
generally affecting the beer industry, since the date of the
Acquisition Agreement, there will not have occurred any
change, occurrence or development that has had, or is
reasonably likely to have, a material adverse effect on the
results of operations, business or financial condition of
Stroh; and (vi) no modifications or alterations to the Plan
of Reorganization in violation of the terms of the Plan
Undertaking Agreement (as such term is hereinafter defined)
will have occurred.
Employee Relations and Benefits
Employment. Stroh will determine the procedures
for hiring any of the employees as of the Effective Time;
provided, that the timing and form of offers of employment
to be made by Stroh prior to the Closing Date shall be
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subject to the reasonable approval of the Sellers. Stroh
will provide written notice to the Sellers at least 10
business days prior to the Closing Date of the names of the
employees it desires to make offers of employment or the
names of the Company Business employees it has decided not
to make an offer of employment. Company Business employees
who are salaried employees as of the Closing Date will be
referred to collectively hereafter as "Salaried Company
Business Employees" and Company Business Employees who are
hourly employees as of the Closing Date will be referred to
collectively hereafter as "Hourly Company Business
Employees." Stroh will offer employment to such Company
Business employees as Stroh in its discretion determines to
employ. Company Business employees who accept and commence
employment with the Consolidated Company after the Closing
will be referred to collectively hereafter as "New Buyer
Employees." Any Company Business employees who are not New
Buyer Employees will be referred to collectively hereafter
as "Non-Buyer Employees." The Consolidated Company will pay
all liabilities related to the termination of the Non-Buyer
Employees and New Buyer Employees, including severance
obligations, if any.
Effective Time. All New Buyer Employees will
become employees of the Consolidated Company as of the
Effective Time (the "Date of Hire").
Benefit Plans and Programs. New Buyer Employees
who were previously Salaried Company Business Employees will
be subject to the Consolidated Company's employment policies
and eligible to participate in the Consolidated Company's
employee benefit plans and programs under the same terms and
conditions as the Consolidated Company's other salaried
employees, except that New Buyer Employees will be subject
to such policies and will commence participation in such
plans and programs as of their respective Date of Hire and
will be granted past service credit for their employment
with the Sellers with respect to such plans, programs and
policies, including vacation and severance (with appropriate
offsets so as not to duplicate benefits), unless the
provision of such past service credit would violate
applicable law. Employment policies and employee benefit
plans and programs applicable to New Buyer Employees who
were previously Hourly Company Business Employees will be as
required by applicable collective bargaining agreements
and/or negotiated with applicable bargaining units. Except
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as provided in the immediately preceding sentence, the
Consolidated Company has no obligation to maintain for the
prospective benefit of New Buyer Employees any employment
policy or employee benefit plan or program similar to any
such policy or program maintained or provided by the Sellers
prior to the Closing.
For the purpose of assuming existing obligations
thereunder, the Consolidated Company will adopt and will be
substituted as the plan sponsor as of the Effective Time of
each Employee Benefit Program (as such term is defined in
the Acquisition Agreement); provided, that, with certain
exceptions, the Consolidated Company may amend or terminate
any such plans without limitation.
Welfare Plans. The Consolidated Company will
cause to be waived under the Consolidated Company's welfare
benefit plans all eligibility waiting periods, actively-at-
work provisions and pre-existing condition exclusions for
New Buyer Employees who were previously Salaried Company
Business Employees and their eligible dependents (to the
extent dependents are covered by the Consolidated Company's
welfare benefit plan) and will cause New Buyer Employees and
their eligible dependents (to the extent dependents are
covered by the Consolidated Company's welfare benefit plan)
to be given credit under the Consolidated Company's welfare
benefit plans for deductible and out-of-pocket expenses that
they have satisfied under the Sellers' similar plans, if
any, during the calendar year in which the Closing Date
occurs. Requirements as to eligibility waiting periods,
actively-at-work provisions, eligibility of dependents and
pre-existing condition exclusions under welfare benefit
plans for New Buyer Employees who were previously Hourly
Company Business Employees, will be as required by
applicable collective bargaining agreements and/or as
negotiated with applicable bargaining units. Except as
provided in the immediately preceding sentence, the
Consolidated Company has no obligation to adopt or otherwise
provide to New Buyer Employees any welfare benefit plan
similar to any such welfare benefit plan maintained or
provided by the Sellers prior to the Closing.
Rollovers. The Consolidated Company agrees to
take such actions as are necessary with respect to the
Consolidated Company's qualified retirement plans to enable
New Buyer Employees to make permitted rollovers of amounts
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distributable to such employees from such plans under the
Internal Revenue Code of 1986, as amended (the "Tax Code").
COBRA and WARN Act. Stroh and the Sellers agree
that for purposes of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), the Closing Date shall be
the "effective date" as such term is used in the WARN Act.
The Sellers and Stroh agree to cooperate with each other
with respect to the timing or content of any WARN Act notice
provided to the Company Business Employees in order to
minimize disruption to the Company Business before and after
the Closing Date. The Sellers agree that they will be
responsible for any obligations to make available group
health coverage pursuant to Title I, Subtitle B, Part VI of
ERISA or Section 4980B of the Tax Code ("COBRA") with
respect to the Company Business Employees who are not New
Buyer Employees and will indemnify the Consolidated Company
and hold the Consolidated Company harmless from and against
all fines and other payments which may become due under
COBRA with respect to such employees. Stroh agrees that
after the Closing it shall be responsible for any
notification required under the WARN Act with respect to the
New Buyer Employees and shall indemnify the Sellers and
their respective affiliates and hold the Sellers and their
respective affiliates harmless from and against all fines
and other payments which may become due under the WARN Act
with respect to the Company Business Employees.
Termination
General. The Acquisition Agreement may be
terminated and the transactions contemplated thereby may be
abandoned, (i) by mutual consent of Stroh and the Sellers,
(ii) by either Stroh or the Sellers, if any permanent
injunction or action by any governmental authority
preventing the consummation of the Closing will have become
final and nonappealable, (iii) by any party by notice to the
other party in the event that the Closing Date will not have
occurred on or before August 31, 1996; (iv) by Stroh, if (a)
Parent and the Sellers do not make the required bankruptcy
filings within 3 business days of the date of the
Acquisition Agreement or the Bankruptcy Court does not enter
the Break-up Fee Order within 25 business days of the date
of the Acquisition Agreement (notice of Stroh's termination
pursuant to this clause will be provided to the Sellers
within 10 business days of Stroh's discovery of the
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termination event), (b) HMT&F breaches any of its material
obligations under the Plan Undertaking Agreement, (c) the
Plan of Reorganization is not presented for a vote by
July 31, 1996 or the Plan of Reorganization is not approved
by the Sellers' stockholders or the holders of the Existing
Senior Subordinated Notes, or (d) MBLP or its successor
exercises its rights under the Right of First Refusal
Agreement or the Sellers fail to provide the notice required
by the Right of First Refusal Agreement and MBLP or its
successor refuses to waive its rights under the agreement;
and (v) by the Sellers, if Stroh breaches any of its
material obligations under the Plan Undertaking Agreement.
No Liabilities in Event of Termination. In the
event of any termination of the Acquisition Agreement as
provided above, the Acquisition Agreement will forthwith
become wholly void and of no further force and effect and
there will be no liability on the part of Stroh or Parent
and the Sellers, except that the obligations of the parties
with respect to the confidential treatment of Evaluation
Material and as provided in the following paragraph will
remain in full force and effect.
Fees and Expenses. Except as otherwise provided,
all expenses incurred by the parties hereto will be borne
solely and entirely by the party which has incurred such
expenses. The Sellers agree that if the Acquisition
Agreement is terminated because the Sellers have been unable
to obtain the approval of the Plan of Reorganization by the
Sellers' stockholders or the holders of the Existing Senior
Subordinated Notes or otherwise due to MBLP's exercise of
its right of first refusal or a breach of a representation
or warranty or covenant by the Sellers, the Sellers will
reimburse Stroh for all of its reasonable expenses
(including the reasonable fees and expenses of its
accountants, financial advisors and attorneys) incurred in
connection with the transactions contemplated by the
Acquisition Agreement, but in no event will such
reimbursement of expenses exceed $2 million. In the event
that prior to or within twelve months of such termination,
Holding or the Sellers enter into a definitive agreement
providing for a Competing Transaction, then upon the
consummation of such Competing Transaction, Holding and the
Sellers will pay Stroh a termination fee of $8.0 million.
The reimbursement of expenses and the payment of the
termination fee in accordance with the provisions hereof
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will be Stroh's sole and exclusive remedy for the Sellers'
failure to consummate the transactions contemplated by the
Acquisition Agreement; provided, however, the fees and
expenses set forth herein will not be Stroh's sole and
exclusive remedy in the event the Acquisition Agreement is
terminated by Stroh because of a willful and intentional
breach by Holding or the Sellers of their respective
obligations under the Acquisition Agreement, under
circumstances where the Sellers would have otherwise been
obligated to consummate the transactions contemplated by the
Acquisition Agreement. Stroh agrees that if the Acquisition
Agreement will be terminated because Stroh has been unable
to obtain the financing necessary to consummate the
transactions contemplated by the Acquisition Agreement, or
otherwise due to a breach of a representation or warranty or
covenant by Stroh, in consideration of the effect the
failure to consummate the sale would have on the Sellers,
Stroh will reimburse Holding and the Sellers for all of
their reasonable expenses (including the reasonable fees and
expenses of their accountants, financial advisors and
attorneys) incurred in connection with the transactions
contemplated by the Acquisition Agreement, but in no event
will such reimbursement of expenses exceed $2 million;
provided, however, that Stroh will not be obligated to
reimburse Holding and the Sellers for their expenses
pursuant hereto if Stroh's failure to obtain its financing
is related to (i) conditions generally affecting the beer
industry, (ii) any breach of a representation or warranty or
covenant by any Seller or an affiliate of any Seller, (iii)
any actions taken by any Seller or an affiliate of a Seller
or (iv) any breach of, or inability to make, a
representation or warranty or other failure of a closing
condition under Stroh's loan agreement caused by the
condition of the Sellers (including, but not limited to, a
material adverse change suffered by the Sellers), or the
Sellers' failure to take all reasonable actions to cooperate
with Stroh in obtaining the acquisition financing. The
reimbursement of expenses in accordance with the provisions
hereof will be the Sellers' sole and exclusive remedy for
Stroh's failure to consummate the transactions contemplated
by the Acquisition Agreement; provided, that the expenses
set forth herein will not be the Sellers' sole and exclusive
remedy in the event the Acquisition Agreement is terminated
by the Sellers because of a willful and intentional breach
by Stroh of its obligations under the Acquisition Agreement,
under circumstances where Stroh would have otherwise been
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obligated to consummate the transactions contemplated by the
Acquisition Agreement. By order dated April 23, 1996, the
Bankruptcy Court authorized and directed the Debtors to
observe and perform their obligations under the Acquisition
Agreement as set forth in this section.
Transactions Subsequent to Closing
Post-Closing Access to Information and Assistance.
After the Closing Date, each party to the Acquisition
Agreement will provide, and will cause its appropriate
personnel to provide, when reasonably requested to do so by
another party, access to all tax, financial and accounting
records and any other records transferred to the
Consolidated Company or retained by the Sellers, as
applicable, in accordance with the Acquisition Agreement.
The Sellers agree to cooperate with the
Consolidated Company in the preparation for and prosecution
of the defense of any claim, action or cause of action
arising out of or relating to any liability relating to the
Company Business which arose prior to the Closing and which
has been assumed by the Consolidated Company, including,
without limitation, by making available evidence within the
control of the Sellers and persons needed as witnesses
employed by the Sellers, in each case as reasonably needed
for such defense. The Consolidated Company shall reimburse
Sellers or the persons providing such assistance for their
reasonable expenses incurred at the Consolidated Company's
request in connection with the foregoing.
The Sellers authorize and empower the Consolidated
Company on and after the Closing Date to receive and open
all mail received by Buyer relating to the business of the
Company Business or the Company Business and to deal with
the contents of such communications in any proper manner.
The Sellers shall promptly deliver to Buyer any mail or
other communication received by them after the Closing Date
pertaining to the business of the Company Business and any
cash, checks or other instruments of payment to which the
Consolidated Company is entitled. After the Closing Date,
the Sellers authorize the Consolidated Company to sign all
checks and to take any other actions with respect to the
bank accounts transferred pursuant to the terms of the
Acquisition Agreement.
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Preparation of Tax Returns. The Consolidated
Company will prepare all of Holding's and the Sellers' tax
returns from and after the Closing Date and will control the
method of reaching the final determination of Holding's and
Sellers' Tax liabilities (including the decision of whether
any motions under section 505(b) of the Bankruptcy Code
should be filed). In connection with the preparation of tax
returns and any audit examinations relating to Holding or
the Sellers by any taxing authority or administrative or
judicial proceedings resulting therefrom, Holding, the
Sellers and the Consolidated Company will cooperate fully
with one another, including but not limited to the
furnishing or making available of records, personnel (as
reasonably required), books of account, powers of authority
or other materials necessary or helpful for the preparation
of returns, the conduct of audit examinations or the defense
of claims by taxing authorities as to the imposition of
Taxes. After the Closing Date, the Consolidated Company
will control the conduct of all stages of any audit or other
administrative or judicial proceeding with respect to Taxes
reflected on all tax returns filed before or after the
Closing Date; provided that the Oversight Committee may
participate in the defense of such audits and investigations
and shall be promptly provided with all notices and other
information relating to such audits or proceedings.
Insurance Claims. To the extent that (i) any
insurance policies controlled by the Sellers and their
affiliates ("Sellers' Insurance Policies") cover any loss,
liability, claim, damage or expense relating to the Company
Business and relating to or arising out of occurrences prior
to the Closing Date and (ii) Sellers' Insurance Policies
continue after the Closing Date to permit claims to be made
thereunder with respect to liabilities relating to or
arising out of occurrences prior to the Closing Date, the
Sellers will cooperate with the Consolidated Company in
submitting such claims (or pursuing claims previously made).
Use of Name. Holding and each Seller will change
their corporate name to remove "Heileman" and any derivative
thereof from such corporate name within 5 days of the
Closing Date. Holding and the Sellers will not use any of
their corporate names (including, but not limited to,
Heileman Holding Company, G. Heileman Brewing Company or any
derivative thereof) in any manner after the Closing Date.
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Indemnification
Holding and the Sellers will jointly and severally
indemnify and hold the Consolidated Company and its
affiliates harmless against and in respect of (i) the
Excluded Liabilities; (ii) any actual damages incurred or
sustained by the Buyer or its affiliates as a result of any
breach by Holding or the Sellers of their covenants
contained in the Acquisition Agreement which by their terms
will survive the Closing, provided, that the sole recourse
for such damages is to offset the amount of such damages
against the New Junior Subordinated Notes (including any
interest on the New Junior Subordinated Notes but not
including any additional New Junior Subordinated Notes
issued under Section 2.3(i) of the Acquisition Agreement or
any interest thereon); (iii) any actual damages incurred or
sustained by the Consolidated Company or its affiliates as a
result of any breach by the Sellers of their representations
and warranties, provided, that (a) the Sellers will be
required to indemnify the Consolidated Company and its
affiliates under this clause (iii) for any such breach or
breaches only to the extent that the aggregate actual
damages resulting from such breaches to the Consolidated
Company exceed $500,000, (b) the sole recourse for such
damages, under this clause (iii), is to offset the amount of
such damages against the New Junior Subordinated Notes
(including any interest accrued or paid on the New Junior
Subordinated Notes but not including any additional New
Junior Subordinated Notes issued under Section 2.3(i) of the
Acquisition Agreement or any interest thereon), and (c) any
claim for indemnification under this clause (iii) must be
made in writing in reasonable detail to the Sellers by the
Consolidated Company not later than the first anniversary of
the Closing Date; and (iv) any Taxes not accounted for in
the Purchase Price adjustment provisions set forth herein,
provided, that the sole recourse for such Taxes is to offset
the amount of such Taxes against the New Junior Subordinated
Notes (including any interest accrued or paid on the New
Junior Subordinated Notes or additional New Junior
Subordinated Notes issued under Section 2.3(i) of the
Acquisition Agreement and any interest thereon).
The Consolidated Company will indemnify and hold
Holding and the Sellers and their affiliates harmless
against and in respect of (i) the Assumed Liabilities and
(ii) any actual Damages incurred or sustained by Holding or
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the Sellers or their affiliates as a result of any breach by
Stroh of its covenants contained herein which will survive
the Closing.
Plan Undertaking Agreement
Concurrently with the execution and delivery of
the Acquisition Agreement, Stroh and HMT&F executed and
delivered that certain Plan Undertaking Agreement dated as
of April 1, 1996 (the "Plan Undertaking Agreement"). (A
copy of the Plan Undertaking Agreement is annexed to the
Acquisition Agreement as Schedule 1.0 thereto.) Under the
Plan Undertaking Agreement, Stroh and HMT&F agreed that, so
long as the Expiration Date (as such term is hereinafter)
has not occurred, Stroh will not permit or otherwise agree
to any amendments or modifications of the Plan of
Reorganization that would adversely alter the consideration
to be received by the holders of Equity Interests in Holding
or the repayment of the senior debt of the Company,
including, without limitation, the Tranche C Obligations and
will not (i) solicit any holder of the Existing Senior
Subordinated Notes to vote against the Plan of
Reorganization or to seek any amendment, modification or
termination of the Plan of Reorganization that would
adversely alter the consideration to be received by the
holders of Equity Interests in Holding or the repayment of
the senior debt of the Company, including, without
limitation, the Tranche C Obligations or (ii) support any
challenge to the Plan of Reorganization by any holders of
the Existing Senior Subordinated notes that would adversely
alter the consideration to be received by the holders of
Equity Interests in Holding or the repayment of the senior
debt of the Company, including, without limitation, the
Tranche C Obligations. Under the Plan Undertaking
Agreement, Stroh and HMT&F further agreed that, so long as
the Expiration Date has not occurred, HMT&F acknowledges its
approval of the terms of the Acquisition Agreement and the
Plan of Reorganization, and not to seek, encourage or
support in any way any other plan of reorganization,
proposal or offer of dissolution, winding up or liquidation,
reorganization, merger, consolidation, recapitalization or
restructuring of the Company or any acquisition of all or a
material part of the assets of the Company or any
acquisition of the securities of the Company. Under the
Plan Undertaking Agreement, each of Stroh and HMT&F further
agreed to use its reasonable efforts to cause the Bankruptcy
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Court to enter a confirmation order in accordance with the
Bankruptcy Code as soon as practicable in the Reorganization
Cases and use its best efforts to cause the effective date
of the Plan of Reorganization to occur as soon as
practicable. For purposes of the Plan Undertaking
Agreement, the Expiration Date is defined to mean the
earlier to occur of the termination of the Acquisition
Agreement in accordance with its terms and August 31, 1996.
B. Commencement of the Reorganization Cases
On April 3, 1996, the Debtors filed voluntary
petitions for relief under chapter 11 of the Bankruptcy Code
with the United States Bankruptcy Court for the District of
Delaware. The Debtors continue to operate their business
and manage their properties as Debtors in Possession
pursuant to sections 1107 and 1108 of the Bankruptcy Code.
C. Statutory Creditors' Committee
Under section 1102(a) of the Bankruptcy Code,
after the commencement of a chapter 11 case, the United
States Trustee is to appoint a committee of creditors
holding unsecured claims against the chapter 11 debtor (a
"Statutory Creditors' Committee"), and may appoint
additional committees of creditors or of equity security
holders as deemed appropriate to assure the adequate
representation of creditors and equity security holders in
the chapter 11 case.
Ordinarily, the Statutory Creditors' Committee
appointed by the United States Trustee will consist of those
entities willing to serve that hold the seven largest claims
against the debtor of the kinds of claims represented on the
committee. Section 1102(b) of the Bankruptcy Code, however,
authorizes the United States Trustee to appoint, as the
Statutory Creditors' Committee, the members of a committee
organized by creditors before the commencement of the
chapter 11 case, if such committee was fairly chosen and is
representative of the different kinds of claims to be
represented in the case.
During the fourth quarter of 1995, the Informal
Noteholders' Committee was organized in connection with a
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restructuring of the obligations evidenced by the Existing
Senior Subordinated Notes.
The Company anticipated that, when it commenced
its chapter 11 case, the Informal Noteholders' Committee
would undertake to be appointed by the United States Trustee
as the Statutory Creditors' Committee under subsection
1102(b) of the Bankruptcy Code.
On April 17, 1996, the United States Trustee for
the District of Delaware appointed American National Can
Co., Anchor Glass Container Corp., Citicorp Securities Inc.,
Crown, Cork & Seal Co., Inc., RH Capital Management, United
States Trust Company of New York as indenture trustee and
York Capital Management as members of the Statutory
Creditors' Committee. The Statutory Creditors' Committee
has engaged, subject to authorization and approval by the
Bankruptcy Court, Stroock & Stroock & Lavan as counsel and
Houlihan Lokey Howard & Zukin as financial advisor in
connection with the Reorganization Cases.
D. Anticipated Proceedings in the Reorganization Cases
Operational Issues After the Petition Date. The
Debtors have obtained a series of orders from the Bankruptcy
Court designed to minimize disruptions of business
operations and to facilitate their reorganization.
Trade Vendor Matters. The Debtors consider their
relations with trade vendors to be important to the
continued operation of the their business during the
pendency of the Reorganization Cases. Accordingly, the
Debtors obtained an order of the Bankruptcy Court
authorizing and approving the payment of purchase orders
dated before the Petition Date relating to goods delivered
or provided after the Petition Date.
Employee Matters. The Debtors consider their
employees to be one of their most valuable assets.
Continued employee cooperation and support is important to a
successful reorganization. Accordingly, on April 3, 1996
and on April 23, 1996, the Debtors effected certain actions
in the Bankruptcy Court to minimize any salary, wage,
employee benefit and retiree benefit disruptions. These
actions included obtaining orders of the Bankruptcy Court
(i) authorizing the Debtors to pay wages, salaries,
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reimbursable employee expenses and accrued and unpaid
employee benefits incurred and payable prior to the Petition
Date; (ii) approving certain employee bonus and severance
plans; and (iii) authorizing the Debtors to pay certain
retirement benefits.
Executory Contracts and Unexpired Leases. As
evidenced by the statement of executory contracts filed with
the Bankruptcy Court, the Debtors are parties to hundreds of
contracts or leases that constitute executory contracts and
unexpired leases pertaining to nonresidential real property
and to personal property within the meaning of section 365
of the Bankruptcy Code. The Debtors intend to obtain an
order of the Bankruptcy Court granting the Debtors an
extension of the sixty-day period provided in the Bankruptcy
Code within which the Debtors would have been required to
assume or reject unexpired leases of real property until
confirmation of a plan of reorganization. On [date], 1996,
the Debtors filed in the Bankruptcy Court Schedule 9.1 to
the Plan of Reorganization, which lists the executory
contracts and unexpired leases the Debtors intend to reject.
The Plan of Reorganization provides that the Debtors may,
with Stroh's consent, amend Schedule 9.1 to delete or add
executory contracts or unexpired leases scheduled thereon on
or before the first Business Day before the date of the
commencement of the Confirmation Hearing.
DIP Working Capital Facilities. At the time that
the Debtors commenced their Reorganization Cases, they
anticipated that their financing needs would be satisfied
through a working capital facility extended by a group of
financial institutions. Prior to the Petition Date, the
Debtors undertook to arrange such financing through
different financial institutions and selected Bankers Trust
Company to arrange such financing.
On April 3, 1996, the Bankruptcy Court approved
that certain Credit Agreement (the "Post-Petition Credit
Agreement") dated as of April 1, 1996, among the Company, as
borrower, the other Debtors, as guarantors, the lenders
named therein and Bankers Trust Company, as agent for such
lenders on an interim basis and authorized the Company to
incur obligations thereunder not exceeding $5.0 million
pending a final hearing thereon.
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On April 19, 1996, the Bankruptcy Court entered an
order (the "DIP Order") approving the Post-Petition Credit
Agreement. The DIP Order authorized the Company to incur
obligations under the Post-Petition Credit Agreement not
exceeding the commitment amount of $10.0 million. The Post-
Petition Credit Agreement is scheduled to expire on the
earlier of the first anniversary of the Petition Date and
the date of the occurrence of certain specified events.
The Adequate Protection Stipulation. In
connection with the Existing Credit Agreement, each of the
Debtors executed security agreements and other collateral
documents (collectively, the "Security Documents") under
which such Debtors granted the lenders under the Existing
Credit Agreement, security interests, liens, and mortgages
in all or substantially all of their respective properties
and interests in property as collateral security for the
payment and performance of the obligations owing to such
lenders. As at the Petition Date, such lenders asserted
liens against, and claimed an entitlement to adequate
protection of their liens on such properties and interest in
property.
To resolve this matter without resort to
protracted and costly litigation and in the best interest of
the estates, the Debtors consented to the entry of an order
of the Bankruptcy Court authorizing them to (i) use cash
collateral and obtain post-petition financing under sections
363 and 364 of the Bankruptcy Code and (ii) provide adequate
protection and grant mortgages, security interests and
super-priority claims to such lenders under the Existing
Credit Agreement (the "Adequate Protection Order"). Under
the Adequate Protection Order, the Debtors agreed to provide
certain priority liens and priority administrative claims in
respect of the Debtors' use of the lenders' cash collateral
during the pendency of the Reorganization Cases and to pay
interest at the nondefault rate during the pendency of the
Reorganization Cases on account of, without duplication, the
indebtedness under the Existing Credit Agreement and the
Cash Collateral Loans (as defined in the Adequate Protection
Order) provided for in the Adequate Protection Order.
Waiver of Avoidance Actions. The Plan of
Reorganization provides that effective as of the
Consummation Date, the Debtors will waive the right to
prosecute, and will release, any avoidance actions
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(including, without limitation, actions for avoidance of
preferential transfers) that the Debtors or Debtors in
Possession may otherwise have been able to assert, except
for those actions that are pending as of such date. The
Consolidated Company will retain and may prosecute any such
actions that may be pending on such date.
The Debtors determined in their business judgment
only to pursue such avoidance actions, if any, pending as of
the Consummation Date, and not to pursue any other causes of
action. This conclusion was based principally on the
analysis that any claims over against the Debtors on account
of avoided transfer would be fully paid under the Plan of
Reorganization. The Debtors believe that only such pending
causes of action provide the potential for a material net
economic benefit to the estates so as to justify
prosecution.
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IV.
THE JOINT PLAN OF REORGANIZATION
A. Introduction
The following is a summary of certain terms and
provisions of the Plan of Reorganization. This summary of
the Plan of Reorganization is qualified in its entirety by
reference to the full text of the Plan of Reorganization,
which is annexed to this Disclosure Statement as Exhibit A
hereto.
B. General Description of the Treatment of Claims and
Equity Interests Under the Plan of Reorganization
Administration Expense Claims and Priority Tax Claims
Administration Expense Claims are rights to
payment constituting a cost or expense of administration of
any of the Reorganization costs of the Debtors allowed under
section 503(b) and 507(a)(3) of the Bankruptcy Code,
including, without limitation, any actual and necessary
costs and expenses of preserving the estates, any actual and
necessary costs or expenses of operating the business of the
Debtors, any indebtedness or obligations incurred or assumed
by the Debtors in possession in connection with the conduct
of their business, including, without limitation, for the
indebtedness or acquisition or lease of property or the
rendition of services, any allowances of compensation and
reimbursement of expenses to the extent allowed by a Final
Order under section 330 or 503 of the Bankruptcy Code,
whether arising before or after the Consummation Date, and
fees or charges assessed against the estates of the Debtors
under section 1930, chapter 123, title 28, United States
Code.
Generally, the Plan of Reorganization provides
that Administration Expense Claims will be paid in full on
the Consummation Date. Liabilities incurred in the ordinary
course of business by the Debtors in Possession after the
Petition Date and indebtedness or obligations arising under
loans or advances to the Debtors in Possession (other than
loans or advances to or other obligations incurred by the
Debtors in Possession under the Post-Petition Credit
Agreement and any agreement, instrument or other document
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executed and delivered in connection therewith), whether or
not incurred in the ordinary course of the business of the
Debtors, which are described in the Plan of Reorganization
as Administration Expense Claims, will, however, be assumed
and paid by the Consolidated Company in accordance with the
terms and subject to the conditions of any agreements
governing, instruments evidencing on other documents
relating to such transactions. Loans or advances to or
other obligations incurred by the Debtors in Possession
under the Post-Petition Credit Agreement and any agreement,
instrument or other document executed and delivered in
connection therewith will be paid or otherwise satisfied on
the Consummation Date by the Debtors in Possession.
All payments to professionals for compensation and
reimbursement of expenses and all payments to reimburse
expenses of members of the Statutory Creditors' Committee
will be made in accordance with the procedures established
by the Bankruptcy Code and the Bankruptcy Rules relating to
the payment of interim and final allowances of compensation
for services rendered and reimbursement of expenses
recovered. The Bankruptcy Court will review and determine
all requests for compensation for services rendered and
reimbursement of expenses recovered.
Section 503(b) of the Bankruptcy Code also pro-
vides for payment of compensation to creditors, indenture
trustees and other entities making a "substantial
contribution" to a reorganization case, and to attorneys for
and other professional advisors to such entities. The
Debtors currently have no knowledge of any such Claims.
Such requests for compensation must be approved by the
Bankruptcy Court after a hearing on notice at which the
Debtors and other parties in interest may participate and,
if appropriate, object to the allowance of any allowances of
compensation and reimbursement of expenses incurred.
Each holder of an Administration Expense Claim
seeking an award of compensation for services rendered or
reimbursement of expenses incurred by the Bankruptcy Court
under sections 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5)
of the Bankruptcy Code (a) shall file its respective final
application for an allowance of compensation for services
rendered and reimbursement of expenses incurred by the date
that is forty-five (45) days after the Consummation Date
and, if granted such an award by the Bankruptcy Court, (b)
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will be paid in full in such amounts as are allowed by the
Bankruptcy Court (a) upon the later of (i) the Consummation
Date and (ii) the date upon which the order relating to any
such Administration Expense Claim becomes a Final Order or
(b) upon such other terms as may be mutually agreed between
such holder of an Administration Expense Claim and the
Consolidated Company.
The Consolidated Company will pay (i) the
reasonable fees of and expenses incurred by the
professionals retained by the Statutory Creditors' Committee
by order of the Bankruptcy Court and (ii) the reasonable
expenses incurred by the members of the Statutory Creditors'
Committee, upon the submission of a final invoice to the
Consolidated Company for services rendered after the
Consummation Date and before the dissolution of the
Statutory Creditors' Committee under section 13.1 of the
Plan of Reorganization.
Priority Tax Claims are claims of a governmental
unit against a Debtor that are entitled to a certain
priority under section 507(a)(8) of the Bankruptcy Code. On
the Consummation Date, each holder of an Allowed Priority
Tax Claim shall be distributed on account of such Allowed
Priority Tax Claim a payment in cash equal to the amount of
such Allowed Priority Tax Claim.
Classification of Claims and Equity Interests
Claims against and Equity Interests in the Debtors
are divided into the following classes:
Class 1 - Priority Non-Tax Claims
Class 2 - Senior Secured Claims
Class 3 - Other Secured Claims
Subclass 3A - G. Heileman Brewing Company, Inc.
Subclass 3B - Heileman Holding Company
Subclass 3C - Blitz-Weinhard Brewing Company, Inc.
Subclass 3D - Carling National Brewing Company, Inc.
Subclass 3E - Christian Schmidt Brewing Company, Inc.
Subclass 3F - GHB Souvenir Sales, Inc.
Subclass 3G - Heileman Air Services, Inc.
Subclass 3H - Heileman Brewing Company, Inc.
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Subclass 3I - Heileman Export Marketing, Inc.
Subclass 3J - HBC Leasing Company, Inc.
Subclass 3K - Lone Star Brewing Company, Inc.
Subclass 3L - Rainier Brewing Company, Inc.
Class 4 - General Unsecured Claims
Subclass 4A - G. Heileman Brewing Company, Inc.
Subclass 4B - Heileman Holding Company
Subclass 4C - Blitz-Weinhard Brewing Company, Inc.
Subclass 4D - Carling National Brewing Company, Inc.
Subclass 4E - Christian Schmidt Brewing Company, Inc.
Subclass 4F - GHB Souvenir Sales, Inc.
Subclass 4G - Heileman Air Services, Inc.
Subclass 4H - Heileman Brewing Company, Inc.
Subclass 4I - Heileman Export Marketing, Inc.
Subclass 4J - HBC Leasing Company, Inc.
Subclass 4K - Lone Star Brewing Company, Inc.
Subclass 4L - Rainier Brewing Company, Inc.
Claim 5 - Intercompany Affiliate Unsecured Claims
Subclass 5A - G. Heileman Brewing Company, Inc.
Subclass 5B - Heileman Holding Company
Subclass 5C - Blitz-Weinhard Brewing Company, Inc.
Subclass 5D - Carling National Brewing Company, Inc.
Subclass 5E - Christian Schmidt Brewing Company, Inc.
Subclass 5F - GHB Souvenir Sales, Inc.
Subclass 5G - Heileman Air Services, Inc.
Subclass 5H - Heileman Brewing Company, Inc.
Subclass 5I - Heileman Export Marketing, Inc.
Subclass 5J - HBC Leasing Company, Inc.
Subclass 5K - Lone Star Brewing Company, Inc.
Subclass 5L - Rainier Brewing Company, Inc.
Class 6 - Subordinated Unsecured Claims
Class 7 - Equity Interests
Subclass 7A - G. Heileman Brewing Company, Inc.
Subclass 7B - Heileman Holding Company
Subclass 7C - Subsidiary Equity Interests
Provisions for Treatment of Claims and Equity Interests
Under the Plan of Reorganization
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Priority Non-Tax Claims (Class 1). On the
Consummation Date, each holder of an Allowed Priority Non-
Tax Claim shall be distributed on account of such Allowed
Priority Non-Tax Claim a payment in Cash equal to such
Allowed Priority Claim.
Allowance of Senior Secured Claims (Class 2).
Each Senior Secured Claim will be allowed as of the Petition
Date in the amount scheduled opposite the name of each
holder of such Claim on Schedule 4.2 to the Plan of
Reorganization, each such amount to be subject to adjustment
to give effect to any payments made on account of such
Claims after the Date and to any increase in the amount of
such Claims after the Petition Date.
Treatment of Senior Secured Claims. On the
Consummation Date (including any successor or assign of any
holder identified on Schedule 4.2 hereto), each holder of an
Allowed Senior Secured Claim, including, without limitation,
Senior Secured Claims constituting a Tranche C Obligation
(as such terms is defined in the Existing Credit Agreement)
will be distributed on account of such Allowed Senior
Secured Claim a payment in Cash equal to such Allowed Senior
Secured Claim, which shall include accrued and unpaid
interest (including, without limitation, accrued and unpaid
interest on and after the Petition Date) at the applicable
non-default rate under the Existing Credit Agreement. On
the Consummation Date, the Consolidated Company will cause
all letters of credit issued and outstanding under the
Existing Credit Agreement to be replaced to the reasonable
satisfaction of Bankers Trust Company as agent under the
Existing Credit Agreement. After the Consummation Date, the
Consolidated Company will also pay in Cash any obligations
arising under the Existing Credit Agreement to the extent
not paid on the Consummation Date, including, without
limitation, any fees and expenses incurred after the
Consummation Date in connection with the implementation and
consummation of the Plan of Reorganization and obligations
arising prior to the Consummation Date which were not
determined or otherwise not paid as of the Consummation
Date, as long as such fees and expenses are disclosed in
writing to the Consolidated Company and counsel to the
Statutory Creditors' Committee within 15 days after the
Consummation Date.
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Other Secured Claims (Class 3). On the
Consummation Date, each Allowed Other Secured Claim in each
subclass of Class 3 will be assumed in accordance with the
Acquisition Agreement and the Assumption Agreement
contemplated thereby.
General Unsecured Claims (Class 4). On the
Consummation Date, each Allowed General Unsecured Claim in
each subclass of Class 4 will be assumed by the Consolidated
Company in accordance with the Acquisition Agreement and the
Assumption Agreement contemplated thereby and each holder of
an Allowed General Unsecured Claim shall be entitled to
payment in Cash in an amount equal to such Allowed General
Unsecured Claim in accordance with such Assumption
Agreement.
Intercompany Affiliate Unsecured Claims (Class 5).
On the Consummation Date, each holder of an Allowed
Intercompany Affiliate Unsecured Claim in each subclass of
Class 5 will be treated in accordance with Schedule 1.55 to
the Plan of Reorganization governing the Restructuring
Transactions.
Subordinated Unsecured Claims (Class 6). On the
Consummation Date, each holder of an Allowed Subordinated
Unsecured Claim will, in accordance with Schedule 1.55 to
the Plan of Reorganization governing the Restructuring
Transactions, be distributed on account of such Allowed
Subordinated Unsecured Claim its Ratable Proportion of (i)
the beneficial interest in Escrow A allocated to holders of
Subordinated Unsecured Claims thereunder, which escrow shall
contain (a) $70,000,000 in aggregate original principal
amount of the New Senior Subordinated Notes issued to the
Debtors (other than Heileman Holding Company) in accordance
with the Agreement, subject to adjustments to decrease such
amount in accordance with Sections 2.2 and 2.3 of the
Acquisition Agreement and Schedule 2.2(a) thereto as of the
Consummation Date and (b) $5,000,000 in aggregate original
principal amount of the New Junior Subordinated Notes issued
to the Debtors (other than Heileman Holding Company) in
accordance with the Acquisition Agreement, subject to
adjustment to decrease or increase such amount in accordance
with sections 2.2 and 2.3 of the Acquisition Agreement as of
the Consummation Date and (ii) the beneficial interest in
Escrow B allocated to holders of Subordinated Unsecured
Claims thereunder, which escrow will contain (a) 706,000 of
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the New Warrants issued to the Debtors (other than Heileman
Holding Company) in accordance with the Acquisition
Agreement, subject to allocation between the holders of
Allowed Subordinated Unsecured Claims and holders of Allowed
Equity Interests in Subclass 7A (G. Heileman Brewing Co.,
Inc.) in accordance with the Warrant Allocation Schedule and
(b) 44,000 of the New Warrants issued to the Debtors (other
than Heileman Holding Company) in accordance with the
Acquisition Agreement, subject to allocation between the
holders of Allowed Subordinated Unsecured Claims and holders
of Allowed Equity Interests in Subclass 7A (G. Heileman
Brewing Company, Inc.) in accordance with the agreement
governing Escrow B. In the event that the aggregate
original principal amount of the New Junior Subordinated
Notes issued to the Debtors (other than Heileman Holding
Company) in accordance with the Acquisition Agreement after
giving effect to adjustments thereto in accordance with
sections 2.2 and 2.3 of the Acquisition Agreement exceeds
$5,000,000, then each holder of a beneficial interest in
Escrow A distributed on account of an Allowed Subordinated
Unsecured Claim will be distributed from, and on account of
such beneficial interest in, Escrow A its Ratable Proportion
of New Junior Subordinated Notes in an original aggregate
principal amount equal to $5,000,000, together with interest
thereon from the date of deposit into Escrow A, plus 85.0%
of such excess, together with interest thereon from the date
of deposit into Escrow A.
The Company presently projects that $68.0 million
to $70.0 million in aggregate original principal amount of
New Senior Subordinated Notes would be issued in accordance
with the calculation contemplated by Schedule 2.2(a) to the
Acquisition Agreement. Such projection is based on a gross
purchase price of $279.37 million and estimates of $214.457
million in obligations outstanding under the Existing Credit
Agreement, including the Tranche C Obligations thereunder,
and the Post-Petition Credit Agreement, $4.0 million in
federal, state and local income taxes and all transfer taxes
payable in connection with the transfer of the Company
Business contemplated by the Acquisition Agreement pursuant
to the allocations contained therein, $.55 million in fees
and expenses of Holding and the Sellers incurred in
connection with the transaction contemplated by the
Acquisition Agreement (including, without limitation, the
fees and expenses incurred in connection with the
Reorganization Cases), $1.0 million in IRB Debt assumed or
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refinanced by Stroh, $1.34 million in taxes payable to the
IRS under the prior plan of reorganization for the Company
and a $10.63 million to $12.63 million working capital
adjustment and no adjustment for wholesaler inventory. SUCH
PROJECTION, ALTHOUGH PRESENTED WITH NUMERICAL SPECIFICITY,
IS BASED ON A SERIES OF ASSUMPTIONS, WHICH, ALTHOUGH
CONSIDERED REASONABLE BY THE COMPANY, MAY NOT BE REALIZED
AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC
AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF
WHICH ARE BEYOND THE CONTROL OF THE COMPANY. SOME
ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE, AND EVENTS AND
CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THIS
PROJECTION WAS PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED
OR MAY BE UNANTICIPATED AND, ACCORDINGLY, MAY AFFECT
FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER.
THIS PROJECTION, THEREFORE, MAY NOT BE RELIED UPON AS A
GUARANTY OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL
OCCUR. THE FOREGOING PROJECTION HAS NOT BEEN REVIEWED BY
STROH AND, ACCORDINGLY, STROH EXPRESSES NO OPINION ON SUCH
PROJECTION.
Timing and Allocation of Distributions. In
accordance with the Acquisition Agreement, the New Senior
Subordinated Notes, the New Junior Subordinated Notes and
the New Warrants shall be delivered on the Consummation Date
to the Escrow Agent. Distributions to holders of Allowed
Subordinated Unsecured Claims shall be effected in
accordance with sections 7.1 and 7.2 of the Plan of
Reorganization at such time as the New Senior Subordinated
Notes, the New Junior Subordinated Notes and the New
Warrants are released from the escrows contemplated by the
Acquisition Agreement. HOLDERS OF SUBORDINATED UNSECURED
CLAIMS SHOULD READ THE AGREEMENTS GOVERNING ESCROW A AND
ESCROW B TO UNDERSTAND THE TERMS AND CONDITIONS, INCLUDING,
WITHOUT LIMITATION, TIMING, UNDER WHICH CONSIDERATION WILL
BE RELEASED FROM SUCH ESCROWS. The distributions on account
of Allowed Subordinated Unsecured Claims hereunder shall be
allocated first to the principal portion of the Existing
Senior Subordinated Notes and second to accrued and unpaid
interest on the Existing Senior Subordinated Notes.
Equity Interests (Class 7). G. Heileman Brewing
Company, Inc. (Subclass 7A). On the Consummation Date, each
holder of an Allowed Equity Interest in G. Heileman Brewing
Company, Inc. will, in accordance with Schedule 1.55 to the
Plan of Reorganization governing the Restructuring
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Transactions, be distributed on account of such Allowed
Equity Interest its Ratable Proportion of (i) the beneficial
interest in Escrow A allocated to holders of Equity
Interests in G. Heileman Brewing Company, Inc. and (ii) the
beneficial interest in Escrow B allocated to holders of
Equity Interests in G. Heileman Brewing Company, Inc. In
the event that the aggregate original principal amount of
the New Junior Subordinated Notes issued to the Debtors
(other than Heileman Holding Company) in accordance with the
Acquisition Agreement after giving effect to adjustments
thereto in accordance with sections 2.2 and 2.3 of the
Acquisition Agreement exceeds $5,000,000, then each holder
of a beneficial interest in Escrow A distributed on account
of an Allowed Equity Interest in Subclass 7A (G. Heileman
Brewing Company, Inc.) will be distributed from, and on
account of such beneficial interest in Escrow A its Ratable
Proportion of New Junior Subordinated Notes in an original
aggregate principal amount equal to 15.0% of such excess,
together with interest thereon from the date of deposit into
Escrow A.
Heileman Holding Company (Subclass 7B). On the
Consummation Date, each holder of an Allowed Equity Interest
in Heileman Holding Company shall be distributed, after
giving effect to the Restructuring Transactions, on account
of such Allowed Equity Interest its Ratable Proportion of
the (i) the beneficial interest in Escrow A and (ii) the
beneficial interest in Escrow B distributed on account of
the Allowed Equity Interests in G. Heileman Brewing Company,
Inc. under section 4.7(a) of the Plan of Reorganization.
Subsidiary Equity Interests (Subclass 7C). On the
Consummation Date, each holder of an Allowed Subsidiary
Equity Interest shall be treated in accordance with Schedule
1.55 to the Plan of Reorganization governing the
Restructuring Transactions.
Certain Voting Provisions
Votes cast by holders of Claims and Equity
Interests in each subclass under the Plan of Reorganization
will be tabulated separately by subclass. A subclass of
Claims will have accepted the Plan of Reorganization if at
least two-thirds in amount and one-half in number of the
Claims of each such subclass that have voted to accept or
reject the Plan of Reorganization, vote to accept the Plan
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of Reorganization. A subclass of Equity Interests will have
accepted the Plan of Reorganization if the holders of at
least two-thirds of the total Equity Interests in such
Subclass that have voted to accept for reject the Plan of
Reorganization vote to accept the Plan of Reorganization.
C. General Description of New Securities
General Description of New Senior Subordinated Notes
The following is a summary of certain terms and
provisions of the New Senior Subordinated Notes Indenture.
This summary of the New Senior Subordinated Notes Indenture
is qualified in its entirety by reference to the full text
of the New Senior Subordinated Notes Indenture, which is
annexed to the Acquisition Agreement as Exhibit B thereto.
Certain defined terms contained in the following summary
have the meanings provided in the section entitled "Certain
Definitions in the New Senior Subordinated Notes Indenture"
below.
The New Senior Subordinated Notes will be issued
by the Consolidated Company under the New Senior
Subordinated Notes Indenture. The indenture trustee under
the New Senior Subordinated Notes Indenture (the "Senior
Trustee") has not been selected as of the date hereof, but
will be selected before the Confirmation Hearing.
The New Senior Subordinated Notes will be issued
in an original aggregate outstanding principal amount equal
to or less than $70.0 million. The actual aggregate out-
standing principal amount of New Senior Subordinated Notes
issued by the Consolidated Company and released from Escrow
A for distribution on account of beneficial interests
distributed on account of Allowed Subordinated Unsecured
Claims will be calculated in accordance with Sections 2.2
and 2.3 of the Acquisition Agreement and Schedule 2.2(a)
thereto. Generally, Section 2.2 of the Acquisition
Agreement provides that the aggregate original principal
amount of the New Senior Subordinated Notes issued by the
Consolidated Company and released from Escrow A for
distribution on account of beneficial interests distributed
on account of Allowed Subordinated Unsecured Claims will be
calculated in accordance with Schedule 2.2(a) to the
Acquisition Agreement as the sum of the following four
items: (i) $279.370 million; minus (ii) the aggregate
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amount of the Itemized Liabilities, plus (in the event that
there is a decrease in the deficiency) or minus (in the
event that there is an increase in the deficiency) (iii) the
difference of (a) the Net Working Capital as of the Closing
Date and (b) $13.125 million, minus (iv) certain other
adjustments. In the event that the Formula Amount is
greater than $70.0 million, then New Senior Subordinated
Notes will be issued in an aggregate principal amount equal
to $70.0 million. In the event that the Formula Amount is
equal to or greater than $64.0 million and less than or
equal to $70.0 million, then New Senior Subordinated Notes
will be issued in an aggregate original principal amount
equal to the Formula Amount. In the event that the Formula
Amount is equal to or greater than $61.25 million and less
than or equal to $64.0 million, then New Senior Subordinated
Notes will be issued in an aggregate original principal
amount equal to $64.0 million. In the event that the
Formula Amount is less than $61.25 million, then New Senior
Subordinated Notes will be issued in an aggregate original
principal amount equal to the difference of the (i) $64.0
million, minus (ii) the difference of (a) $61.25 million,
minus (b) the Formula Amount.
The New Senior Subordinated Notes will bear
interest at a fixed annual rate equal to 425 basis points
over the mean average rate for United States Treasury
securities of comparable maturity for the five consecutive
trading days ending on the trading day before the
Consummation Date (the "Annual Coupon"), payable
semiannually in arrears on the semi-annual anniversaries of
the Consummation Date, commencing with the first semi-annual
anniversary of the Consummation Date. The New Senior
Subordinated Notes will mature on the tenth anniversary of
the Consummation Date, subject to earlier redemption as
hereinafter provided, at which time the aggregate
outstanding principal amount thereof will be payable in
full.
Before the fifth anniversary of the Consummation
Date, the New Senior Subordinated Notes will not be
redeemable by the Consolidated Company. On or after the
fifth anniversary of the Consummation Date, the New Senior
Subordinated Notes will be redeemable, at the option of the
Consolidated Company, at any time, in whole or in part, at
redemption prices equal to the sum of the original principal
amount of the New Senior Subordinated Notes called for
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redemption, plus accrued interest to the redemption date,
plus, in the event redeemed during any period beginning on
any anniversary of the Consummation Date provided below, the
applicable premium provided opposite such year:
Redemption Year Applicable Premium
Sixth 50.00% of Annual Coupon
Seventh 33.33% of Annual Coupon
Eighth 16.67% of Annual Coupon
Ninth 0.00%
Tenth 0.00%
The New Senior Subordinated Notes will be
unsecured and senior subordinated obligations of the
Consolidated Company. The New Senior Subordinated Notes
will be subordinated in right of payment to prior payment of
Senior Debt.
Subordination
The payment of all obligations on the New Senior
Subordinated Notes is subordinated and junior in right of
payment to the prior payment in full, in cash or Cash
Equivalents (or such payment shall be duly provided for to
the satisfaction of the holders of the Senior Debt), of all
obligations on the Senior Debt. Upon any payment or
distribution of assets of the Consolidated Company of any
kind or character, whether in cash, property or securities,
to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or
marshalling of assets of the Consolidated Company or in a
bankruptcy, reorganization, insolvency, receivership or
other similar proceeding relating to the Consolidated
Company or its property, whether voluntary or involuntary,
all obligations due or to become due upon all Senior Debt
will first be paid in full in cash or Cash Equivalents, or
such payment duly provided for to the satisfaction of the
holders of the Senior Debt, before any payment or
distribution of any kind or character is made on account of
any obligations on the New Senior Subordinated Notes, or for
the acquisition of any of the New Senior Subordinated Notes
for cash or property or otherwise. If any default occurs
and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise,
of any principal of, interest on or any other amounts owing
with respect to any Senior Debt, no payment of any kind or
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character (except (i) in Qualified Capital Stock issued by
the Consolidated Company to pay interest on the New Senior
Subordinated Notes or issued in exchange for the New Senior
Subordinated Notes, (ii) in securities substantially
identical to the New Senior Subordinated Notes issued by the
Consolidated Company in payment of interest accrued thereon
or (iii) in securities issued by the Consolidated Company
which are subordinated to the Senior Debt at least to the
same extent as the New Senior Subordinated Notes and having
a Weighted Average Life to Maturity at least equal to the
remaining Weighted Average Life to Maturity of the New
Senior Subordinated Notes (the issuance of such subordinated
securities to be consented to by the holders of at least a
majority of the outstanding amount of Senior Debt consisting
of each class of Designated Senior Debt then outstanding,
which subordinated securities will be issued in exchange for
outstanding New Senior Subordinated Notes or to pay interest
accrued on outstanding New Senior Subordinated Notes)) will
be made by the Consolidated Company or any other Person on
behalf of the Consolidated Company with respect to any
Obligations on the New Senior Subordinated Notes or to
acquire any of the New Senior Subordinated Notes for cash or
property or otherwise. In addition, if any other event of
default occurs and is continuing (or if such an event of
default would occur upon any payment with respect to the New
Senior Subordinated Notes or would arise upon the passage of
time as a result of such payment) with respect to any
Designated Senior Debt (as such event of default is defined
in the instrument creating or evidencing such Designated
Senior Debt) and such event of default permits the holders
of such Designated Senior Debt then outstanding to
accelerate the maturity thereof and if the Representative
for the respective issue of Designated Senior Debt gives
written notice of the event of default to the Consolidated
Company and the Trustee (a "Default Notice"), then, unless
and until all events of default have been cured or waived or
have ceased to exist or the Consolidated Company and the
Trustee receives notice from the Representative for the
respective issue of Designated Senior Debt terminating the
Blockage Period (as defined below), during the 180 days
after the delivery of such Default Notice (the "Blockage
Period"), neither the Consolidated Company nor any other
Person on behalf of the Consolidated Company will make any
payment of any kind or character (except (i) in Qualified
Capital Stock issued by the Consolidated Company to pay
interest on the New Senior Subordinated Notes or issued in
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exchange for the New Senior Subordinated Notes, (ii) in
securities substantially identical to the New Senior
Subordinated Notes issued by the Consolidated Company in
payment of interest accrued thereon or (iii) in securities
issued by the Consolidated Company which are subordinated to
the Senior Debt at least to the same extent as the New
Senior Subordinated Notes and having a Weighted Average Life
to Maturity at least equal to the remaining Weighted Average
Life to Maturity of the New Senior Subordinated Notes (the
issuance of such subordinated securities to be consented to
by the holders of at least a majority of the outstanding
amount of Senior Debt consisting of each class of Designated
Senior Debt then outstanding, which subordinated securities
will be issued in exchange for outstanding New Senior
Subordinated Notes or to pay interest accrued on outstanding
New Senior Subordinated Notes)) with respect to any
Obligations on the New Senior Subordinated Notes or to
acquire any of the New Senior Subordinated Notes for cash or
property or otherwise. Notwithstanding anything herein to
the contrary, in no event will a Blockage Period extend
beyond 180 days from the date the payment on the New Senior
Subordinated Notes was due and only one such Blockage Period
may be commenced within any 360 consecutive days. No event
of default which existed or was continuing on the date of
the commencement of any Blockage Period with respect to the
Designated Senior Debt initiating such Blockage Period shall
be, or be made, the basis for the commencement of a second
Blockage Period by the Representative of such Designated
Senior Debt, whether or not within a period of 360
consecutive days, unless such event of default has been
cured or waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action, or
any breach of any financial covenants for a period
commencing after the date of commencement of such Blockage
Period that, in either case, would give rise to an event of
default pursuant to any provision under which an event of
default previously existed or was continuing shall
constitute a new event of default for this purpose).
Certain Covenants
The New Senior Subordinated Notes Indenture
contains, among others, the following covenants:
Limitation on Incurrence of Additional
Indebtedness. The New Senior Subordinated Notes Indenture
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will provide that neither the Consolidated Company nor any
Subsidiary will, directly or indirectly, create, incur,
assume, guarantee, acquire or become liable, contingently or
otherwise, or otherwise become responsible for (collectively
"incur") any Indebtedness (other than Permitted Indebted-
ness). Notwithstanding the foregoing limitation, the Con-
solidated Company may incur Indebtedness if, on the date of
the incurrence of such Indebtedness, the Consolidated Fixed
Charge Coverage Ratio of the Consolidated Company is greater
than 2.5 to 1.0, which Indebtedness may be guaranteed by a
Subsidiary of the Consolidated Company; provided that such
guarantee is issued by such Subsidiary in compliance with
the "Limitation of Guarantees by Subsidiaries" covenant.
Limitation on Restricted Payments. The New Senior
Subordinated Notes Indenture will provide that the Consoli-
dated Company will not, and will cause each of its Subsid-
iaries not to, directly or indirectly, (a) declare or pay
any dividend or make any distribution (other than dividends
or distributions payable in Qualified Capital Stock of the
Consolidated Company) on shares of the Capital Stock of the
Consolidated Company, (b) purchase, redeem or otherwise
acquire or retire for value any Capital Stock of the
Consolidated Company or any warrants, rights or options to
acquire shares of any class of such Capital Stock, other
than the exchange of such Capital Stock or any warrants,
rights or options to acquire shares of any class of such
Capital Stock for Qualified Capital Stock or warrants,
rights or options to acquire Qualified Capital Stock, (c)
make any principal payment on, purchase, defease, redeem,
prepay, decrease (other than a decrease in the original
principal amount of the New Junior Subordinated Notes
pursuant to Section 9.3 of the Acquisition Agreement or
otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Indebtedness of the Consolidated
Company or its Subsidiaries that is subordinate or junior in
right of payment to the New Senior Subordinated Notes or (d)
make any Investment (other than Permitted Investments) (each
of the foregoing prohibited actions contained in clauses
(a), (b), (c) and (d) being referred to as a "Restricted
Payment"), if at the time of such Restricted Payment or
immediately after giving effect thereto, (i) a Default or an
Event of Default has occurred and is continuing, (ii) the
Consolidated Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness)
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in compliance with the "Limitation on Incurrence of
Additional Indebtedness" covenant or (iii) the aggregate
amount of Restricted Payments made subsequent to the Issue
Date (the amount expended for such purposes, if other than
in cash, being the fair market value of such property as
determined by the Board of Directors of the Consolidated
Company in good faith) exceeds the sum of: (x) 50.0% of the
cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100.0% of
such loss) of the Consolidated Company earned subsequent to
the Issue Date and prior to the date the Restricted Payment
occurs (treating such period as a single accounting period);
plus (y) 100.0% of the aggregate net proceeds, including the
fair market value of property other than cash as determined
by the Board of Directors of the Consolidated Company in
good faith, received by the Consolidated Company from any
Person (other than a Subsidiary of the Consolidated Company)
from the issuance and sale subsequent to the Issue Date of
Qualified Capital Stock of the Consolidated Company
(excluding (A) Qualified Capital Stock made as a
distribution on any Capital Stock or as interest on any
Indebtedness and (B) any net proceeds from issuances and
sales financed directly or indirectly using funds borrowed
from the Consolidated Company or any Subsidiary of the
Consolidated Company, until and to the extent such borrowing
is repaid, but including the proceeds from the issuance and
sale of any security convertible into or exchangeable for
Qualified Capital Stock to the extent such securities are so
converted or exchanged and further including any proceeds
received by the Consolidated Company upon the conversion or
exchange of any security convertible into or exchangeable
for Qualified Capital Stock).
Notwithstanding the foregoing, these provisions
will not prohibit: (1) the payment of any dividend or mak-
ing 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 acquisition of
Capital Stock or warrants, options or other rights to
acquire Capital Stock (but excluding any Indebtedness that
is convertible into, or exchangeable for, Capital Stock)
through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the
Consolidated Company) of shares of Qualified Capital Stock
or warrants, options or other rights to acquire Qualified
Capital Stock; (3) the acquisition of Indebtedness of the
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Consolidated Company that is subordinate or junior in right
of payment to the New Senior Subordinated Notes, either (i)
solely in exchange for shares of Qualified Capital Stock (or
warrants, rights or options to acquire Qualified Capital
Stock) or Indebtedness of the Consolidated Company which is
subordinate or junior in right of payment to the New Senior
Subordinated Notes, at least to the extent that the Indebt-
edness being acquired is subordinated to the New Senior
Subordinated Notes and has a Weighted Average Life to
Maturity no less than that of the Indebtedness being
acquired or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a
Subsidiary of the Consolidated Company) of shares of
Qualified Capital Stock or warrants, rights or options to
acquire Qualified Capital Stock or Indebtedness of the
Consolidated Company which is subordinate or junior in right
of payment to the New Senior Subordinated Notes, at least to
the extent that the Indebtedness being acquired is
subordinated to the New Senior Subordinated Notes and has a
Weighted Average Life to Maturity no less than that of the
Indebtedness being acquired; (4) payments by the Consoli-
dated Company to Stroh Holding pursuant to the Tax Sharing
Agreement; (5) payments made pursuant to any merger,
consolidation or sale of assets effected in accordance with
the covenant captioned "When Company May Merge, Etc."; pro-
vided, that no such payment may be made pursuant to this
clause (5) unless, after giving effect to such transaction,
the Consolidated Fixed Charge Coverage Ratio of the Consoli-
dated Company would be greater than 3.5 to 1.0; (6) the
purchase of the New Warrants in accordance with the terms
thereof and the New Warrant Agreement as such terms exist on
the Issue Date; (7) the mandatory prepayment of the New
Junior Subordinated Notes in accordance with the terms
thereof and the New Junior Subordinated Notes Indenture as
such terms exist on the Issue Date; and (8) the payment of
dividends or making of distributions by the Consolidated
Company to its shareholders in an aggregate amount not to
exceed $7.0 million in any fiscal year, provided that in the
case of clauses (5), (6), (7) and (8), no Default or Event
of Default shall have occurred or be continuing at the time
of such payment or as a result thereof.
In calculating the aggregate amount of Restricted
Payments made subsequent to the Issue Date for purposes of
this covenant, amounts expended pursuant to clauses (1),
(2), (3) (to the extent Indebtedness of the Consolidated
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Company subordinate or junior in right of payment to the New
Senior Subordinated Notes is acquired in exchange for or
through the application of net proceeds from the sale of
Qualified Capital Stock (or warrants, options or other
rights to acquire Qualified Capital Stock)), (5), (6), (7)
and (8) shall be included in such calculation.
Change of Control. In the event of a change of
control, the Consolidated Company shall be obligated to make
an offer to repurchase all outstanding New Senior
Subordinated Notes pursuant to the offer described in
paragraph (b) below (the "Change of Control Offer") at a
purchase price equal to 100.0% of the principal amount
thereof plus accrued interest, if any, to the date of
repurchase. Prior to the mailing of the notice referred to
below, but in any event within 30 days following the date on
which a Change of Control occurs, the Consolidated Company
covenants to (i) repay in full all Indebtedness under the
New Credit Agreement (and terminate all commitments
thereunder) or offer to repay in full all such Indebtedness
(and terminate all such commitments) and to repay the
Indebtedness owed to (and terminate the commitments of) each
lender which has accepted such offer or (ii) obtain the
requisite consents under the New Credit Agreement to permit
the repurchase of the New Senior Subordinated Notes as
provided below. The Consolidated Company will first comply
with the covenant in the preceding sentence before it shall
be required to repurchase New Senior Subordinated Notes
pursuant to the provisions described in this covenant;
provided that the Consolidated Company's failure to comply
with such covenant shall constitute an Event of Default
under the covenant default provision and not under the
payment default provision.
Within 30 days following the date upon which a
Change of Control occurs (the "Change of Control Date"), the
Consolidated Company will send, by first class mail, a
notice to each Holder of New Senior Subordinated Notes as of
the Change of Control Date, which notice will govern the
Change of Control Offer. Such notice will specify, among
other things, the purchase price (including the amount of
accrued interest, if any) and the purchase date (which shall
be no earlier than 30 days nor later than 45 days from the
date such notice is mailed, other than as may be required by
law) and will otherwise comply with the procedures set forth
in the New Senior Subordinated Notes Indenture. All New
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Senior Subordinated Notes validly tendered and not withdrawn
will be accepted for payment.
The Consolidated Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in
connection with the purchase of the New Senior subordinated
Notes pursuant to a Change of Control Offer.
Limitation on Asset Sales. The New Senior Sub-
ordinated Notes Indenture will provide that the Consolidated
Company will not, and will not permit any of its Subsid-
iaries to, consummate an Asset Sale unless (i) the Consoli-
dated Company or the applicable Subsidiary, as applicable,
receives consideration at the time of such Asset Sale at
least equal to the fair market value of the assets sold or
otherwise disposed of (as determined in good faith by
management of the Consolidated Company or, if such Asset
Sale involves consideration in excess of $10.0 million by
the Board of Directors of the Company, as evidenced by a
board resolution), (ii) with respect to any Asset Sale other
than a Non-Cash Asset Sale, at least 85.0% of the
consideration received by the Consolidated Company or the
Subsidiary, as applicable, from such Asset Sale is cash or
Cash Equivalents and is received at the time of such
disposition and (iii) upon the consummation of an Asset
Sale, the Consolidated Company either (A) applies or causes
such Subsidiary to apply, such Net Cash Proceeds of such
Asset Sale with 180 days of receipt thereof, to repay any
Senior Debt (and, to the extent such Senior Debt relates to
a revolving credit or similar facility, to obtain a
corresponding reduction in the commitments thereunder), (B)
commits or causes such Subsidiary to commit such Net Cash
Proceeds, within 180 days of receipt thereof, and applies or
causes such Subsidiary to apply such Net Cash Proceeds,
within 360 days of receipt thereof, to reinvest in
Productive Assets or to repay Senior Debt (and, to the
extent such Senior Debt relates to a revolving credit or
similar facility, to obtain a corresponding reduction in the
commitments thereunder) or (C) to purchase New Senior
Subordinated Notes tendered to the Consolidated Company for
purchase at a price equal to 100.0% of the principal amount
thereof plus accrued interest thereon to the date of
purchase pursuant to an offer to purchase made by the
Consolidated Company as set forth below (a "Net Proceeds
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Offer"); provided, that if at any time any non-cash
consideration received by the Consolidated Company or any
Subsidiary of the Consolidated Company, as applicable, in
connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash, then such conversion or
disposition will be deemed to constitute an Asset Sale under
the New Senior Subordinated Notes Indenture and the Net Cash
Proceeds thereof shall be applied in accordance with clause
(iii) above; and provided, further, that the Consolidated
Company may defer making a Net Proceeds Offer until the
aggregate Net Cash Proceeds from Asset Sales to be applied
equals or exceeds $10.0 million.
Subject to the deferral right contained in the
final proviso of the next preceding paragraph, each notice
of a Net Proceeds Offer will be mailed or caused to be
mailed, by first class mail, by the Consolidated Company not
more than 180 days (or 360 days in the event that the
Consolidated Company or a Subsidiary of the Consolidated
Company commits to apply such proceeds in accordance with
clause (iii)(B) above and does not so apply such proceeds in
compliance with such clause) after the relevant Asset Sale
to all Holders at their last registered addresses as of a
date within 15 days of the mailing of such notice, with a
copy to the Senior Trustee. Such notice will specify, among
other things, the purchase price (including the amount of
accrued interest) and the purchase date (which will be no
earlier than 30 days nor later than 45 days from the date
such notice is mailed, except as otherwise required by law)
and will otherwise comply with the procedures set forth in
the New Senior Subordinated Notes Indenture. Upon receiving
notice of the Net Proceeds Offer, holders of New Senior
Subordinated Notes may elect to tender their New Senior
Subordinated Notes in whole or in part in integral multiples
of $1,000. All New Senior Subordinated Notes validly
tendered will be accepted for payment, except that if the
aggregate principal amount of New Senior Securities tendered
in a Net Proceeds Offer plus accrued interest at the
expiration of such offer exceeds the aggregate amount of the
Net Proceeds Offer, the Consolidated Company will select the
New Senior Subordinated Notes to be purchased on a pro rata
basis. To the extent that the aggregate principal amount of
New Senior Subordinated Notes validly tendered pursuant to
any Net Proceeds Offer is less than the amount of Net Cash
Proceeds subject to such Net Proceeds Offer, the
Consolidated Company may use any remaining portion of such
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Net Cash Proceeds not required to fund the repurchase of
tendered New Senior Subordinated Notes for general corporate
purposes. Upon the closing of any Net Proceeds Offer, the
amount of Net Cash Proceeds subject to any future Net
Proceeds Offer from the Asset Sales giving rise to such Net
Cash Proceeds shall be deemed to be zero.
The Consolidated Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in
connection with the purchase of New Senior Subordinated
Notes pursuant to a Net Proceeds Offer.
Limitations on Transactions with Affiliates. The
New Senior Subordinated Notes Indenture will provide that
neither the Consolidated Company nor any of its Subsidiaries
will, directly or indirectly, enter into or permit to exist
any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the
rendering of any service) with or for the benefit of any of
its Affiliates (other than transactions between the Consoli-
dated Company and a Wholly-owned Subsidiary of the Consoli-
dated Company or among Wholly-owned Subsidiaries of the Con-
solidated Company) (an "Affiliate Transaction"), other than
Affiliate Transactions on terms that are not less favorable
than those that might reasonably have been obtained in a
comparable transaction on an arm's-length basis from a Per-
son that is not an Affiliate; provided, that for a transac-
tion or series of related transactions involving value of
$1.0 million or more, such determination will be made in
good faith by a majority of the members of the Board of
Directors of the Consolidated Company and by a majority of
the disinterested members, if any, of the Board of Directors
of the Consolidated Company and evidenced by a board
resolution; and provided, further, that for a transaction or
series of related transactions involving value of $10.0
million or more, the Board of Directors of the Consolidated
Company will have received an opinion from a nationally
recognized investment banking firm that such Affiliate
Transaction is fair, from a financial point of view, to the
Consolidated Company and such Subsidiary. The foregoing
restrictions will not apply to reasonable and customary
directors' fees, indemnification and similar arrangements
and payments thereunder; or to any obligations of the
Consolidated Company pursuant to any Affiliate Lease, the
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Tax Sharing Agreement, any employment agreement with an
officer of the Consolidated Company as in effect on the
Issue Date or any transaction with a joint venture or
partnership which the Consolidated Company or any Subsidiary
has established or establishes after the Issue Date with one
or more Persons which are not Affiliates of the Consolidated
Company.
Limitation on Dividend and Other Payment Restric-
tions Affecting Subsidiaries. The New Senior Subordinated
Notes Indenture will provide that the Consolidated Company
will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or permit
to exist or become effective any encumbrance or restriction
on the ability of any Subsidiary to (a) pay dividends or
make any other distributions on its Capital Stock; (b) make
loans or advances or to pay any Indebtedness or other obli-
gation owed to the Consolidated Company or any of its Sub-
sidiaries; or (c) transfer any of its property or assets to
the Consolidated Company, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable
law, (2) the New Senior Subordinated Notes Indenture, (3)
customary non-assignment provisions of any lease governing a
leasehold interest of the Consolidated Company or any Sub-
sidiary, (4) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other
than the Person or the property or assets of the Person, so
acquired, (5) agreements existing on the Issue Date (includ-
ing, without limitation, the New Credit Agreement) as such
agreements are from time to time in effect; provided, that
any amendments or modifications of such agreements which
affect the encumbrances or restrictions of the types subject
to this covenant shall not result in such encumbrances or
restrictions being less favorable to the Consolidated Com-
pany in any material respect, as determined in good faith by
the Board of Directors of the Consolidated Company, than the
provisions as in effect before giving effect to the respec-
tive amendment or modification, (6) an agreement effecting a
refinancing, replacement or substitution of Indebtedness
issued, assumed or incurred pursuant to an agreement re-
ferred to in clause (2), (4) or (5) above or any other
agreement evidencing Indebtedness permitted under the Inden-
ture; provided, that the provisions relating to such encum-
brance or restriction contained in any such refinancing, re-
placement or substitution agreement or any such other agree-
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ment are not less favorable to the Consolidated Company in
any material respect as determined in good faith by the
Board of Directors of the Consolidated Company than the pro-
visions relating to such encumbrance or restriction con-
tained in agreements referred to in such clause (2), (4),
(5) or (7) any holder of a Lien permitted under the New
Senior Subordinated Notes Indenture may restrict the
transfer of the asset or assets subject thereto.
Prohibition on Incurrence of Senior Subordinated
Debt and Limitation on Senior Unsecured Debt. The New
Senior Subordinated Notes Indenture will prohibit the
Consolidated Company from incurring or suffering to exist
any Indebtedness that is senior in right of payment to the
New Senior Subordinated Notes and is expressly subordinate
in right of payment to any other Indebtedness of the
Consolidated Company. The New Senior Subordinated Notes
Indenture will also prohibit the Consolidated Company from
incurring any unsecured indebtedness that is senior to the
New Senior Subordinated Notes, which, together with all
other unsecured Indebtedness of the Consolidated Company
that is senior to the New Senior Subordinated Notes
outstanding on the date such additional unsecured
Indebtedness is incurred, would constitute a "substantial
amount of unsecured indebtedness" within the meaning of
Section 279(b)(2)(B) of the Tax Code (the "Tax Code") and
the regulations promulgated thereunder, including any
successor provisions or regulations, unless the Consolidated
Company receives a favorable determination from the IRS
that, in the absence of this covenant, the New Senior
Subordinated Notes do not constitute "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the
Tax Code.
Limitation on Preferred Stock of Subsidiaries.
The New Senior Subordinated Notes Indenture will provide
that the Consolidated Company will not permit any of its
Subsidiaries to issue any Preferred Stock (other than to the
Consolidated Company or to a Wholly-owned Subsidiary of the
Consolidated Company) or permit any Person (other than the
Consolidated Company or a Wholly-owned Subsidiary of the
Consolidated Company) to own any Preferred Stock of a
Subsidiary (other than Acquired Preferred Stock); provided
that at the time the issuer of such Acquired Preferred Stock
becomes a Subsidiary of the Consolidated Company or merges
with the Consolidated Company or any of its Subsidiaries,
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and after giving effect to such transaction, the
Consolidated Company shall be able to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness)
in compliance with the covenant captioned "Limitation on
Incurrence of Additional Indebtedness."
Limitation on Liens. The New Senior Subordinated
Notes Indenture will provide that neither the Consolidated
Company nor any of its Subsidiaries shall create, incur,
assume or suffer to exist any Liens upon any of their
respective assets, except for (a) Permitted Liens, (b) Liens
to secure Senior Debt or guarantees thereof permitted in the
New Senior Subordinated Notes Indenture; provided that in
the case of a Lien upon assets of a Subsidiary of the
Consolidated Company, the Consolidated Company, to the
extent applicable, complies with the provisions of the
covenant captioned "Limitation of Guarantees by
Subsidiaries," (c) Liens existing on the Issue Date, (d)
Liens in favor of the Senior Trustee and (e) any Lien to
secure the replacement, refunding, extension or renewal, in
whole or in part, of any Indebtedness described in the
foregoing clauses; provided that, to the extent any such
clause limits the amount secured or the assets, no extension
or renewal will increase the assets subject to such Liens or
the amount secured thereby beyond the assets or amounts
contained in such clauses.
Limitation of Guarantees by Subsidiaries. The New
Senior Subordinated Notes Indenture will provide that the
Consolidated Company will not permit any Subsidiary,
directly or indirectly, by way of the pledge of an inter-
company note or otherwise, to assume, guarantee or in any
other manner become liable with respect to any Indebtedness
of the Consolidated Company or any other Subsidiary other
than Indebtedness under the New Credit Agreement or
Indebtedness incurred pursuant to clause (vi) of the
definition of Permitted Indebtedness or Interest Swap
Obligations incurred pursuant to clause (v) of the
definition of Permitted Indebtedness unless (i) such
Subsidiary simultaneously executes and delivers a
supplemental indenture to the New Senior Subordinated Notes
Indenture, providing a guarantee of payment of the New
Senior Subordinated Notes by such Subsidiary in the form
required by the New Senior Subordinated Notes Indenture (the
"Guarantee") and (ii) (a) if any such assumption, guarantee
or other liability of such Subsidiary is provided in respect
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of Senior Debt, the guarantee or other instrument provided
by such Subsidiary in respect of such Senior Debt may be
superior to the Guarantee pursuant to subordination
provisions no less favorable to the holders of the New
Senior Subordinated Notes than those contained in the New
Senior Subordinated Notes Indenture and (b) if such assump-
tion, guarantee or other liability of such Subsidiary is
provided in respect of Indebtedness that is expressly sub-
ordinated to the New Senior Subordinated Notes, the guaran-
tee or other instrument provided by such Subsidiary in
respect of such subordinated Indebtedness shall be subordi-
nated to the Guarantee pursuant to subordination provisions
not less favorable to the holders of the New Senior
Subordinated Notes than those contained in the New Senior
Subordinated Notes Indenture.
Notwithstanding the foregoing, any such Guarantee
by a Subsidiary of the New Senior Subordinated Notes shall
provide by its terms upon the sale or other disposition of
all or substantially all of the assets of such Subsidiary,
by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the Capital Stock of such
Subsidiary, to an entity which is not a Subsidiary of the
Consolidated Company and which sale or disposition is
otherwise in compliance with the terms of the New Senior
Subordinated Notes Indenture, then such Subsidiary (in the
event of a sale or other disposition, by way of a merger,
consolidation or otherwise, of all of the Capital Stock of
such Subsidiary) or the corporation acquiring the property
(in the event of a sale or other disposition of all or
substantially all of the assets of such Subsidiary) shall be
released from and relieved of any Obligations under such
Guarantee without any further action required on the part of
the Senior Trustee or any Holder; provided, that any such
termination shall occur only to the extent that all
Obligations of such Subsidiary under all of its guarantees
of, and under all of its pledges of assets or other security
interests which secure, any other Indebtedness of the
Consolidated Company shall also terminate upon such release,
sale or transfer, provided, further, that in the event of an
Asset Sale, the Net Cash Proceeds of such sale or other
disposition are applied in accordance with the "Limitation
on Asset Sales" covenant.
When Company May Merge, Etc. The New Senior
Subordinated Notes Indenture will provide that the
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Consolidated Company may not, in a single transaction or
through a series of related transactions, consolidate with
or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of
its assets to, another Person or adopt a plan of liquidation
unless: (1) either (A) the Consolidated Company is the
survivor of such merger or consolidation or (B) the
surviving or transferee Person is a corporation, partnership
or trust organized and existing under the laws of the United
States, any state thereof or the District of Columbia and
such surviving or transferee Person expressly assumes by
supplemental indenture all the obligations of the
Consolidated Company under the New Senior Subordinated Notes
and the New Senior Subordinated Notes Indenture; (2) except
in the case of a transaction or transactions entered into to
effect a change in the state in which the Consolidated
Company is incorporated, (A) immediately after giving effect
to such transaction and the use of the proceeds therefrom
(on a pro forma basis, including, without limitation, any
Indebtedness incurred or anticipated to be incurred in
connection with such transaction), the Consolidated Company
or the surviving or transferee Person is able to incur $1.00
of additional indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness" covenant and (B)
immediately after giving effect to such transaction
(including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with the
transaction) no Default or Event of Default has occurred and
is continuing; and (3) the Consolidated Company has
delivered to the Senior Trustee an Officers' Certificate and
Opinion of Counsel, each stating that such consolidation,
merger or transfer complies with the New Senior Subordinated
Notes Indenture, that the surviving or transferee Person
agrees by supplemental indenture to be bound thereby, and
that all conditions precedent in the New Senior Subordinated
Notes Indenture relating to such transaction have been
satisfied (and the Senior Trustee shall be entitled to
conclusively rely upon such Officers' Certificate and
Opinion of Counsel). For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of related transactions) of all
or substantially all of the properties and assets of one or
more Subsidiaries, the Capital Stock of which constitutes
all or substantially all of the properties and assets of the
Consolidated Company, will be deemed to be the transfer of
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all or substantially all of the properties and assets of the
Consolidated Company.
Investment Company. The New Senior Subordinated
Notes Indenture will provide that the Consolidated Company
will not become an investment company subject to
registration under the Investment Company Act of 1940, as
amended.
Limitation on Payments for Consents. The New
Senior Subordinated Notes Indenture will provide that
neither the Consolidated Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise,
to any holder of any New Senior Subordinated Notes for or as
an inducement to any consent, waiver or amendment of any of
the terms or provisions of the New Senior Subordinated Notes
Indenture or the New Senior Subordinated Notes unless such
consideration is offered to be paid or agreed to be paid to
all holders of the New Senior Subordinated Notes which so
consent, waiver or agree to amend in the time frame set
forth in solicitation documents relating to such consent,
waiver or agreement.
Representations
In the New Senior Subordinated Notes Indenture,
the Consolidated Company will make certain representations
that the New Senior Subordinated Notes Indenture has been
duly authorized, executed and delivered by the Consolidated
Company and, assuming due authorization, execution and
delivery hereof by the Senior Trustee, constitutes a valid
and legally binding obligation of the Consolidated Company
enforceable against the Consolidated Company in accordance
with its terms, and the New Senior Subordinated Notes have
been duly authorized, executed and issued by the
Consolidated Company and, assuming due authentication
thereof by the Senior Trustee pursuant hereto, constitute
valid and legally binding obligations of the Consolidated
Company enforceable against the Consolidated Company in
accordance with their terms and entitled to the benefits
hereof; except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors rights
generally or by general equitable principles (regardless of
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whether such enforceability is considered in a proceeding in
equity or at law).
Events of Default
The following events will be defined in the New
Senior Subordinated Notes Indenture as "Events of Default":
(i) the failure to pay interest on the New Senior Subordi-
nated Notes when the same becomes due and payable and the
Default continues for a period of 30 days (whether or not
such payment is prohibited by the subordination provisions
of the New Senior Subordinated Notes Indenture); (ii) the
failure to pay the principal on the New Senior Subordinated
Notes, when such principal becomes due and payable, at
maturity, upon redemption or otherwise (whether or not such
payment is prohibited by the subordination provisions of the
New Senior Subordinated Indenture); (iii) a default in the
observance or performance of any other covenant or agreement
contained in the New Senior Subordinated Notes or the New
Senior Subordinated Notes Indenture which default continues
for a period of 30 days after the Consolidated Company re-
ceives written notice thereof specifying the default from
the Senior Trustee or the holders of at least 25.0% in
aggregate principal amount of outstanding New Senior
Subordinated Notes; (iv) the failure to pay at the final
stated maturity (giving effect to any extensions thereof)
the principal amount of any Indebtedness of the Consolidated
Company or any Subsidiary of the Consolidated Company, or
the acceleration of the final stated maturity of any such
Indebtedness, if the aggregate principal amount of such
Indebtedness, together with the aggregate principal amount
of any other such Indebtedness in default for failure to pay
principal at the final stated maturity or which has been
accelerated, aggregates $10.0 million or more at any time,
in each case after a 10-day period during which such default
shall not have been cured or such acceleration rescinded;
(v) one or more judgments in an aggregate amount in excess
of $10.0 million (which are not covered by insurance as to
which the insurer has not disclaimed coverage) being
rendered against the Consolidated Company or any of its
Significant Subsidiaries and such judgments remain
undischarged or unstayed for a period of 60 days after such
judgment or judgments become final and non-appealable; and
(vi) certain events of bankruptcy affecting the Consolidated
Company or any of its Significant Subsidiaries.
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Upon the happening of any Event of Default (other
than an Event of Default with respect to bankruptcy
proceedings relating to the Consolidated Company) specified
in the New Senior Subordinated Notes Indenture, the Senior
Trustee may, by notice to the Consolidated Company, or the
Holders of at least 25.0% in aggregate principal amount of
the New Senior Subordinated Notes then outstanding may, by
written notice to the Consolidated Company and the Senior
Trustee, and the Senior Trustee will, upon the request of
such Holders, declare the aggregate principal amount of the
New Senior Subordinated Notes outstanding, together with
accrued but unpaid interest, if any, thereon to be due and
payable by notice in writing to the Consolidated Company and
the Senior Trustee specifying the respective Event of
Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same (i) shall become
immediately due and payable or (ii) if there are any amounts
outstanding under the New Credit Agreement, will become due
and payable upon the first to occur of any acceleration
under the New Credit Agreement or 5 Business Days after
receipt by the Consolidated Company and the Representative
under the New Credit Agreement of such Acceleration Notice
(unless all Events of Default specified in such Acceleration
Notice have been cured or waived). If an Event of Default
with respect to bankruptcy proceedings relating to the Con-
solidated Company occurs and is continuing, then such amount
will ipso facto become and be immediately due and payable
without any declaration or other act on the part of the
Senior Trustee or any holder of New Senior Subordinated
Notes.
The New Senior Subordinated Notes Indenture will
provide that the holders of a majority in principal amount
of the New Senior Subordinated Notes then outstanding (by
notice to the Senior Trustee) may rescind and cancel an
acceleration and its consequences if (i) the rescission
would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default
have been cured or waived, except non-payment of the
principal or interest on the New Senior Subordinated Notes
that has become due solely by such declaration of
acceleration, (iii) the Consolidated Company has paid the
Senior Trustee its reasonable compensation and reimbursed
the Senior Trustee for its expenses, disbursements and
advances, (iv) in the event of the cure or waiver of a
Default or Event of Default of the type described in clause
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(vi) of the description above of Events of Default, the
Senior Trustee has received an Officers' Certificate and an
Opinion of Counsel that such Default or Event of Default has
been cured or waived and (v) to the extent the payment of
such interest is lawful, interest (at the same rate
specified in the New Senior Subordinated Notes) on overdue
installments of interests and overdue payments of principal,
which has become due otherwise than by such declaration of
acceleration, has been paid. The holders of a majority in
principal amount of the New Senior Subordinated Notes may
waive any existing Default or Event of Default under the New
Senior Subordinated Notes Indenture, and its consequences,
except a Default in the payment of the principal of or in-
terest on any New Senior Subordinated Notes. The Consoli-
dated Company is required to deliver to the Senior Trustee,
within 120 days after the end of the Consolidated Company's
fiscal year, a certificate indicating whether the signing
officers know of any Default or Event of Default that
occurred during the previous year and whether the Consoli-
dated Company has complied with its obligations under the
New Senior Subordinated Notes Indenture. In addition, the
Consolidated Company will be required to notify the Trustee
of the occurrence and continuation of any Default or Event
of Default within five business days after the Consolidated
Company becomes aware of the same.
Subject to the provisions of the New Senior
Subordinated Notes Indenture relating to the duties of the
Senior Trustee in case an Event of Default thereunder should
occur and be continuing, the Senior Trustee will be under no
obligation to exercise any of the rights or powers under the
New Senior Subordinated Notes Indenture at the request or
direction of any of the holders of the New Senior Subordi-
nated Notes unless such holders have offered to the Senior
Trustee reasonable indemnity or security against any loss,
liability or expense. Subject to such provision for secu-
rity or indemnification and certain limitations contained in
the New Senior Subordinated Notes Indenture, the holders of
a majority in principal amount of the outstanding New Senior
Subordinated Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy avail-
able to the Senior Trustee or exercising any trust or power
conferred on the Senior Trustee.
Satisfaction and Discharge of Indenture; Defeasance
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The New Senior Subordinated Notes Indenture will
terminate when all outstanding New Senior Subordinated Notes
have been delivered to the Senior Trustee for cancellation
and the Consolidated Company has paid all sums payable by it
thereunder. Subject to certain conditions, the Consolidated
Company, at its option (i) will be discharged from any and
all obligations with respect to the New Senior Subordinated
Notes (except for certain obligations of the Consolidated
Company to register the transfer or exchange of such New
Senior Subordinated Notes, replace stolen, lost or mutilated
New Senior Subordinated Notes, maintain paying agencies and
hold moneys for payment in trust) or (ii) need not comply
with certain of the restrictive covenants with respect to
the New Senior Subordinated Notes Indenture, if the
Consolidated Company deposits with the Senior Trustee, in
trust, U.S. Legal Tender or U.S. Government Obligations or a
combination thereof which, through the payment of interest
thereon and principal in respect thereof in accordance with
their terms, will be sufficient to pay all the principal of
and interest on the New Senior Subordinated Notes on the
dates such payments are due in accordance with the terms of
such New Senior Subordinated Notes as well as the Trustee's
fees and expenses. To exercise either such option, the
Consolidated Company is required to deliver to the Senior
Trustee (A) an Opinion of Counsel or a private letter ruling
issued to the Consolidated Company by the IRS to the effect
that the holders of the New Senior Subordinated Notes will
not recognize income, gain or loss for federal income tax
purposes as a result of the deposit and related defeasance
and will be subject to federal income tax on the same amount
and the same manner and at the same times as would have been
the case if such option had not been exercised and, in the
case of an Opinion of Counsel furnished in connection with a
discharge pursuant to clause (i) above, accompanied by a
private letter ruling issued to the Consolidated Company by
the IRS to such effect, (B) subject to certain
qualifications, an Opinion of Counsel to the effect that,
(i) the funds will not be subject to any rights of any other
holders of Indebtedness of the Company, and (ii) the funds
so deposited will not be subject to avoidance under
applicable bankruptcy law, and (C) an Officers' Certificate
and an Opinion of Counsel to the effect that all conditions
precedent to the defeasance have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel
required by clause (A) above need not be delivered if all
New Senior Subordinated Notes not theretofore delivered to
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the Senior Trustee for cancellation (i) have become due and
payable, (ii) will become due and payable on the Maturity
Date within one year, or (iii) are to be called for
redemption within one year under arrangements satisfactory
to the Senior Trustee for the giving of notice of redemption
by the Senior Trustee in the name, and at the expense of,
the Consolidated Company.
Reports to Holders
The Consolidated Company will file with the Senior
Trustee and provide to the holders of the New Senior Sub-
ordinated Notes, within 15 days after it files them with the
Securities and Exchange Commission ("SEC"), copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the
Consolidated Company files with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). In the event that the Con-
solidated Company is at any time not subject to the report-
ing requirements of the Exchange Act, it will provide to the
Senior Trustee and supply each holder of New Senior Subordi-
nated Notes without cost, within 15 days after it would have
been required to file such information with the SEC
consolidated financial statements, comparable to those which
would have been required to appear in annual or quarterly
reports, together with a management's discussion and
analysis of financial condition and results of operations
for the period covered by such financial statements;
provided that such management's discussion and analysis
shall only be provided to the holders if it is then required
to be furnished to the parties to the New Credit Agreement;
and provided, further, that copies of any such management's
discussion and analysis furnished to the holders of the New
Senior Subordinated Notes pursuant to the New Senior
Subordinated Notes Indenture may omit any information which
the Consolidated Company deems to be confidential.
Modification of the New Senior Subordinated Notes Indenture
From time to time, the Consolidated Company and
the Senior Trustee, together, without the consent of the
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holders of the New Senior Subordinated Notes, may amend or
supplement the New Senior Subordinated Notes Indenture for
certain specified purposes, including curing ambiguities,
defects or inconsistencies, so long as such change does not
adversely affect the rights of any of the holders in any
material respect. Other modifications and amendments of the
New Senior Subordinated Notes Indenture may be made with the
consent of the holders of a majority in principal amount of
the then outstanding New Senior Subordinated Notes, except
that, without the consent of each holder of the New Senior
Subordinated Notes affected thereby, no amendment may,
directly or indirectly (i) reduce the amount of New Senior
Subordinated 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 New
Senior Subordinated Notes; (iii) reduce the principal of or
change the fixed maturity of any New Senior Subordinated
Notes, or change the date on which any New Senior
Subordinated Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price
therefor; (iv) make any New Senior Subordinated Notes
payable in money other than that stated in the New Senior
Subordinated Notes; (v) make any change in provisions of the
New Senior Subordinated Notes Indenture protecting the right
of each holder of a New Senior Subordinated Note to receive
payment of principal of and interest on such New Senior
Subordinated 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 New Senior Subordinated
Notes to waive Defaults or Events of Default, other than
ones with respect to the payment of principal of or interest
on the New Senior Subordinated Notes, or relating to certain
amendments of the New Senior Subordinated Notes Indenture;
(vi) after the Consolidated Company's obligation to purchase
the New Senior Subordinated Notes arises thereunder, amend,
modify or change the obligation of the Consolidated Company
to make or consummate a Change of Control Offer or a Net
Proceeds Offer or waive any default in the performance
thereof or modify any of the provisions or definitions with
respect to any such offers; or (vii) modify the
subordination provisions of the New Senior Subordinated
Notes Indenture to adversely affect the holders of New
Senior Subordinated Notes.
Certain Definitions in the New Senior Subordinated Notes
Indenture
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Set forth below is a summary of certain of the
defined terms used in the New Senior Subordinated Notes
Indenture. Reference is made to the New Senior Subordinated
Notes Indenture for the full definition of all such terms,
and any other terms used therein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a
Person or any of its Subsidiaries existing at the time such
Person becomes a Subsidiary of the Consolidated Company or
at the time it merges or consolidates with the Consolidated
Company or any of its Subsidiaries or assumed in connection
with the acquisition of assets from such Person and not
incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a
Subsidiary of the Consolidated Company or such acquisition,
merger or consolidation.
"Acquired Preferred Stock" means Preferred Stock
of any Person at the time such Person becomes a Subsidiary
of the Consolidated Company or at the time it merges or
consolidates with the Company or any of its Subsidiaries and
not issued by such Person in connection with, or in antici-
pation or contemplation of, such acquisition, merger or
consolidation.
"Affiliate" means a Person who, directly or
indirectly, through one or more intermediaries controls, or
is controlled by, or is under common control with, the
Consolidated Company. The term "control" means the
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership or voting securities,
by contract or otherwise.
"Affiliate Leases" means the leases by the
Consolidated Company from Holding of office and parking
space at the facility of the Consolidated Company located in
Detroit, Michigan, including the administrative services
contemplated thereunder.
"Asset Acquisition" means (i) an Investment by the
Consolidated Company or any Subsidiary of the Consolidated
Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Consolidated Company or
shall be merged with the Consolidated Company or any Sub-
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sidiary of the Consolidated Company or (ii) the acquisition
by the Consolidated Company or any Subsidiary of the
Consolidated Company 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 (other than operating
leases entered into in the ordinary course of business),
assignment or other transfer for value by the Consolidated
Company or any of its Subsidiaries (including any Sale and
Leaseback Transaction but excluding a pledge of, mortgage or
Lien on, or security interest in, assets or stock by the
Consolidated Company or any of its Subsidiaries) to any
Person other than the Consolidated Company or a Wholly-owned
Subsidiary of the Consolidated Company of (i) any Capital
Stock of any Subsidiary of the Consolidated Company; or (ii)
any other property or assets of the Consolidated Company or
any Subsidiary of the Consolidated Company other than in the
ordinary course of business; provided, that for purposes of
the "Limitation on Asset Sales" covenant, Asset Sales shall
not include (i) a transaction or series of related
transactions for which the Consolidated Company or its
Subsidiaries receive aggregate consideration of less than
$5.0 million or (ii) transactions permitted under the "When
the Consolidated Company May Merge, Etc." covenant.
"Capital Stock" means (i) with respect to any
Person that is a corporation, any and all shares, interest,
participation or other equivalents (however designated) of
capital 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 obligation of such Person to pay rent or other
amounts under a lease to which such Person is a party that
is required to be classified and accounted for as a capital
lease obligation under GAAP and, for purposes of this
definition, the amount of such obligation at any date shall
be the capitalized amount of such obligation at such date,
determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct
obligations issued by, or unconditionally guaranteed by, the
United States Government or issued by any agency thereof and
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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 publish
instrumentality thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either
Standard & Poor's Rating Services or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time
of acquisition, having a rating of at least A-1 from
Standard & Poor's Rating Services or at least P-1 from
Moody's Investors Service, Inc.; (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
or any U.S. branch of a foreign bank having at the date of
acquisition thereof combined capital and surplus of not less
than $200.0 million; (v) repurchase obligations with a term
of not more than seven days for underlying securities of the
types described in clause (i) above entered into with any
bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which
invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means (i) the sale of all or
substantially all of the assets of the Consolidated Company
or Stroh Holding to any Person that is not a Stroh
Affiliate, (ii) Stroh Affiliates shall cease to beneficially
own, directly or indirectly, voting securities of the
Consolidated Company entitled in an election of directors to
exercise more than 50.0% of the voting power thereof on a
fully-diluted basis, or (iii) the merger or consolidation of
the Consolidated Company or Stroh Holding with or into any
Person which results in Stroh Affiliates ceasing to exercise
beneficial ownership of more than 50.0% of the voting
securities of the surviving entity on a fully-diluted basis.
"Commodity Agreement" means any commodity futures
contract, commodity option or other similar agreement or
arrangement entered into by the Company or any of its
subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodi-
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ties actually used in the ordinary course of business of the
Company and its Subsidiaries.
"Consolidated EBITDA" means, with respect to any
Person, for any period, the sum (without duplication) of (i)
Consolidated Net Income and (ii) to the extent Consolidated
Net Income has been reduced thereby, (A) all income taxes of
such Person and its Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income
taxes attributable to extraordinary, unusual or nonsecuring
gains or losses), Consolidated Interest Expense, amortization
expense (including the amortization of financing charges)
and depreciation expense and (B) other deferred non-cash
items other than non-cash interest reducing Consolidated Net
Income less other non-cash items increasing Consolidated Net
Income, all as determined on a consolidated basis for such
Person and its Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means,
with respect to any Person the ratio of Consolidated EBITDA
of such Person during the four full fiscal quarters (the
"Four Quarter Period") ending on or prior to the date of the
transaction giving rise to the need to calculate the
Consolidated Fixed Charge 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 (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary
course of business pursuant to working capital facilities,
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 proceeds thereof), occurred on the first day
of the Four Quarter Period and (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
(including any Person who becomes a Subsidiary as a result
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of any such Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness) at any
time subsequent 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,
assumption or liability for any such Indebtedness or
Acquired Indebtedness and also including any Consolidated
EBITDA associated with such Asset Acquisition) occurred on
the first day of the Four Quarter Period. If such Person or
any of its Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall
give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Subsidiary of such
Person had directly incurred or otherwise assumed such
guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated
Fixed Charge 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; and (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.
"Consolidated Fixed Charges" means, with respect
to any Person for any period, the sum, without duplication
of (i) Consolidated Interest Expenses (before amortization
or write-off of debt issuance costs) and (ii) the amount of
all cash dividend payments made on any series of Preferred
Stock of such Person.
"Consolidated Interest Expense" means, with
respect to any Person for any period, the aggregate of all
cash and non-cash interest expense (excluding any original
issue discount attributable to the issuance of any debt
security as part of or with any other security) with respect
to all outstanding indebtedness of such Person and its
Subsidiaries, including the net costs associated with
Interest Swap Obligations, for such period determined on a
consolidated basis in conformity with GAAP.
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"Consolidated Net Income" of any Person means, for
any period, the aggregate net income (or loss) of such
Person and its Subsidiaries for such period on a consoli-
dated basis, determined in accordance with GAAP; provided,
that there shall be excluded therefrom, without duplication,
(a) gains and losses from Asset Sales (without regard to the
$5,000,000 limitation contained in the definition thereof),
other than gains and losses from the sale of Pete's Brewing
Warrants, or abandonments or reserves relating thereto and
the related tax effects, (b) items classified as extra-
ordinary or nonrecurring gains and losses, and the related
tax effects according to GAAP, (c) the net income or loss of
any Person acquired in a pooling of interests transaction
accrued prior to the date it becomes a Subsidiary of such
Person or is merged or consolidated with such Person or any
Subsidiary, (d) the net income of any Person, other than a
consolidated Subsidiary, in which such first referred to
Person or a consolidated Subsidiary has an interest shall be
included only to the extent of the lesser of (i) any
dividends or distributions actually paid to such first
referred to Person and its consolidated Subsidiaries during
such period and (ii) the net income of such Person (but in
no event less than zero), and the net loss of such Person
shall be included only to the extent of the aggregate
Investment of the first referred to Person or a consolidated
Subsidiary in such Person, and (e) the net income or loss of
any consolidated Subsidiary of such Person shall be excluded
to the extent such Subsidiary is restricted by contract,
operation of law or otherwise from distributing its net
income.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement or other similar agreement
or arrangement designed to protect the Consolidated Company
or any of its Subsidiaries against fluctuation in currency
values.
"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.
"Designated Senior Debt" means (i) Indebtedness
under or in respect of the New Credit Agreement and (ii) any
other Indebtedness constituting Senior Debt which, at the
time of determination, has an aggregate principal amount of
at least $25.0 million and is specifically designated in the
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instrument evidencing such Senior Debt as "Designated Senior
Debt" by the Consolidated Company.
"Disqualified Capital Stock" means any Capital
Stock which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchange-
able), or upon the happening of any event, matures
(excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or
otherwise or is redeemable at the sole option of the holder
thereof (except, in each case, upon the occurrence of a
Change of Control), in whole or in part, on or prior to the
final maturity date of the New Senior Subordinated Notes.
"GAAP" means generally accepted accounting
principles as in effect in the United States of America as
of the Issue Date.
"Indebtedness" means with respect to any Person,
without duplication, any liability of such Person (i) for
borrowed money, (ii) evidenced by bonds, debentures, notes
or other similar instruments, (iii) constituting Capitalized
Lease Obligations of such Person, (iv) incurred 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
arising in the ordinary course of business), (v) all
obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit
transaction, (vi) all Indebtedness of others guaranteed by
such Person, (vii) Interest Swap Obligations, Commodity
Agreements and Currency Agreements and (viii) all Indebted-
ness of any other Person of the type referred to in clauses
(i) through (vii) above which are secured by any Lien on any
property or asset of such first referred to Person, the
amount of such Indebtedness being deemed to be the lesser of
the value of such property or asset or the amount of the
Indebtedness so secured. The amount of Indebtedness of any
Person at any date shall be the outstanding principal amount
of all unconditional obligations described above, as such
amounts would be reflected on a balance sheet prepared in
accordance with GAAP, and the maximum liability at such date
of such Person for any contingent obligations described
above.
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"Interest Swap Obligation" means the obligation of
any Person under any interest rate protection agreement,
interest rate future, interest rate option, interest rate
swap, interest rate cap or other interest rate hedge or
arrangement.
"Investment" means any transfer or delivery of
cash, stock or other property of value in exchange for
Indebtedness, stock or other security or ownership interest
in any Person by way of loan, advance, capital contribution,
guarantee or otherwise. The amount to any non-cash Invest-
ment (other than a Permitted Investment) shall be the fair
market value of such Investment, as determined conclusively
in good faith by management of the Consolidated Company
unless the fair market value of such Investment exceeds $2.0
million, in which case the fair market value shall be
determined conclusively in good faith by the Board of
Directors of the Consolidated Company at the time such
Investment is made.
"Issue Date" means the date of original issuance
of the New Senior Subordinated Notes.
"Lien" means any lien, mortgage, deed of trust,
pledge, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof or any agreement
to give any security interest).
"Maturity Date" means the tenth anniversary of the
Consummation Date.
"Net Cash Proceeds" means, with respect to any
Asset Sale, the proceeds in the form of cash or Cash
Equivalents (including payments in respect of deferred
payment obligations when received by the Consolidated
Company in the form of cash or Cash Equivalents) received by
the Consolidated Company or any of its Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses
and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees
and sales commissions, recording fees, title insurance
premiums, appraisers fees and costs reasonably incurred in
preparation of any asset or property for sale), (b) taxes
paid, accrued or reasonably estimated to be payable as a
result of such Asset Sale (calculated based on the combined
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state, federal and foreign statutory tax rates applicable to
the Consolidated Company or the Subsidiary engaged in such
Asset Sale) and (c) repayment of Indebtedness secured by
assets subject to such Asset Sale; provided, that if the
instrument or agreement governing such Asset Sale requires
the transferor to maintain a portion of the purchase price
in escrow (whether as a reserve for adjustment of the
purchase price or otherwise) or to indemnify the transferee
for specified liabilities in a maximum specified amount, the
portion of the cash or Cash Equivalents that is actually
placed in escrow or segregated and set aside by the
transferor for such indemnification obligation shall not be
deemed to be Net Cash Proceeds until the escrow terminates
or the transferor ceases to segregate and set aside such
funds, in whole or in part, and then only to the extent of
the proceeds released from escrow to the transferor or that
are no longer segregated and set aside by the transferor.
"New Credit Agreement" means the Credit Agreement,
dated on or about the Issue Date among the Consolidated
Company, the lenders party thereto and Morgan Guaranty Trust
Company of New York, as agent, together with the related
documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case
as such agreements may be amended (including, without
limitation, any amendment and restatement thereof),
supplemented or otherwise modified from time to time,
including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including
by way of adding subsidiaries of the Consolidated Company as
additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Non-Cash Asset Sale" means any Asset Sale
involving (i) the brewery facilities of the Consolidated
Company that are idle on the Issue Date or become idle
thereafter, (ii) property or equipment of the Consolidated
Company which is or becomes surplus to the operation of the
business of the Consolidated Company or (iii) assets which
the Consolidated Company transfers to joint ventures or
partnerships in connection with the activities conducted by
such entities as consideration for an equity interest
therein.
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"Obligations" means all obligations for principal,
premium, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under
the documentation governing, or otherwise relating to, any
Indebtedness.
"Permitted Indebtedness" means, without duplica-
tion, (i) the New Senior Subordinated Notes, (ii)
Indebtedness of the Consolidated Company and guarantees
thereof by its Subsidiaries incurred pursuant to the New
Credit Agreement, (iii) the New Junior Subordinated Notes in
an aggregate principal amount not to exceed the original
principal amount thereof, except if increased pursuant to
Section 2.3 of the Acquisition Agreement, (iv) Indebtedness
outstanding on the Issue Date, (v) Commodity Agreements and
Currency Agreements of the Consolidated Company and Interest
Swap Obligations of the Consolidated Company, and, to the
extent such Interest Swap obligations relate, in the
judgment of the Consolidated Company, to Indebtedness under
the New Credit Agreement, guarantees thereof by a Subsidiary
of the Consolidated Company; provided that such Interest
Swap Obligations are entered into, in the judgment of the
Consolidated Company, to protect the Consolidated Company
from fluctuations in interest rates of its outstanding
Indebtedness, (vi) additional Indebtedness of the
Consolidated Company and its Subsidiaries not to exceed
$50.0 million outstanding at any time (which amount may, but
need not, be incurred under the New Credit Agreement), (vii)
Refinancing Indebtedness, (viii) Acquired Indebtedness to
the extent the Consolidated Company could have incurred such
Indebtedness in accordance with the "Limitation on
Incurrence of Additional Indebtedness" covenant, (ix)
Indebtedness owed by the Consolidated Company to any Wholly-
owned Subsidiary which is unsecured and subordinated in
right of payment to the payment and performance of the
Consolidated Company's obligations under the New Senior
Subordinated Notes Indenture and the New Senior Subordinated
Notes, or Indebtedness owed by any Subsidiary to the
Consolidated Company or any Wholly-owned Subsidiary of the
Consolidated Company, (x) guarantees of Indebtedness of
partnerships and joint ventures in which the Consolidated
Company participates in an aggregate principal amount at any
time outstanding not to exceed $10.0 million; and (xi)
letters of credit issued for the account of the Consolidated
Company which support workers' compensation or similar
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obligations of the Consolidated Company which are otherwise
reflected on its balance sheet.
"Permitted Investments" means (i) Investments by
the Consolidated Company to acquire the stock or assets of
any Person (or Indebtedness of such Person acquired in
connection with a transaction in which such Person becomes a
Subsidiary of the Consolidated Company but not incurred in
connection with or anticipation or contemplation of such
transaction) engaged in the beverage business; provided that
if any such Investment or series of related Investments
involves an Investment by the Consolidated Company in excess
of $10.0 million, the Consolidated Company is able, at the
time of such Investment and immediately after giving effect
thereto, to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness"
covenant, (ii) Investments received by the Consolidated
Company or its Subsidiaries as consideration for asset
sales, including (x) Non-Cash Asset Sales, provided that
Investments received from Non-Cash Asset Sales pursuant to
clause (iii) of the definition thereof shall not exceed
12.5% of the total assets of the Consolidated Company at any
time and (y) an Asset Sale if such Asset Sale is effected in
compliance with the "Limitation on Asset Sales" covenant,
(iii) cash and Cash Equivalents, (iv) Investments by the
Consolidated Company or any Wholly-owned Subsidiary of the
Consolidated Company in any Wholly-owned Subsidiary of the
Consolidated Company (whether existing on the Issue Date or
created thereafter) in the ordinary course of business and
Investments in the Consolidated Company by any wholly-owned
Subsidiary in the Consolidated Company, (v) Investments in
securities of trade creditors, wholesalers or customers
received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade
creditors, wholesalers or customers, (vi) Investments in the
capital stock of Pete's Brewing Company received in connec-
tion with the exercise of Pete's Brewing Warrants, (vii)
Investments in McKenzie River Partners pursuant to capital
commitments in existence on the Issue Date and (viii)
additional Investments in an aggregate amount not to exceed
$5.0 million at any time outstanding.
"Permitted Liens" means (i) Liens for taxes,
assessments and governmental charges to the extent not
required to be paid under the Indenture, (ii) statutory
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Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like Liens
arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good
faith by an appropriate process of law, and for which a
reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made, (iii) pledges or
deposits to secure lease obligations or nondelinquent
obligations under workers' compensation, unemployment
insurance or similar legislation, (iv) Liens to secure the
performance of public statutory obligations that are not
delinquent, performance bonds or other obligations of a like
nature (other than for borrowed money), in each case
incurred in the ordinary course of business, (v) easements,
rights-of-way, restrictions, minor defects or irregularities
in title and other similar charges or encumbrances incurred
in the ordinary course of business and not interfering in
any material respect with the business of the Consolidated
Company or its Subsidiaries, (vi) Liens upon specific items
of inventory or other goods and proceeds of any Person
securing such Person's obligations in respect of letters of
credit or bankers' acceptances issued or created for the
account of such person to facilitate the purchase, shipment
or storage of such inventory or other goods in the ordinary
course of business, (vii) Liens securing reimbursement
obligations with respect to letters of credit which encumber
documents and other property relating to such letters of
credit and the products and proceeds thereof, (viii)
judgment and attachment Liens not giving rise to an Event of
Default, (ix) leases or subleases granted to others in the
ordinary course of business consistent with past practice
not interfering in any material respect with the business of
the Consolidated Company or its Subsidiaries, (x) any
interest or title of a lessor in the property subject to any
lease, whether characterized as capitalized or operating
other than any such interest or title resulting from or
arising out of default by the Consolidated Company or its
Subsidiaries of its obligations under such lease, (xi) Liens
arising from filing UCC financing statements for
precautionary purposes in connection with true leases of
personal property that are otherwise permitted under the
Indenture and under which the Company or any of its
Subsidiaries is lessee, (xii) Liens securing Acquired
Indebtedness and existing at the time such Acquired
Indebtedness is assumed by the Consolidated Company or any
of its Subsidiaries; provided that such Lien is not created
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in contemplation of or in connection with the underlying
acquisition, merger or consolidation and such Lien does not
extend to any property not covered thereby at the time of
such assumption of Acquired Indebtedness, and (xiii)
purchase money Liens on real property, improvements thereto
or equipment acquired after the Issue Date (or, in the case
of improvements, constructed) by the Consolidated Company or
any of its Subsidiaries; provided that such Liens secure
Indebtedness permitted under the "Limitation on Incurrence
of Additional Indebtedness" covenant and such Liens are
incurred, and the Indebtedness secured thereby is created,
within 90 days after such acquisition (or construction).
"Person" means an individual, corporation,
association, partnership, joint venture, trust,
unincorporated organization, government or political
subdivision thereof or governmental agency or other entity.
"Pete's Brewing Warrants" means the warrants
issued to the Consolidated Company pursuant to a Warrant to
Purchase Shares dated October 18, 1995 to acquire 10% of the
capital stock of Pete's Brewing Company.
"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.
"Productive Assets" means assets (including assets
owned directly or indirectly through the ownership of
Capital Stock) of a kind used or useable in the beverage
business as conducted by the Consolidated Company and its
Subsidiaries.
"Qualified Capital Stock" means any Capital Stock
that is not Disqualified Capital Stock.
"Refinancing Indebtedness" means any refinancing
by the Consolidated Company of Indebtedness of the
Consolidated Company (and to the extent such Indebtedness is
guaranteed by a Subsidiary of the Consolidated Company, a
guarantee of such Refinancing Indebtedness) or of any
Subsidiary of the Consolidated Company initially incurred in
accordance with the "Limitation on Incurrence of Additional
Indebtedness" covenant (other than pursuant to clauses (ii)
or (vi) of the definition of Permitted Indebtedness) that
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does not (i) result in an increase in the aggregate
principal amount of Indebtedness of such Person 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 and that (x) is subordinated in right of
payment to the New Senior Subordinated Notes on terms at
least as favorable to the Holders as those, if any,
contained in the documentation governing the Indebtedness
being refinanced and (y) is incurred by the Consolidated
Company or the Subsidiary who is the obligor on the
Indebtedness being refinanced.
"Representative" means the indenture trustee or
other trustee, agent or representative in respect of any
Designated Senior Debt; provided that if, and for so long
as, any Designated Senior Debt lacks such a representative,
then the Representative for such Designated Senior Debt
shall at all times constitute the holders of a majority in
outstanding principal amount of such Designated Senior Debt
in respect of any Designated Senior Debt.
"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
Consolidated Company or a Subsidiary of any property,
whether owned by the Consolidated Company or any Subsidiary
at the Issue Date or later acquired, which has been or is to
be sold or transferred by the Consolidated Company or such
Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the
security of such property.
"Senior Debt" means any Indebtedness of the
Consolidated Company (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable law), whether outstanding on the Issue Date or
thereafter created, incurred or assumed, if, in the case of
any particular indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall
be senior in right of payment to the New Senior Subordinated
Notes. Without limiting the generality of the foregoing,
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"Senior Debt" shall also include the principal of, premium,
if any, interest (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect
of, and all monetary obligations of every nature under, (x)
the New Credit Agreement, including, without limitation,
obligations to pay principal and interest, reimbursement
obligations under letters of credit, fees, expenses and
indemnities and (y) all Interest Swap Obligations, Commodity
Agreements and Currency Agreements. Notwithstanding the
foregoing, Senior Debt shall not include any of the
following amounts (whether or not constituting Indebtedness
as defined in the New Senior Subordinated Notes Indenture),
(i) any Indebtedness of the Consolidated Company to a
Subsidiary of the Consolidated Company, (ii) Indebtedness
to, or guaranteed by the Consolidated Company on behalf of,
any director, officer or employee of the Company or any
Subsidiary (including, without limitation, amounts owed for
compensation), (iii) Indebtedness and other amounts owing to
trade creditors incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal,
state, local or other taxes owed or owing by the
Consolidated Company, (vi) that portion of any Indebtedness
which at the time of issuance is issued in violation of the
"Limitation on Incurrence of Additional Indebtedness"
covenant (but, as to any such obligation, no such violation
shall be deemed to exist for purposes of this clause (vi) if
the holder(s) of such obligation or their representative and
the Senior Trustee shall have received an Opinion of Counsel
(which legal counsel may, as to matters of fact, rely upon
an Officers' Certificate of the Consolidated Company) to the
effect that the incurrence of such Indebtedness does not
(or, in the case of revolving credit Indebtedness, that the
incurrence of the entire committed amount thereof at the
date on which the initial borrowing thereunder is made would
not) violate such provision of the New Senior Subordinated
Notes Indenture), (vii) that portion of any Indebtedness
which, at the time of issuance, is issued in violation of
the second sentence of the "Prohibition on Senior
Subordinated Debt and Limitation on Senior Unsecured Debt"
covenant and (viii) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other
Indebtedness of the Consolidated Company. Notwithstanding
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anything contained to the contrary in the New Senior
Subordinated Notes Indenture or the New Senior Subordinated
Notes, the Indebtedness represented by the New Senior
Subordinated Notes will be superior in right of payment to,
and "Senior Debt" will not include, the New Junior
Subordinated Notes.
"Significant Subsidiary" means for any Person each
Subsidiary of such Person which (i) for the most recent
fiscal year of such Person accounted for more than 5.0% of
the consolidated net income of such Person or (ii) as at the
end of such fiscal year, was the owner of more than 5.0% of
the consolidated assets of such Person.
"Stroh Affiliate" means (i) any descendant of
Julius Stroh or any spouse or former spouse of any such
descendant, (ii) any corporation, partnership or joint
venture owned or controlled, directly or indirectly, by any
descendant of Julius Stroh or any spouse or former spouse of
any such descendant, (iii) any trust formed for the benefit
of any descendant of Julius Stroh, and (iv) any combination
or group consisting of one or more of the foregoing.
"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.
"Tax Sharing Agreement" means the Tax Sharing
Agreement between the Consolidated Company and Stroh
Holding, as in effect on the Issue Date.
"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.
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"Wholly-owned Subsidiary" of any Person means any
Subsidiary of such Person of which all the outstanding
voting securities (other than directors' qualifying shares)
which normally have the right to vote in the election of
directors are owned by such Person or any Wholly-owned
Subsidiary of such Person.
General Description of New Junior Subordinated Notes
The following is a summary of certain terms and
provisions of the New Junior Subordinated Notes Indenture.
This summary is qualified in its entirety by reference to
the full text of the New Junior Subordinated Notes
Indenture, which is annexed to the Acquisition Agreement as
Exhibit C thereto.
The New Junior Subordinated Notes will be issued
by the Consolidated Company under the New Junior
Subordinated Notes Indenture. The indenture trustee under
the New Junior Subordinated Notes Indenture (the "Junior
Trustee") has not been selected as of the date hereof, but
will be selected before the Confirmation Hearing.
The New Junior Subordinated Notes will be issued
in an original aggregate outstanding principal amount of
$5.0 million. The New Junior Subordinated Notes will bear
interest at a fixed annual rate initially equal to 11.0%
until the seventh anniversary of issuance and thereafter
equal to 13.0%, payable semiannually in arrears on the semi-
annual anniversaries of the Consummation Date, commencing
with the first semi-annual anniversary of the Consummation
Date. The New Junior Subordinated Notes will mature in 2008
on the twelfth anniversary of the Consummation Date, subject
to earlier redemption as hereinafter provided, at which time
the aggregate outstanding principal amount thereof will be
payable in full.
Before the fifth anniversary of the Consummation
Date, the New Junior Subordinated Notes will not be
redeemable by the Consolidated Company. On and after the
fifth anniversary of the Consummation Date, the New Junior
Subordinated Notes will be redeemable, at the option of the
Consolidated Company, at any time, in whole or in part, at a
redemption price equal to the sum of the original principal
amount of the New Junior Subordinated Notes called for
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redemption, plus accrued interest to the redemption date,
without any premium.
The New Junior Subordinated Notes will be un-
secured and junior subordinated obligations of the
Consolidated Company. The New Junior Subordinated Notes
will be subordinated in right of payment to prior payment of
Senior Debt (as such term is defined in the New Junior
Subordinated Notes Indenture), which includes, without
limitation, the obligations evidenced by the New Senior
Subordinated Notes. The subordination provisions in the New
Junior Subordinated Notes Indenture are effectively
identical to the subordination provisions in the New Senior
Subordinated Notes Indenture except that the definition of
Senior Debt in the former indenture includes the obligations
evidenced by the New Senior Subordinated Notes and the
exclusions from the definition of Senior Debt in the former
indenture do not include clauses (vi) and (vii) contained in
the definition of Senior Debt in the latter indenture.
The New Junior Subordinated Notes Indenture
contains covenants effectively identical to the covenants
contained in the New Senior Subordinated Notes Indenture,
except the former indenture does not contain the following
covenants in the latter indenture: "Limitations on
Transactions with Affiliates," "Limitations on Incurrence of
Additional Indebtedness," "Limitation on Dividend and Other
Payment Restrictions Affecting Subsidiaries," "Prohibition
on Senior Subordinated Debt and Limitation of Senior
Unsecured Debt," "Limitation on Asset Sales," "Limitation on
Preferred Stock of Subsidiaries," "Limitation on Liens," and
"Limitation of Guarantees by Subsidiaries."
General Description of New Warrants
The following is a summary of certain terms and
provisions of the New Warrant Agreement. This summary of
the New Warrant Agreement is qualified in its entirety by
reference to the full text of the New Warrant Agreement,
which is annexed to the Plan of Reorganization as Exhibit D
thereto. Certain defined terms in the following summary
have the meanings provided in the section entitled "Certain
Definitions in the New Warrant Agreement" below.
The New Warrants will be issued by the
Consolidated Company under the New Warrant Agreement. The
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agent under the New Warrant Agreement (the "Warrant Agent")
has not been selected as of the date hereof, but will be
selected before the Confirmation Hearing.
Each New Warrant initially will entitle the holder
thereof to acquire one share of Common Stock at an initial
exercise price equal to $6.94, subject to adjustment from
time to time as provided in the New Warrant Agreement (the
"Exercise Price").
The initial aggregate exercise price of the New
Warrants will equal $5.205 million.
Exercise of Warrants and Expiration Date. The New
Warrants shall not be exercisable until the earlier of (i)
the date on which the Common Stock commences trading on a
national securities exchange or the NASDAQ-NMS, (ii) the
termination of any Put Right and Call Right as provided
under "Put and Call Rights" following a Change of Control of
the Consolidated Company or Stroh Holding and (iii) the
tenth anniversary of the Consummation Date. The New
Warrants will cease to be exercisable and will terminate and
become void, and all rights thereunder and under this
Agreement will cease, on the date (the "Expiration Date")
which is (i) in the event the New Warrants become
exercisable on or before four years and nine months after
the Consummation Date, the fifth anniversary of the
Consummation Date, or (ii) in any other event, 90 days after
the date on which the New Warrants have become exercisable.
Subject to the foregoing and compliance with certain
procedures in the New Warrant Agreement, the registered
holder of any certificate evidencing the New Warrants may
exercise the New Warrants evidenced thereby in whole or in
part upon surrender of such certificate, with the form of
election to purchase on the reverse thereof duly executed,
to the Warrant Agent at the principal office of the Warrant
Agent in New York City, together with payment of the
Exercise Price in immediately available funds denominated in
U.S. dollars for each share of Common Stock as to which the
New Warrants are exercised. The Consolidated Company will
instruct the Warrant Agent to give notice to the registered
holders of the New Warrants at least 10 Business Days prior
to the date the New Warrants are to become exercisable.
Put and Call Rights. Subject to suspension during
the Restricted Period (as such term is hereinafter defined),
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commencing on the earlier of the fifth anniversary of the
Closing and the date of a Change of Control, (i) a
registered holder of New Warrants will have the right to put
all, or less than all, of such holder's New Warrants to the
Consolidated Company, and the Consolidated Company will be
required to purchase such Warrants (the "Put Right"), and
(ii) the Consolidated Company will have the right to call
all, or less than all, of the New Warrants from the
registered holders thereof, and each such holder will be
required to deliver such Warrants to the Consolidated
Company (the "Call Right"), in each case, at a price equal
to the excess of the Appraised Fair Market Value per share
of Common Stock issuable upon exercise of such New Warrants
over the Exercise Price (the "Put/Call Price"); provided,
that, if at any time the Appraised Fair Market Value per
share of Common Stock is equal to or less than the Exercise
Price, then the Put/Call Price will be zero, and New
Warrants subject to any exercise of the Put Right or the
Call Right at such time will be cancelled without any
payment becoming due or payable to the registered holder or
holders thereof. Subject to suspension during the
Restricted Period, the Put Right and the Call Right will
each terminate upon the earlier of (i) the date the Common
Stock commences trading on a national securities exchange or
the NASDAQ-NMS, (ii) 90 days after a Change of Control and
(iii) 90 days after the tenth anniversary of the
Consummation Date. In the event that the Consolidated
Company elects to call less than all of the New Warrants,
the Warrant Agent shall be instructed to call the New
Warrants on a ratable basis from all holders thereof.
Unless the Put Right and Call Right have already
terminated, prior to (i) the fifth anniversary of the
Consummation Date, (ii) each subsequent anniversary of such
date, and (iii) a Change of Control (whether occurring
before or after the fifth anniversary of the Consummation
Date), the Consolidated Company will retain a nationally
recognized investment bank to determine the Appraised Fair
Market Value and, promptly following receipt of such
determination, will instruct the Warrant Agent to deliver a
notice to registered holders of New Warrants informing such
holders of such Appraised Fair Market Value.
If the Consolidated Company determines in its sole
discretion to do so, the Consolidated Company may exercise
the Call Right during any period in which such Call Right is
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exercisable under Sections 7(a) and 7(e) of the New Warrant
Agreement by giving notice to the Warrant Agent with a
direction to deliver a notice to such effect to the
registered holders of New Warrants, which may be included as
part of the notice contemplated above. Upon exercise of the
Call Right, all rights of registered holders of New Warrants
under the New Warrant Agreement relating to the called New
Warrants shall terminate, except the right to receive the
Put/Call Price with respect thereto.
Notwithstanding the foregoing, the Put Right and
the Call Right will be suspended and will not be exercisable
during any period (a "Restricted Period") when the
Consolidated Company is restricted from delivering the
Put/Call Price under the New Credit Agreement and the New
Senior Subordinated Notes Indenture. In the event that any
registered holder of Warrants attempts to exercise the Put
Right during any such Restricted Period, such attempted
exercise thereof will be null and void, and any warrant
certificates delivered to the Warrant Agent in connection
therewith will promptly be returned to such holder by the
Warrant Agent. If the exercisability of the Put Right and
Call Right are at any time suspended due to the existence of
a Restricted Period, (i) the Consolidated Company will
instruct the Warrant Agent to notify registered holders of
New Warrants of the existence of such Restricted Period,
(ii) the date on which the Put Right and the Call Right
would otherwise terminate pursuant to Section 7(a) of the
New Warrant Agreement will be postponed by a number of days
equal to the number of days in the Restricted Period, (iii)
the Consolidated Company will not be entitled to exercise
its Call Right until the date which is the earlier of one
year after the end of any Restricted Period and 30 days
prior to the Expiration Date, (iv) the dates on which the
Exercise Price would otherwise be increased under Section
12(c) of the New Warrant Agreement will be postponed by a
number of days equal to the number of days in the Restricted
Period, and (v) the Consolidated Company will cause the
Warrant Agent to notify registered holders of Warrants of
the end of any such Restricted Period promptly after the
Consolidated Company is permitted under the terms and
conditions of the New Credit Agreement to deliver the
Put/Call Price upon exercise of the Put Right or the Call
Right, which notice will also set forth the dates referred
to in the immediately preceding clauses (ii), (iii) and (iv)
hereof.
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The Put/Call Price payable at any time will be
that based upon the Appraised Fair Market Value determined
as of the day the notice exercising the Put Right is
received by the Warrant Agent, without regard to the date of
exercise of such Put Right. Once the Appraised Fair Market
Value has been determined for any purpose under the New
Warrant Agreement, the amount so determined will be the
Appraised Fair Market Value for all purposes under the New
Warrant Agreement until the Consolidated Company has
received a subsequent determination thereof as required
thereby.
In case the registered holder of any Warrant
Certificate will exercise the Put Right with respect to
fewer than all New Warrants evidenced thereby or the
Consolidated Company will exercise a partial call of the New
Warrants, a new Warrant Certificate evidencing the number of
New Warrants equivalent to the number of New Warrants
remaining after giving effect to such Put Right or Call
Right will be issued by the Warrant Agent to the registered
holder of such Warrant Certificate or to his duly authorized
assigns, subject to the provisions of Sections 5, 6(b) and
14 of the New Warrant Agreement.
Tag-along Put Rights. With respect to any
proposed sale of shares of the Common Stock representing
more than 30.0% of the Common Stock on a fully-diluted basis
directly by Stroh Holding or by any wholly owned subsidiary
to which Stroh Holding or Stroh Affiliates may have
transferred such shares or indirectly by any stockholders of
Stroh Holding (other than a proposed public offering of
shares of Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the
"Securities Act") or a proposed sale to a Stroh Affiliate),
in any single transaction or series of related transactions,
the holder or holders of such shares proposing such sale (a
"Selling Shareholder") or, in the case of sales by the
stockholders of Stroh Holding or Stroh Affiliates, the
Consolidated Company will have the obligation, and each
registered holder of New Warrants will have the right (the
"Tag-along Put Right"), to require the proposed buyer to
purchase from each such holder New Warrants representing the
right to purchase a number of shares of Common Stock equal
to the product (rounded up to the nearest integer) of (i)
the quotient determined by dividing the number of shares of
Common Stock issuable to such holder of Warrants upon
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exercise thereof in full by the sum or the number of
outstanding shares of Common Stock and the number of shares
reserved for issuance upon exercise of then outstanding
Warrants and (ii) the number of shares of Common Stock
proposed to be sold in the contemplated sale, and at the
same price per share, less the Exercise Price, and upon the
same terms and conditions offered to the Selling
Shareholders.
New Warrant Adjustments
The Exercise Price of the New Warrants, the number
of shares of Common Stock purchasable upon the exercise of
New Warrants provided and the number of New Warrants
outstanding will be subject to adjustment from time to time
in certain events as provided in the New Warrant Agreement,
including, without limitation, the issuance of capital stock
of the Consolidated Company as a dividend or distribution on
the Common Stock; subdivisions and combinations of the
Common Stock on the issuance to holders of Common Stock of
certain rights, options or warrants entitling them to sub-
scribe for Common Stock at less than the Appraised Fair
Market Value of the Common Stock; and no adjustment in the
Exercise Price will be required unless such adjustment would
require a change of at least 1.0% (but any adjustment
requiring a change of less than 1.0% in such price will be
carried forward and taken into account in any subsequent
adjustment).
Subject to suspension during the Restricted
Period, on and after the fifth anniversary of the
Consummation Date, and on each subsequent anniversary of the
Consummation Date, the Exercise Price shall be increased by
a per share amount equal to (x) $50,000 divided by (y) the
total number of shares issuable upon exercise of all of the
New Warrants, assuming all of the New Warrants issued on the
Consummation Date are then outstanding and unexercised and
giving effect to all adjustments required by Section 12 of
the New Warrant Agreement; provided that in no event will
the aggregate Exercise Price for all the New Warrants issued
be reduced below $1,000 and provided that to the extent that
the aggregate Exercise Price has been reduced to $1,000 or
less, additional Extraordinary Dividends shall be treated as
a distribution of assets for purposes of the following
paragraph.
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In the event that the Consolidated Company pays an
Extraordinary Dividend, then the Exercise Price will be
decreased by an amount equal to 7.5% of (i) the aggregate
amount of the Extraordinary Dividend divided by (ii) the
total number of shares issuable upon exercise of all of the
New Warrants, assuming all of the New Warrants are then
outstanding and unexercised and giving effect to all
adjustments required by Section 12 of the New Warrant
Agreement; provided, that in no event will the aggregate
Exercise Price for all of the New Warrants issued under the
new Warrant Agreement be reduced below $1,000 by operation
of this provision; provided, further, that to the extent the
aggregate Exercise Price has been reduced to $1,000 or less,
additional Extraordinary Dividends will be treated as a
distribution of assets for purposes of Section 12(e) of the
New Warrants Agreement. For purposes of the New Warrant
Agreement, Extraordinary Dividend means (i) for the first
fiscal year following the issuance of the New Warrants an
aggregate amount of cash dividends paid on the Common Stock
in excess of $7 million (as adjusted in future years, the
"Dividend Threshold Limit") and (ii) for any fiscal year
thereafter shall mean an aggregate amount of cash dividends
paid on the Common Stock in excess of (A) $7 million plus
(B) the amount equal to the Dividends Threshold Limit in
effect during the prior fiscal year less the amount of cash
dividends actually paid by the Consolidated Company in such
prior fiscal year.
In the event the Consolidated Company fixes a
record date for the making of a dividend or distribution to
all holders of Common Stock of any evidences of indebtedness
or assets or subscription rights or warrants (excluding
those referred to in Sections 12(b) and 12(d) of the New
Warrant Agreement), the Exercise Price to be in effect after
such record date will be determined by multiplying the
Exercise Price in effect immediately prior to such record
date by a fraction of which the numerator will be the
Appraised Fair Market Value per share of Common Stock on
such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Consolidated
Company) of such distribution applicable to one share of
Common Stock, and of which the denominator will be such
Appraised Fair Market Value per share of Common Stock. Such
adjustment will be made successively whenever such a record
date is fixed, and in the event that such distribution is
not so made, the Exercise Price will again be adjusted to be
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the Exercise Price which would then be in effect if such
record date had not been fixed.
In the event the Consolidated Company consummates
a tender offer for or otherwise repurchases or redeems
Common Stock, to the extent that the cash and value of any
other consideration included in such payment per share of
Common Stock exceeds the fair market value of Common Stock
on the trading day next succeeding the Expiration Time (as
defined below), the Exercise Price will be reduced so that
the same will equal the price determined by multiplying the
Exercise Price in effect immediately prior to the last time
tenders or repurchases or redemptions may be made pursuant
to such tender or repurchase or redemption (the "Expiration
Time") by a fraction of which the numerator will be the
number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time multiplied by the
fair market value of the Common Stock on the trading day
next succeeding the Expiration Time, and of which the
denominator will be the sum of (A) the fair market value of
the aggregate consideration payable to shareholders based on
the acceptance of all shares validly tendered, repurchased
or redeemed and not withdrawn as of the Expiration Time (the
shares deemed so accepted being referred to as the
"Purchased Shares") and (B) the product of the number of
shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the fair market value of
the Common Stock on the trading day next succeeding the
Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day
following the Expiration Time. For purposes of this
paragraph, the value of non-cash consideration and the fair
market value of the Common Stock will be as determined in
good faith by the Board of Directors of the Consolidated
Company.
In the event that the Consolidated Company will
sell any Common Stock or any security convertible or
exercisable for Common Stock (other than Permitted
Issuances) for less than fair market value, the exercise
Price to be in effect upon the close of business immediately
following such sale will be determined by multiplying the
Exercise Price in effect immediately prior to such sale by a
fraction of which the numerator will be the sum of (i) the
number of shares of Common Stock outstanding immediately
prior to the issuance of the additional shares or other
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securities and (ii) the quotient of (x) the aggregate
consideration received therefor (including the fair market
value of any consideration received upon exercise or
conversion of any securities convertible into or exercisable
for Common Stock, or the estimated fair market value
thereof) divided by (y) the fair market value per share of
the securities so issued, and of which the denominator will
be the number of shares of Common Stock outstanding after
giving effect to such issuances (including exercise or
conversion of all securities exercisable for or convertible
into Common Stock). For purposes of this paragraph, the
value of non-cash consideration and the fair market value of
the Common Stock will be as determined in good faith by the
Board of Directors of the Consolidated Company.
The Consolidated Company may elect on or after the
date of any adjustment of the Exercise Price to adjust the
number of New Warrants, in substitution for any adjustment
in the number of shares of Common Stock purchasable upon the
exercise of a New Warrant.
Certain Definitions in the New Warrant Agreement
"Affiliate" has the meaning ascribed to it in Rule
12b-2 under the Securities Exchange Act of 1934, as amended.
"Appraised Fair Market Value" at any time means
the value of the Common Stock as of the end of the
Consolidated Company's immediately preceding fiscal year, as
determined by a nationally recognized investment bank
retained in good faith by the Board of Directors, provided
that such investment bank will not have provided services to
the Consolidated Company or Stroh Holding or any Stroh
Affiliate during the 24 months prior to being initially
retained by the Consolidated Company, based on such method
or methods of valuation as such investment bank, exercising
its professional competence, deems appropriate to value the
Consolidated Company as a going concern, provided, that (i)
such investment bank shall not attach any weight or
significance to any value which any third party may place on
the Consolidated Company and may not solicit any offers to
purchase, indications of interest or other indicia of value
from any third parties, (ii) in the event of any Change of
Control, such investment bank shall determine the Appraised
Fair Market Value by reference to the value of the Common
Stock implied by the consideration delivered or to be
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delivered in such Change of Control transaction, and, in the
event any part of such consideration consists of property
other than cash, such investment bank shall determine the
fair market value thereof in accordance with the principles
set forth above, and (iii) the investment bank will not
apply any discount to any determination reached by such
investment bank to reflect a lack of liquidity for the
Common Stock or to reflect that the holders of the New
Warrants would be entitled to only a minority interest in
the Consolidated Company. All determinations made by such
investment bank will be delivered to the Consolidated
Company in writing and will be final and binding.
"Change of Control" means (i) the sale of all or
substantially all of the assets of the Consolidated Company
or Parent to any Person that is not a Stroh Affiliate, (ii)
Stroh Affiliates shall cease to beneficially own, directly
or indirectly voting securities of the Consolidated Company
entitled in an election of directors to exercise more than
50.0% of the voting power thereof on a fully-diluted basis
or (iii) the merger or consolidation of the Consolidated
Company or Stroh Holding with or into any Person which
results in Stroh Affiliates ceasing to have beneficial
ownership of more than 50.0% of the voting securities of the
surviving entity on a fully-diluted basis.
"Stroh Affiliate" means any descendant of Julius
Stroh or any spouse or former spouse of any such descendant,
(ii) any corporation, partnership or joint venture owned or
controlled, directly or indirectly, by any descendant of
Julius Stroh or any spouse or former spouse of any such
descendant or any combination thereof, (iii) any trust
formed for the benefit of any descendant of Julius Stroh and
(iv) any combination or group consisting of one or more of
the foregoing.
Securities Law Matters
In reliance upon an exemption from the
registration requirements of the Securities Act, and state
and local securities laws under section 1145 of the
Bankruptcy Code, the New Senior Subordinated Notes, New
Junior Subordinated Notes and New Warrants to be issued on
the Consummation Date under the Plan of Reorganization will
not be registered under the Securities Act or any state or
local securities laws. Section 1145 of the Bankruptcy Code,
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generally, exempts from such registration requirements the
offer or sale of securities of a debtor or, among other
entities, a successor to the debtor under a plan of
reorganization in the event that such securities are offered
or sold in exchange for a claim against or interest in such
debtor, or if such securities are offered or sold
principally in such exchange and partly for cash.
The Company believes that the Consolidated Company
will be deemed to be a "successor" to the Company within the
meaning of section 1145(a)(1) of the Bankruptcy Code, as the
same has been interpreted and that section 1145 of the
Bankruptcy Code will apply to the New Senior Subordinated
Notes, the New Junior Subordinated Notes and the New
Warrants and the shares of common stock issuable upon
exercise of the New Warrants. Accordingly, the New Senior
Subordinated Notes, the New Junior Subordinated Notes and
the New Warrants issued under the Plan of Reorganization on
the Consummation Date and the shares of common stock
issuable upon exercise of the New Warrants may be resold by
any holder thereof without registration under the Securities
Act or other federal securities laws under the exemption
provided by Section 4(1) of the Securities Act, unless the
holder is an "underwriter" of such securities within the
meaning of section 1145(b) of the Bankruptcy Code (a "statu-
tory underwriter"). In addition, such securities generally
may be resold by the holders thereof without registration
under the state securities laws. Holders of securities
issued under the Plan of Reorganization are, however,
advised to consult with their own counsel as to the
availability of any such exemption from registration under
state law in any given instance and as to any applicable
requirements or conditions to the availability thereof.
Section 1145(b) of the Bankruptcy Code defines
"underwriter" for purposes of the Securities Act as an
entity that (i) purchases a claim against or interest in the
debtor with a view to distribution of any security to be
received in exchange for the claim or interest, (ii) offers
to sell securities issued under a plan of reorganization for
the holders of such securities, (iii) offers to buy
securities issued under a plan of reorganization from
persons receiving such securities, if the offer to buy is
made with a view to distribution of such securities or made
under a distribution agreement or (iv) is an "issuer" as
defined in Section 2(ii) of the Securities Act. The
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Consolidated Company does not intend and is not obligated to
file a registration statement on behalf of any such
"underwriter." Any entity that believes it may be a
statutory underwriter within the meaning of section 1145 of
the Bankruptcy Code is advised to consult its counsel.
D. Other Provisions of the Plan of Reorganization
Oversight Committee
Under the Acquisition Agreement, the Sellers are
to enjoy certain rights and exercise functions. See "The
Reorganization Cases - Events Preceding Commencement of the
Reorganization Cases - The Acquisition Agreement." After
giving effect to the Restructuring Transactions, the Debtors
will be liquidated and dissolved. Accordingly, an entity
will be constituted to be delegated such rights and exercise
such functions.
Function of Oversight Committee. After the
Consummation Date, the rights and functions of the Debtors
under the Acquisition Agreement will be delegated to and
exercised by the Oversight Committee. Such delegation and
exercise will not constitute an assumption of any liability
or obligation of the Debtors under the Acquisition Agree-
ment, including, without limitation, the indemnification
obligations under Section 9.3 of the Acquisition Agreement.
Constitution of the Oversight Committee. The
Oversight Committee will at all times consist of a designee
of Hicks, Muse, Tate & Furst Incorporated and a designee of
Houlihan, Lokey, Howard & Zukin, with the assistance of M.L.
Lowenkron, Daniel J. Schmid, Jr. and Randy J. Smith.
Expenses Incurred on or After the Consummation
Date. Any fees and expenses incurred by the Oversight
Committee or the members thereof on or after the
Consummation Date (including, without limitation, any taxes)
and any compensation and expense reimbursement claims
(including, without limitation, reasonable fees and expenses
of counsel) made by the Oversight Committee or the members
thereof, will be paid in accordance with, and subject to the
$200,000 aggregate limitation contained in Section 2(c) of
the Escrow Agreement contemplated by the Acquisition
Agreement.
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Exculpation. Each Member of the Oversight
Committee, from and after the Consummation Date, is
exculpated by all entities, including, without limitation,
holders of Claims and Equity Interests and other parties in
interest from any and all claims, causes of action and other
assertions of liability (including, without limitation,
breach of fiduciary duty) arising out of the discharge by
such member of the Oversight Committee of the powers and
duties conferred upon it hereby or any order of the
Bankruptcy Court entered in accordance with or in
furtherance hereof, or applicable law. No holder of a Claim
or an Equity Interest or other party in interest will have
the right to pursue any claim or cause of action against the
Oversight Committee or any member thereof for implementing
the terms of the Acquisition Agreement. In the event that,
notwithstanding the exculpation contained in Section 6.5(d)
of the Plan of Reorganization, any entity pursues any Claim
or cause of action against the Oversight Committee or any
member thereof, the Oversight Committee may have recourse
against the monies, if any, distributed from Escrow B to the
Debtors (other than Heileman Holding Company) and the
holders of Allowed Subordinated Unsecured Claims and Allowed
Equity Interests (subject to the rights of the Consolidated
Company therein) after exhausting the funds to be reserved
as provided in Section 6.5(c) of the Plan of Reorganization.
Provisions Governing Distributions
Requirement for Allowance of Claims and Equity
Interests. No payments or other distributions will be made
to or for the benefit of any Claim or Equity Interest that
is not "Allowed." "Allowed" means with reference to any
Claim or Equity Interest, (a) any Claim or Equity Interest
against any Debtor which has been listed by such Debtor in
its Schedules, as such Schedules may be amended by the
Debtors before the Consummation Date and by the Consolidated
Company after the Consummation Date from time to time in
accordance with Bankruptcy Rule 1009, as liquidated in
amount and not disputed or contingent and for which no
contrary proof of claim has been filed, (b) any Claim
allowed by Final Order of the Bankruptcy Court, (c) any
Claim or Equity Interest as to which the liability of the
Debtors and the amount thereof are determined by final order
of a court of competent jurisdiction other than the
Bankruptcy Court or (d) any Claim allowed under the Plan of
Reorganization.
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Date and Delivery of Distribution. Any
distributions of cash and deliveries of the securities
issued under the Plan of Reorganization and distributable to
the holders of any Allowed Claim or Allowed Equity Interest
will be made by the Consolidated Company as the Disbursing
Agent or such other entity designated by the Consolidated
Company as a Disbursing Agent on the Consummation Date, or
as soon as practicable thereafter. After giving effect to
the distribution of the beneficial interests in Escrow A and
Escrow B to the holders of Claims and Equity Interests in
Class 6 (Subordinated Unsecured Claims) and Class 7 (Equity
Interests) provided hereunder, the Debtors shall have no
further interest in such escrows. All distributions of the
New Senior Subordinated Notes, the New Junior Subordinated
Notes and the New Warrants which shall be made in accordance
with the Acquisition Agreement and the agreements governing
Escrow A and Escrow B, as applicable.
The Disbursing Agent will make all distributions
and deliveries to holders of Allowed Claims and Allowed
Equity Interests at the addresses contained in the Schedules
filed with the Bankruptcy Court or unless the Consolidated
Company has been notified in writing of a change of address.
If the distribution to any holder of a Claim or Equity
Interest is returned as undeliverable, the Disbursing Agent
will use its reasonable efforts to determine the current
address of such holder, but no distribution to such holder
will be made unless and until the Disbursing Agent has
determined the then current address, at which time such
distribution will be made to such holder, without interest.
Amounts in respect of any undeliverable distributions made
through a Disbursing Agent will be returned to the
Disbursing Agent making such distribution until such
distributions are claimed. If no proofs of claim are filed
and the Schedules filed with the Bankruptcy Court fail to
state addresses for holders of Allowed Claims, such Allowed
Claims will be deemed unclaimed property under section
347(b) of the Bankruptcy Code at the expiration of one year
from the Consummation Date. After such date, all unclaimed
property other than property or an interest in property
distributable on account of the Allowed Subordinated
Unsecured Claims will revert to the Consolidated Company and
all property or interest in unclaimed property distributable
on account of the Allowed Subordinated Unsecured Claims
shall be allocated ratably to the other holder of Allowed
Subordinated Unsecured Claims, and the claim of any other
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holder to such property or interest in property will be
discharged and forever barred. The distributions to be made
on the Consummation Date to each holder of an Allowed Senior
Secured Claim shall be made to Bankers Trust Company, as
agent under the Existing Credit Agreement, for distribution
to holders of Allowed Senior Secured Claims in accordance
with the provisions of the Existing Credit Agreement.
Fractions. No fractional New Warrants will be
issued to the beneficial owners of Allowed Claims.
Fractional New Warrants will be rounded to the next greater
or next lower number of New Warrants, as follows:
(a) fractions of one-half or greater will be rounded to the next
higher whole number, and (b) fractions of less than one-half
will be rounded to the next lower whole number. The Plan of
Reorganization provides, however, that no fraction of one-half
or less will be rounded to zero and accordingly extinguish the
distribution of New Warrants to any entity as an entirety.
Means of Cash Payment and Time Bar. At the option
of the Consolidated Company, any cash payment to be made by
the Consolidated Company under the Plan of Reorganization
may be made by check or wire transfer or as otherwise
required or provided in applicable agreements.
Checks issued in respect of Allowed Claims will be
null and void if not negotiated within 60 days after the
date of issuance thereof. Any amounts paid to the
Disbursing Agent in respect of such a check will be promptly
returned to the Consolidated Company by the Disbursing
Agent. Requests for reissuance of any check will be made
directly to the Disbursing Agent by the holder of the
Allowed Claim with respect to which such check originally
was issued. Any claim in respect of such a voided check
will be made on or before the later of (i) the second
anniversary of the Consummation Date or (ii) 90 days after
the date of issuance of such check. After such date, all
claims in respect of void checks will be discharged and
forever barred.
Surrender and Cancellation of Instruments. The
Plan of Reorganization provides that each holder of a
promissory note or other instrument evidencing a Claim
(other than a holder of a promissory note issued under the
Existing Credit Agreement) must surrender such promissory
note or instrument to the Disbursing Agent, and the
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Disbursing Agent will then distribute or cause to be
distributed to the holder thereof the appropriate
distribution under the Plan of Reorganization. No
distribution under the Plan of Reorganization will be made
to or on behalf of any holder of such a Claim unless and
until such promissory note or instrument is received or the
unavailability of such note or instrument is reasonably
established to the satisfaction of the Disbursing Agent. In
accordance with section 1143 of the Bankruptcy Code, the
Plan of Reorganization provides that any holder of a Claim
that fails to (a) surrender or cause to be surrendered such
promissory note or instrument or to execute and deliver an
affidavit of loss and indemnity reasonably satisfactory to
the Disbursing Agent and (b) in the event that the
Disbursing Agent requests, furnish a bond in form and
substance (including, without limitation, amount) reasonably
satisfactory to the Disbursing Agent, within 5 years from
and after the Consummation Date will be deemed to have
forfeited all rights, claims and interests and will not
participate in any distribution under the Plan of
Reorganization.
Procedures for Resolving Disputed Claims
The Stroh Brewery Company and, after the
Consummation Date, the Consolidated Company shall be
entitled to object to Claims.
Filing Objections and Allowance of Claims. Upon
resolution of an objection to a Claim, the Disputed Claim
will be allowed in a specified amount and be classified as
unsecured, priority or secured. The distribution to the
holder of a claim under the Plan of Reorganization will be
determined in part by the allowed amount and classification
of a Claim.
No Distributions Pending Allowance. If any
portion of a Claim is a Disputed Claim, no payment or
distribution will be made on account of the portion of such
Claim that is a Disputed Claim unless and until such
Disputed Claim becomes an Allowed Claim. Distributions will
be made, however, on the portion of such Claim that is an
Allowed Claim.
Distributions After Allowance. Payments and
distributions to each holder of a Disputed Claim or any
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other Claim that is not an Allowed Claim, to the extent that
such Claim ultimately becomes an Allowed Claim, will be made
in accordance with the provisions of the Plan of
Reorganization governing the class or subclass of Claims in
which such Claim is classified, including, without
limitation, the Restructuring Transactions. As soon as
practicable after the date that the order or judgment of the
Bankruptcy Court allowing any Disputed Claim or any other
Claim that is not an Allowed Claim becomes a Final Order,
the Disbursing Agent will distribute to the holder of such
Claim any payment or property that would have been
distributed to such holder if the Claim had been Allowed on
the Consummation Date, without any interest thereon.
Executory Contracts and Unexpired Leases
Executory Contracts and Unexpired Leases Assumed
and Assigned if Not Rejected. The Bankruptcy Code entitles
the Debtors, subject to the approval of the Bankruptcy
Court, to assume or reject executory contracts and unexpired
leases. The Bankruptcy Code further entitles the Debtors,
subject to satisfaction of certain conditions, to assign
assumed executory contracts and unexpired leases to another
entity. Rejection or assumption and assignment may be
effected under a plan of reorganization. The Debtors
presently intend to assume and assign to the Consolidated
Company substantially all of the executory contracts and
unexpired leases to which they are party. The Plan of
Reorganization constitutes and incorporates a motion by the
Debtors to assume and assign to the Consolidated Company, as
of the Consummation Date, all executory contracts and
unexpired leases, except as otherwise provided in the Plan
of Reorganization. The Plan of Reorganization further
constitutes and incorporates a motion by the Debtors to
assume and assign any executory contract or unexpired lease
not identified on Schedule 9.1 thereto. The Plan of
Reorganization further constitutes and incorporates a motion
by the Debtors to assume that certain engagement letter
dated September 29, 1995, as amended by that certain letter
agreement dated April 2, 1996 as amended between G. Heileman
Brewing Company, Inc. and Houlihan Lokey Howard & Zukin
relating to the payment of a $550,000 advisory fee. The
Confirmation Order will constitute an order of the
Bankruptcy Court approving all such assumptions and
rejections of executory contracts as of the Consummation
Date.
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The Plan of Reorganization generally provides that
executory contracts or unexpired leases relating to real
property which have not previously been the subject of an
order of the Bankruptcy Court as to assumption or rejection
and which are not identified on Schedule 9.1 to the Plan of
Reorganization, will be assumed and assigned. Under the
Plan of Reorganization, however, the Debtors have reserved
the right until the first Business Day before the date of
the commencement of the Confirmation Hearing to delete or
add an executory contract or unexpired lease from such
schedule, in which event such executory contract or
unexpired lease would be deemed to be, respectively, assumed
and, if applicable, assigned as provided therein or
rejected.
Bar to Rejection Damages. In the event that an
executory contract or unexpired lease is rejected, the other
party to the agreement may file a Claim for damages incurred
by reason of the rejection within such time as the
Bankruptcy Court may allow. In the case of rejection of
employment agreements and leases of real property, damages
are limited under the Bankruptcy Code. The Plan of
Reorganization requires that all Claims for damages arising
from the rejection of an executory contract or unexpired
lease be evidenced by a proof of claim that is filed with
the Bankruptcy Court and served upon counsel for the Debtors
and the Consolidated Company by the earlier of 30 days after
the filing of Schedule 9.1 or 30 days after the entry of an
order by the Bankruptcy Court approving the rejection of
such contract or lease. Failure to file such a proof of
claim timely will result in such Claim being forever barred
as against the Debtors or the Consolidated Company, or their
respective properties or agents, successors, or assigns.
Conditions Precedent to Occurrence of Confirmation Date and
Consummation Date
Conditions Precedent to Confirmation of the Plan
of Reorganization. Subject to waiver by the Debtors with
the consent of Stroh, confirmation of the Plan of
Reorganization will not occur unless all the following
conditions precedent have been satisfied:
(i) The Acquisition Agreement shall then be
in full force and effect; and
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(ii) The Plan Undertaking Agreement shall
then be in full force and effect.
Conditions Precedent to Consummation Date of the
Plan of Reorganization. Subject to waiver by the Debtors
with the consent of Stroh, the occurrence of the
Consummation Date of the Plan of Reorganization is
conditioned on satisfaction of the following conditions
precedent:
(i) The Clerk of the Bankruptcy Court will
have entered the Confirmation Order, and the
Confirmation Order will have become a Final Order;
(ii) All other actions and documents neces-
sary to implement the provisions of the Plan of
Reorganization will have been effected or executed; and
(iii) All conditions precedent to the
obligations of the Buyer (as such term is defined in
the Acquisition Agreement) and the Sellers (as such
term is defined in the Acquisition Agreement) shall
have been satisfied or waived in accordance with the
Acquisition Agreement.
The Debtors, with the consent of Stroh, may waive
each of such conditions precedent, in whole or in part, at
any time without notice or any formal action, including
obtaining an order from the Bankruptcy Court approving such
waiver.
Discharge of the Debtors; Injunction. Subject to
section 11.5 of the Plan of Reorganization, the treatment of
all Claims against or Equity Interests in each of the
Debtors will, to the fullest extent permitted under
applicable law, be in exchange for and in complete
satisfaction, discharge and release of all Claims against or
Equity Interests in such Debtor of any nature whatsoever,
known or unknown, including, without limitation, any
interest accrued or expenses incurred thereon from and after
the Petition Date, or against its estate or properties or
interests in property. Except as otherwise provided in the
Plan of Reorganization, upon the Consummation Date, all
Claims against and Equity Interests in the Debtors will be
satisfied, discharged and released in full exchange for the
consideration provided under the Plan of Reorganization.
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All entities will be precluded from asserting against any
Debtor or the Consolidated Company or their respective
properties or interests in property, any other Claims based
upon any act or omission, transaction or other activity of
any kind or nature that occurred prior to the Consummation
Date, except to the extent expressly assumed under the
Acquisition Agreement and the Assumption Agreement
contemplated thereby. The Confirmation Order will be a
judicial determination of discharge of all liabilities of
any and all Debtors.
Except as otherwise expressly provided in the Plan
of Reorganization, all entities who have held, hold or may
hold Claims or Equity Interests are permanently enjoined, on
and after the Consummation Date, from directly or
derivatively (a) commencing or continuing in any manner any
action or other proceeding of any kind with respect to any
such Claim or Equity Interest against any such Debtor,
(b) the enforcement, attachment, collection or recovery by
any manner or means of any judgment, award, decree or order
against any such Debtor, (c) creating, perfecting, or
enforcing any encumbrance of any kind against any such
Debtor or against the property or interests in property of
any such Debtor on account of any such Claim, and
(d) asserting any right of setoff, subrogation, or recoup-
ment of any kind against any obligation due from any such
Debtor or against the property or interests in property of
any such Debtor on account of any such Claim. The benefits
of such injunction will extend to the Consolidated Company,
except to the extent liability on a Claim is expressly
assumed under the Acquisition Agreement and the Assumption
Agreement contemplated thereby, the Releasees and their
respective properties and interests in property. In
connection therewith, such injunction will permanently
enjoin and restrain all entities from effecting any of the
following actions (other than actions commenced to enforce
any right or obligation provided by the Plan of
Reorganization): commencement or continuation of any action
or proceeding against or affecting any Debtor or the
Consolidated Company or any property or interest in property
of such Debtor or the Consolidated Company, and commencement
or continuation of any action or proceeding against or
affecting any of the Releasees or any property or interest
in property of the Releasees in connection with the Plan of
Reorganization.
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General Release of Releasees. Effective as of the
Consummation Date, each of the Debtors and Debtors in
Possession releases the Releasees from any and all costs,
expenses, claims, causes of action or liability whatsoever,
known or unknown, liquidated or unliquidated, matured or not
matured, contingent or direct, and whether arising at common
law, in equity, or under any statute which such Debtor has
as of, or prior to, the Consummation Date against the
Releasees which in any way relate to such Debtor or the
applicable Reorganization Case.
Release from Claims and Liabilities. Except for
those obligations arising under the Plan of Reorganization,
effective as of the Consummation Date, each of the Debtors
is released by the Plan of Reorganization and discharged
from any and all claims and liabilities arising from or in
connection with, by reason of, or related in any way to,
such Debtor, the Senior Secured Claims, the Existing Credit
Agreement, the Existing Indenture, the Existing Senior
Subordinated Notes, any other Claim, the Reorganization Case
of such Debtor or the Plan of Reorganization, and the
Releasees are released and discharged by operation of the
Plan of Reorganization from any and all claims or
liabilities arising from actions effected in their capacity
as present or, in the event applicable, former officers and
directors of any of the Debtors and their Affiliates, and
from any and all Causes of Action of any entity, including,
without limitation, each holder of a Senior Secured Claim,
an Existing Senior Subordinated Note or any other Claim and
all of the successors, predecessors, assignors, assignees,
parents, subsidiaries, present and former directors,
trustees, officers, employees, agents, attorneys, advisors,
accountants, financial advisors, investment bankers,
appraisers, engineers, stockholders, partners, affiliates,
heirs, receivers, conservators, beneficiaries, executors and
administrators of or to the holders of Senior Secured
Claims, or Existing Senior Subordinated Notes or other
Claims, arising from or in connection with, by reason of, or
related in any way to, such Debtor, the Senior Secured
Claims, the Existing Credit Agreement, the Existing
Indenture, the Existing Senior Subordinated Notes, any other
Claim, the Reorganization Case of such Debtor or the Plan of
Reorganization, including, without limitation, in each case
any claims arising from,
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<PAGE>
(i) the offer, sale, purchase, resale or
ownership of the Existing Senior
Subordinated Notes, the Prospectus, any
sales brochure, registration statement,
preliminary prospectus, prospectus,
appraisal, report or inspection, or any
disclosure or omission related to any of
the foregoing, and any engagement, under-
writing, placement agency or other role
of, or services rendered by, any entity in
connection with any of the foregoing;
(ii) the involvement of any Releasee in or with
the sale of the Existing Senior
Subordinated Notes;
(iii) the ownership, management, and operation
of the Debtors by any Releasee;
(iv) the preparation by any Releasee of
financial statements in respect of any or
all of the Debtors;
(v) the actions, payments and obligations, if
any, required of any of the Releasees
under, among other things, the Existing
Indenture, the Existing Senior
Subordinated Notes and all agreements,
instruments and other documents executed
and delivered in connection with any of
the foregoing;
(vi) the use of proceeds by the Releasees from
the Existing Senior Subordinated Notes;
and
(vii) the actions by the Releasees to
restructure the Existing Senior
Subordinated Notes, including, without
limitation, any actions in connection with
or related to the formulation,
negotiation, preparation, dissemination,
confirmation or consummation of the Plan
of Reorganization and any agreement,
instrument or other document issued
thereunder or related thereto.
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Effective as of the Consummation Date, the
Releasees are released and discharged by operation of the
Plan of Reorganization from any and all claims, obligations,
rights, causes of action and liabilities which any holder of
a Claim against or Equity Interest in any of the Debtors may
be entitled to assert, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, based in whole or
in part upon any act or omission or other event occurring on
or at any time prior to the Consummation Date in any way
relating to the Debtors, the Reorganization Cases or the
Plan of Reorganization.
Nothing contained in the Plan of Reorganization
will affect any rights of the Releasees to assert and
prosecute (i) any direct claim, counterclaim, cross-claim,
separate action, or similar claim against any entity which
maintains that it has a cause of action of the kind
described in section 12.2 of the Plan of Reorganization
(other than a claim described in clause (ii) immediately
below) against a Releasee that has not been released and
discharged under the Plan of Reorganization or (ii) any
claim for indemnification, contribution or otherwise,
however denominated, against any entity relating to any
cause of action against such Releasee that has not been
released and discharged under the Plan of Reorganization.
Each holder of a Claim, including, without
limitation, a Senior Secured Claim or a Subordinated
Unsecured Claim will be deemed to have agreed to the
provision of section 12.2 of the Plan of Reorganization, and
will be bound thereby, by reason of, among other things, its
acceptance of the Plan of Reorganization and its receipt of
any distributions thereunder.
Indemnification Obligations. The Plan of
Reorganization provides that the obligations of the Debtors
to indemnify their present and any former directors or
officers that were directors or officers at any time
preceding the Petition Date against any obligations pursuant
to certificates or articles of incorporation, bylaws or
applicable state law will survive confirmation of the Plan
of Reorganization, remain unaffected thereby and not be
discharged, irrespective of whether indemnification is owed
in connection with an event occurring before, on or after
the Petition Date; provided, that nothing in section 11.5 of
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the Plan of Reorganization will in any manner affect the
rights and obligations of the Consolidated Company under the
Acquisition Agreement. To the knowledge of the Debtors, no
claims giving rise to a right of indemnification have been
asserted against any officer or director.
Dissolution of Statutory Creditors' Committee. In
the event that the Formula Amount of the New Senior
Subordinated Notes reflected on the Closing Statement to be
delivered under section 2.3(a) of the Acquisition Agreement
equals or exceeds $70.0 million, the Statutory Creditors'
Committee will automatically dissolve on the date of the
delivery of such Closing Statement. In the event that the
Formula Amount of the New Senior Subordinated Notes
reflected on the Closing Statement to be delivered under
section 2.3(a) of the Acquisition Agreement does not equal
or exceed $70.0 million, the Statutory Creditors' Committee
will continue to exist after the date of the delivery of
such Closing Statement solely for the purposes of (a)
participating in any matters pending before the Bankruptcy
Court to which the Statutory Creditors' Committee is party
until such matters are resolved by Final Order, (b)
prosecuting objections to any fee applications filed in
accordance with section 330 of the Bankruptcy Code or Claims
for fees and expenses of professionals employed by the
Debtors or agreed to be paid by the Debtors or the
Consolidated Company and (c) insuring that the initial
distributions to holders of Allowed General Unsecured Claims
and Allowed Subordinated Unsecured Claims provided hereunder
have actually been made; provided, that upon the conclusion
of all functions described in clauses (a), (b) and (c), the
Statutory Creditors' Committee will be automatically
dissolved.
Exculpation. Each member of the Creditors'
Committee or any informal committee of holders of the
Existing Senior Subordinated Notes or both and each of their
respective advisors and attorneys, effective as of the
Consummation Date, is hereby exculpated by all entities,
including, without limitation, holders of Claims against and
Equity Interests in any of the Debtors and other parties in
interest, from any and all Claims, Causes of Action and
other assertions of liability (including, without
limitation, breach of fiduciary duty), whether known or
unknown, foreseen or unforeseen, existing or arising
hereafter, arising out of or related to the Debtors, the
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Reorganization Cases or the exercise by such entities of
their functions as members of or advisors to or attorneys
for any such committee or applicable law.
Reorganized Debtors' Authority; Retention of
Jurisdiction. The Plan of Reorganization provides that on
the Consummation Date, each of the Debtors and, its
properties and interests in property, will be released from
the custody and jurisdiction of the Bankruptcy Court, except
as described in the next paragraph.
Under the Plan of Reorganization, however, the
Bankruptcy Court may retain jurisdiction of and, if the
Bankruptcy Court exercises its retained jurisdiction, will
have the exclusive jurisdiction of all matters arising out
of, and related to, the Reorganization Cases and the Plan of
Reorganization and for, among other things, the following
purposes: (i) to hear and determine pending applications
for the assumption or rejection of executory contracts or
unexpired leases, if any are pending, and the allowance of
Claims resulting therefrom; (ii) to determine any and all
adversary proceedings, applications and contested matters;
(iii) to ensure that distributions to holders of Allowed
Claims are accomplished as provided in the Plan of
Reorganization; (iv) to hear and determine any timely
objections to Administration Expense Claims or to proofs of
claim or proofs of interest filed, both before and after the
Confirmation Date, including, without limitation, any
objections to the classification of any Claim or Equity
Interest, and to allow or disallow any Disputed Claim, in
whole or in part; (v) to enter and implement such orders as
may be appropriate in the event the Confirmation Order is
for any reason stayed, revoked, modified, or vacated;
(vi) to issue such orders in aid of execution of the Plan of
Reorganization, to the extent authorized by section 1142 of
the Bankruptcy Code; (vii) to consider any amendments to or
modifications of the Plan of Reorganization, to cure any
defect or omission, or reconcile any inconsistency in any
order of the Bankruptcy Court, including, without
limitation, the Confirmation Order; (viii) to hear and
determine all applications for awards of compensation for
services rendered and reimbursement of expenses incurred
prior to the Consummation Date; (ix) to hear and determine
disputes arising in connection with the interpretation,
implementation, or enforcement of the Plan of
Reorganization, including, without limitation, Escrow A or
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Escrow B; (x) to hear and determine matters concerning
state, local and federal taxes in accordance with sections
346, 505, and 1146 of the Bankruptcy Code; (xi) to hear any
other matter not inconsistent with the Bankruptcy Code;
(xii) to issue injunctions and effect any other actions that
may be necessary or desirable to restrain interference by
any entity with the consummation or implementation of the
Plan of Reorganization; and (xiii) to enter a final decree
closing the Reorganization Cases.
Amendment of Plan of Reorganization. Subject to
the Acquisition Agreement, amendments of the Plan of
Reorganization may be proposed in writing by the Debtors at
any time before confirmation, provided that the Plan of
Reorganization, as amended, satisfies the requirements of
sections 1122 and 1123 of the Bankruptcy Code, and the
Debtors have complied with section 1125 of the Bankruptcy
Code. Subject to the Acquisition Agreement, the Plan of
Reorganization may be amended at any time after confirmation
and before substantial consummation (as such term is used in
section 1127(b) of the Bankruptcy Code), provided that the
Plan of Reorganization, as amended, satisfies the conditions
of sections 1122 and 1123 of the Bankruptcy Code and the
Bankruptcy Court, after notice and a hearing, confirms the
Plan of Reorganization as amended under section 1129 of the
Bankruptcy Code and the circumstances warrant such
amendments. A holder of a Claim or Equity Interest that has
accepted the Plan of Reorganization will be deemed to have
accepted the Plan of Reorganization as amended if the
proposed amendment does not materially and adversely change
the treatment of the Claim or Equity Interest of such
holder.
Retiree Benefits. On and after the Consummation
Date, pursuant to section 1129(a)(13) of the Bankruptcy
Code, the Consolidated Company will, subject to the
provisions of section 9.4 of the Plan of Reorganization,
continue to pay all retiree benefits (within the meaning of
section 1114 of the Bankruptcy Code), at the level
established in accordance with subsection (e)(1)(B) or (b)
of section 1114 of the Bankruptcy Code, at any time prior to
the Confirmation Date, for the duration of the period each
Debtor has obligated itself to provide such benefits.
Compliance with Tax Requirements: Withholding and
Authorization. In connection with the Plan of
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<PAGE>
Reorganization, the Debtors and the Consolidated Company as
applicable, will comply with all withholding and reporting
requirements imposed by any taxing authority, and all
distributions hereunder will be subject to such withholding
and reporting requirements. The Consolidated Company is
authorized by the Plan of Reorganization, effective as of
the Consummation Date, on behalf of the Debtors, to request
expedited determination of taxes under section 505(b) of the
Bankruptcy Code for all taxable periods ending after the
Petition Date, including, without limitation, the taxable
year ending on the Consummation Date.
Recognition of Guarantee Rights. The
classification of, and manner of satisfying, all Claims and
Equity Interests under the Plan of Reorganization take into
account the existence of guarantees by certain Debtors and
certain other Affiliates of obligations of other Debtors,
and that the Debtors may be joint obligors with another
entity or entities, with respect to the same obligation.
All Claims against the Debtors based upon any such
guarantees or joint obligations will be discharged in the
manner provided in the Plan of Reorganization, and each
holder of a Claim or Equity Interest will not be entitled to
receive more than a single satisfaction of its Allowed
Claims.
Revocation of Plan of Reorganization. The Debtors
reserve the right to revoke and withdraw the Plan of
Reorganization as to any or all Debtors at any time prior to
entry of the Confirmation Order, subject to their
obligations under the Acquisition Agreement. If the Plan of
Reorganization is so revoked or withdrawn as to any or all
Debtors, then the Plan of Reorganization will be deemed null
and void as it relates to each such Debtor.
Waiver of Subordination. Subject to the
consummation of the distributions to be effected on account
of the Allowed Senior Secured Claims as provided in section
4.2(b) of the Plan of Reorganization, the distributions on
account of the Subordinated Unsecured Claims will not be
subject to levy, garnishment, attachment or other legal
process by any holder of Senior Indebtedness (as such term
is defined in the instrument governing the Subordinated
Unsecured Claims) by reason of claimed subordination rights
and, on the Consummation Date, all holders of Claims will be
deemed to have waived any and all contractual subordination
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<PAGE>
rights which they may have relating to such distributions,
and the Bankruptcy Court in the Confirmation Order will
permanently enjoin, effective as of the Consummation Date,
all holders of Senior Indebtedness from enforcing or
attempting to enforce any such rights with respect to such
distribution to the holders of the Subordinated Unsecured
Claims.
Deletion of Classes and Subclasses. Any class or
subclass of Claims that does not contain as an element
thereof an Allowed Claim or a Claim temporarily allowed
under Bankruptcy Rule 3018 as of the date of the
commencement of the Confirmation Hearing will be deemed
deleted from the Plan of Reorganization for purposes of
voting to accept or reject the Plan of Reorganization and
for purposes of determining acceptance or rejection of the
Plan of Reorganization by such class or subclass under
section 1129(a)(8) of the Bankruptcy Code.
Addition of Classes and Subclasses. In the event
that any subclass of Class 3 (Other Secured Claims) would
contain as elements thereof two or more Secured Claims
collateralized by different properties or interests in
property or collateralized by liens against the same
property or interest in property having different priority,
such Claims will be divided into separate subclasses of such
subclasses of Class 3 (Other Secured Claims).
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<PAGE>
V.
PROJECTIONS
Consolidated Condensed Projected Financial Statements
Responsibility for and Purpose of the Projections
The Bankruptcy Code conditions confirmation of the
Plan of Reorganization on, among other things, a finding by
the Bankruptcy Court that confirmation is not likely to be
followed by the liquidation or the need for further finan-
cial reorganization of the Consolidated Company. See
section XII entitled "Confirmation of the Plan of
Reorganization - Requirements for Confirmation of the Plan
of Reorganization - Feasibility". In this connection, Stroh
developed the projections of operations, cash flows and
financial position for the 6 month period ending December
31, 1996, giving effect to the adjustments necessary to
reflect the confirmation and consummation of the Plan of
Reorganization, which is assumed to occur as of July 1, 1996
and for the subsequent two fiscal years ending December 31
(the "Projections").
The Projections should be read in conjunction with
the assumptions, qualifications, and the footnotes to tables
containing the Projections contained herein.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO
COMPLYING WITH THE GUIDELINES FOR PROSPECTIVE FINANCIAL
STATEMENTS PUBLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS. NEITHER THE INDEPENDENT ACCOUNTANTS FOR
THE COMPANY, ARTHUR ANDERSEN LLP, NOR THE INDEPENDENT
ACCOUNTANTS FOR STROH, DELOITTE & TOUCHE LLP, HAVE EXAMINED
OR COMPILED THE ACCOMPANYING PROSPECTIVE FINANCIAL
INFORMATION AND ACCORDINGLY DO NOT EXPRESS AN OPINION OR ANY
OTHER FORM OF ASSURANCE WITH RESPECT THERETO.
THE COMPANY AND STROH DO NOT PUBLISH THEIR
RESPECTIVE BUSINESS PLANS AND STRATEGIES OR PROJECTIONS OF
THEIR RESPECTIVE ANTICIPATED FINANCIAL POSITION OR RESULTS
OF OPERATIONS. ACCORDINGLY, THE CONSOLIDATED COMPANY DOES
NOT INTEND, AND DISCLAIMS ANY OBLIGATION TO, (A) FURNISH
UPDATED BUSINESS PLANS OR PROJECTIONS TO HOLDERS OF CLAIMS
OR EQUITY INTERESTS PRIOR TO THE CONSUMMATION DATE OR ANY
OTHER ENTITY AFTER THE CONSUMMATION DATE, (B) INCLUDE SUCH
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UPDATED INFORMATION IN ANY DOCUMENTS WHICH MAY BE REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR
(C) OTHERWISE MAKE SUCH UPDATED INFORMATION PUBLICLY
AVAILABLE.
THE PROJECTIONS PROVIDED IN THE DISCLOSURE
STATEMENT HAVE BEEN PREPARED BY STROH. THESE PROJECTIONS,
ALTHOUGH PRESENTED WITH NUMERICAL SPECIFICITY, ARE BASED
UPON A SERIES OF ESTIMATES AND ASSUMPTIONS, WHICH, ALTHOUGH
CONSIDERED REASONABLE BY STROH, MAY NOT BE REALIZED, AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND
COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH
ARE BEYOND CONTROL OF STROH AND THE CONSOLIDATED COMPANY.
NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE
FINANCIAL PROJECTIONS OR TO THE CAPACITY OF THE CONSOLIDATED
COMPANY TO ACHIEVE THE PROJECTED RESULTS. SOME ASSUMPTIONS
INEVITABLY WILL NOT MATERIALIZE, AND EVENTS AND CIRCUM-
STANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE
PROJECTIONS WERE PREPARED MAY BE DIFFERENT FROM THOSE
ASSUMED OR MAY BE UNANTICIPATED AND, ACCORDINGLY, MAY AFFECT
FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER.
THE PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A
GUARANTY OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL
OCCUR.
THE FOREGOING ASSUMPTIONS AND RESULTANT COMPUTA-
TIONS WERE MADE SOLELY FOR PURPOSES OF PREPARING THE
PROJECTIONS. ALTHOUGH THE CONSOLIDATED COMPANY EXPECTS TO
UTILIZE A CONSISTENT METHODOLOGY, THE CHANGES BETWEEN THE
AMOUNTS OF ANY OR ALL OF THE FOREGOING ITEMS AS ASSUMED IN
THE PROJECTIONS AND THE ACTUAL AMOUNTS THEREOF AS OF THE
CONSUMMATION DATE MAY BE MATERIAL.
The accompanying projected consolidated balance
sheets, statement of operations and cash flows for the six
month period ending December 31, 1996 and the years ending
December 31, 1997 and 1998, have been prepared assuming the
acquisition of the Company occurs as of July 1, 1996.
The "Stroh Pre-Acquisition" projected balance
sheet as of June 30, 1996 has been prepared using Stroh's
financial forecast for the period ending March 31, 1996 and
the appropriate portion of its profit plan for fiscal year
1997 (April 1, 1996 to March 31, 1997).
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The "Heileman Acquisition" amounts reflect the
affects of Stroh's acquisition as if it occurred as of July
1, 1996. The following information was used in preparing
these projections:
Stroh intends to finance the acquisition as follows:
- Senior Debt of $175.0 million (Tranche A $125.0
million and Tranche B $50,000,000).
- Borrowing $30.0 million under a $75.0 million
revolving credit facility.
- Senior Subordinated Notes of $70.0 million
(subject to adjustment).
- Junior Subordinated Notes of $5.0 million.
- Warrants with an agreed aggregate value of
$6,500,000 for the purchase of 7.5% of the common
stock of the Consolidated Company.
- Additional cash resources of Stroh and its
affiliates projected to be available as of the
Consummation Date and not associated with
borrowings.
The standalone balance sheet of the Company as of
December 31, 1995 was used as the starting point. This
balance sheet was then rolled forward to June 30, 1996 based
on the 1996 profit plan of the Company and a forecast of the
working capital position as of June 30, 1996 prepared by the
Company.
The acquired assets and liabilities of Heileman
were adjusted to estimated fair values based on information
currently available and is subject to change as more data is
obtained including, but not limited to, independent
appraisals of assets and actuarial reports on employee
benefits. The assets and liabilities were also adjusted to
reflect Stroh's accounting methods where appropriate.
- The net book value as of June 30, 1996 for
continuing facilities was used as the "fair value"
for purposes of recording Property, Plant and
Equipment. No independent appraisals are
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currently available. Estimated useful lives were
assigned that are consistent with Stroh's current
policies.
- Post-retirement benefits were adjusted to
eliminate all unrealized gains and losses and to
reflect Stroh's benefit levels and actuarial
assumptions.
- Point of sale material in inventory was recorded
at its estimated cost.
- The income tax liability resulting from the
acquisition has been assumed by Stroh and is
included as an acquired liability.
- For this projection, the amount of acquisition
cost and assumed liabilities in excess of
estimated tangible assets was recorded as
"intangible assets". The resulting amount has not
been allocated between identifiable intangibles
and goodwill, if any. The intangible assets are
assumed to be amortized over 15 years.
Costs associated with effecting the acquisition
and with addressing certain duplicative facilities and
administrative functions have been accrued as appropriate.
In certain circumstances those costs have been charged to
the operations of the Consolidated Company following the
acquisition. Final determination of the facilities and
operations to be impacted by the combination of Stroh has
not been completed, however, Stroh management's best
estimate, based on available information, is reflected in
these financial statement projections.
The statement of operations for the Consolidated
Company reflect Stroh management's estimates of the synergy
impacts of the consolidation.
- Sales are increased to reflect net transportation
savings achieved in the consolidation.
- The acquisition is structured to be a taxable
transaction. Therefore, the Projections have been
prepared assuming a step-up of the tax basis of
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the properties and interests in property acquired
from the Company.
- Costs of products sold are reduced to reflect the
phased-in impact of brewery rationalization and
consolidation. Additional reductions are made to
reflect packaging cost savings under existing
supplier contracts.
- Marketing administrative and general expenses
reflect the phased-in impact of overhead
rationalization and consolidation. Such accounts
also include projected increases in marketing
expenditures in 1997 and 1998.
- Interest income and other, net reflects the
prospective write-off of redundant fixed assets in
1997.
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<TABLE>
THE STROH BREWERY COMPANY
Projected Statements of Operations
July-Dec
1996 1997 1998
(000) (000) (000)
<S> <C> <C> <C>
Sales $ 860,464 $ 1,700,289 $ 1,699,686
Less excise taxes (172,364) (326,883) (315,553)
Net Sales $ 688,100 $ 1,373,406 $ 1,384,133
Costs and Expenses:
Cost of products sold $(583,123) $(1,164,768) $(1,159,900)
Marketing, administrative
and general expenses (77,321) (165,453) (164,668)
Total costs and expenses $(660,444) $(1,330,221) $(1,324,568)
Earnings from Operations $ 27,656 $ 43,185 $ 59,565
Other Income/(Expense):
Interest Expense (16,262) (30,799) (26,589)
Intangible amortization (4,163) (8,326) (8,326)
Interest income and other,
net 472 (7,906) 6,343
Earnings Before Taxes
on Income $ 7,703 $ (3,846) $ 30,993
Taxes on Income (3,004) 1,500 (12,088)
Net Earnings/(Loss) $ 4,699 $ (2,346) $ 18,905
Notes: EBITDA $ 50,375 $ 97,103 $ 111,430
Shipment summary
- barrels 11,602 22,326 21,676
</TABLE>
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<TABLE>
THE STROH BREWERY COMPANY
Projected Statements of Cash Flows
July-Dec
1996 1997 1998
(000) (000) (000)
<S> <C> <C> <C>
Beginning Cash $ 7,464 $ 2,761 $ 2,094
Cash Flow Provided by Operating
Activities:
Net Earnings (Loss) $ 4,699 $ (2,346) $ 18,905
Adjustments to reconcile net
earnings to net cash
provided by operating activities
Depreciation and Amortization 26,882 $ 62,244 60,191
Deferred taxes (3,271) 4,775 12,088
Imputed Interest $ 400 897 $ 916
Plant Closing 0 11,953 0
Deferred Revenue (3,000) 10,000 1,000
Deferred Financing Costs 889 1,779 1,779
Other 301) (1,750) (1,826)
Subtotal $ 26,298 $ 87,552 $ 93,053
Net Change in Operating
Assets and Liabilities
Accounts Receivable $ 18,166 $ 34 $ 87
Inventories 30,334 (122) (711)
Other Current Assets 0 (157) (140)
Accounts Payable (50,452) 956 (173)
Accrued Expenses (20,976) (7,921) (4,683)
Post Retirement and
Pension Liabilities (1,452) (3,126) (3,169)
Subtotal $ (24,380) $ (10,336) $ (8,789)
Net Cash Provided by
Operating Activities $ 1,918 $ 77,216 $ 84,264
Cash Flow Used in Investing
Activities:
Capital Expenditures $ (20,517) $ (30,000) $(30,000)
Collection of Notes
Receivables 2,146 4,677 4,951
Net Cash Used in Investing
Activities $ (18,371) $ (25,323) $(25,049)
Cash Flow Provided by (Used in)
Financing Activities:
Payment of Long-Term Debt $ (7,750) $ (20,500) $(25,500)
Net Change in Working Capital
Loan 23,000 (25,000) (26,000)
Dividends (3,500) (7,000) (7,000)
Other 0 (60) (360)
Net Cash Provided by (Used in)
Financing Activities $ 11,750 $ (52,560) $(58,860)
Increase (Decrease) in Cash $ (4,703) $ (667) $ 355
Cash At End of Period $ 2,761 $ 2,094 $ 2,449
</TABLE>
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<TABLE>
THE STROH BREWERY COMPANY
Projected Balance Sheets
Stroh
Pre- Heileman
AcquisitionAcquisition Consolidated Company
6/30/96 6/30/96 6/30/96 12/31/96 12/31/97 12/31/98
(000) (000) (000) (000) (000) (000)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and Marketable Securities $ 19,576 $ (12,112) $ 7,464 $ 2,761 $ 2,094 $ 2,449
Accounts and Notes Receivable 45,665 36,951 82,616 64,450 64,341 62,457
Inventories 51,853 51,968 103,821 73,487 73,609 74,320
Other Current Assets 6,990 4,718 11,708 11,708 11,865 12,005
Total Current Assets $ 124,084 $ 81,525 $ 205,609 $ 152,406 $ 151,909 $ 151,231
Property, Plant and Equipment 422,112 238,307 660,419 680,936 661,007 691,007
Accumulated Depreciation (241,976) 0 (241,976) (264,695) (280,637) (332,502)
Net P. P. and E $ 180,136 $ 238,307 $ 418,443 $ 416,241 $ 380,370 $ 358,505
Intangible Assets 421 124,462 124,883 120,720 112,394 104,068
Other Assets 34,143 47,200 81,343 69,026 63,730 59,958
TOTAL ASSETS $ 338,784 $ 491,494 $ 830,278 $ 758,393 $ 708,403 $ 673,762
LIABILITIES & EQUITY
Notes Payable $ 3,665 $ 0 $ 3,665 $ 3,665 $ 3,665 $ 3,665
Accounts Payable 43,031 66,992 110,023 59,571 60,527 60,354
Accrued Expenses 45,497 54,333 99,830 78,854 70,933 66,250
Current Portion of
Long-term Debt 0 15,500 15,500 20,560 25,860 25,860
Other Current Liabilities 9,665 15,750 25,415 9,665 9,665 9,665
Total Current Liabilities $ 101,858 $ 152,575 $ 254,433 $ 172,315 $ 170,650 $ 165,794
Long-term Debt $ 30,022 $ 238,888 $ 268,910 $ 279,100 $ 228,240 $ 176,380
Post Retirement and Pension
Liabilities 70,924 75,150 146,074 145,189 142,295 139,377
Other Long-term Liabilities
and Credits 8,246 18,381 26,627 26,356 41,131 54,219
Total Liabilities $ 211,050 $ 484,994 $ 696,044 $ 622,960 $ 582,316 $ 535,770
Warrants $ 0 $ 6,500 $ 6,500 $ 6,500 $ 6,500 $ 6,500
Stock and Paid-in Capital 1,710 0 1,710 1,710 1,710 1,710
Earnings Retained for use in the
business 126,024 0 126,024 127,223 117,877 129,782
Total Equity $ 127,734 $ 6,500 $ 134,234 $ 135,433 $ 126,087 $ 137,992
TOTAL LIABILITIES & EQUITY $ 338,784 $ 491,494 $ 830,278 $ 758,393 $ 708,403 $ 673,762
<F>
Note: These projected balance sheets reflect certain accounting adjustments
and should not be relied upon for purposes of assessing the effect of
working capital charges on the Stroh acquisition price. Reference is
made to Section III entitled "Reorganization Cases -- Events Preceding
Commencement of Reorganization Cases -- The Acquisition Agreement --
Calculation of Aggregate Released Original Principal Amount of New
Senior Subordinated Notes" and Section IV entitled "Joint Plan of
Reorganization -- Provisions for Treatment of Claims and Equity
Interests under the Plan of Reorganization -- Subordinated Unsecured
Claims (Class 6)" for a discussion of, among other things, projected
working capital charges and purchase price adjustments.
</TABLE>
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VI.
FINANCIAL INFORMATION
A. General
The Company was current in making its required
periodic filings on Forms 10-K and 10-Q until it voluntarily
suspended its registration on November 21, 1995. Such
filings contained the audited consolidated balance sheets,
and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows. Such filings
are publicly available for review by holders of Claims and
other entities.
The Consolidated Financial Statements as of
December 31, 1995 and 1994 together with Report of
Independent Public Accountants for the Company together with
certain financial information relating to Stroh are included
herewith as part of the solicitation materials relating to
the Plan of Reorganization and form a part of this
Disclosure Statement. The Consolidated Financial Statements
as of December 31, 1995 and 1994 together with Report of
Independent Public Accountants for Holding are not included
because the only property or interest in property of Holding
is the Equity Interest in the Company and, accordingly, the
financial statements of Holding are effectively identical to
the financial statements of the Company.
The Debtors are required to file monthly financial
statements with the United States Trustee and the Clerk of
the Bankruptcy Court. Accordingly, such financial
information will be on file with the Bankruptcy Court and
will be publicly available for review by holders of Claims
and other entities.
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VII.
VALUATION
Estimated Liquidation Value of Assets
As a condition to confirmation of the Plan of
Reorganization, section 1129(a)(7)(A)(ii) of the Bankruptcy
Code requires that each holder of a Claim or Equity Interest
in an impaired class of Claims or Equity Interests that has
not voted to accept the Plan of Reorganization must be
distributed an account of such Claim or Equity Interest
consideration of a value not less than that which it would
receive in the event that the Debtors were liquidated under
chapter 7 of the Bankruptcy Code on the Consummation Date.
The information contained in Exhibit C attached hereto
provides a summary of the liquidation values of the Debtors'
properties and interests in property, on a consolidated
basis, assuming a chapter 7 liquidation in which a trustee
appointed by the Bankruptcy Court would liquidate the
properties and interests in property comprising the estates
of the Debtors. Reference should be made to the Liquidation
Analysis annexed as Exhibit C hereto for a complete
discussion and presentation of such liquidation analysis.
The Liquidation Analysis was prepared by management of the
Company.
Underlying the Liquidation Analysis are a number
of estimates and assumptions that, although developed and
considered reasonable by management of the Company, are
inherently subject to significant economic and competitive
uncertainties and contingencies beyond the control of the
Debtors and management of the Company. The Liquidation
Analysis is also based upon assumptions with regard to
liquidation decisions that are subject to change.
Accordingly, the values reflected may not be realized if the
Debtors were actually to be the subject of such a
liquidation. The chapter 7 liquidation period is assumed to
be a period of one year following the discontinuance of
operations. This period would allow for the collection of
receivables, sale of properties and interests in property,
and the winding down of operations.
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VIII.
RISK FACTORS
Variances from Projections
The Projections reflect numerous assumptions
concerning the anticipated future performance of the
Consolidated Company many of which are beyond the control
of the Consolidated Company and some of which may not
materialize. The Projections include, among other things,
assumptions concerning general economic conditions; the
ability to make necessary capital expenditures; and the
ability to increase gross margin and control future
expenses, including material costs and other operating
costs. Stroh has advised the Company that it considers the
assumptions underlying the projected financial statements
reasonable. Unanticipated events and circumstances
occurring subsequent to the preparation of the Projections
may, however, affect the actual financial results of the
Consolidated Company. Therefore, the actual results
achieved throughout the periods covered by the Projections
will vary from the projected results, which variations may
be material and adverse.
Lack of Trading Market
After consummation of the Plan of Reorganization
and issuance of the New Senior Subordinated Notes, the New
Junior Subordinated Notes and the New Warrants, there can be
no assurance that an active trading market will develop
therefor, or, if developed, that it will continue. In
addition, there can be no assurance as to the degree of
price volatility in any market for such New Senior Subordi-
nated Notes, the New Junior Subordinated Notes or New
Warrants that does develop. Accordingly, no assurance can
be given that a holder of the New Senior Subordinated Notes,
New Junior Subordinated Notes or New Warrants will be able
to sell such securities in the future or as to the price at
which any sale may occur. If such markets were to exist,
such securities could trade at prices higher or lower than
the value attributed to such securities hereunder, depending
upon many factors, including, without limitation, prevailing
interest rates, markets for similar securities, industry
conditions, and the performance of, and investor
expectations for, the Consolidated Company.
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Leverage
Based on the Projections and subject to the
assumptions and limitations contained therein, including,
without limitation, consummation of the transactions
contemplated by the Plan of Reorganization in accordance
with its terms, as of the Consummation Date (assuming the
Consummation Date were to occur on June 30, 1996), the
Consolidated Company would have projected (i) approximately
$288.1 million in aggregate outstanding principal amount of
consolidated debt (including, without limitation, current
portions thereof) and (ii) approximately $134.2 million of
total shareholders' equity (as determined for financial
reporting purposes). Accordingly, the Consolidated Company
will be leveraged after the Consummation Date.
The leveraged nature of the capital structure of
the Consolidated Company will have several important effects
on the Consolidated Company and its operations, including,
without limitation, the following: (i) the Consolidated
Company will continue to have significant cash requirements
for debt service; (ii) the financial covenants and other
restrictions likely to be contained in the agreements
governing its debt will require the Consolidated Company to
satisfy certain financial conditions and will limit its
ability to borrow additional funds or to dispose of assets;
(iii) certain debt of the Consolidated Company under the
agreements governing its debt will likely bear interest at a
floating rate and, accordingly, the Consolidated Company
will be sensitive to any increase in prevailing interest
rates; (iv) as a result of the debt service requirements and
restrictions to be imposed under the terms of the agreements
governing its debt, funds available for capital expenditures
will likely be limited; and (v) the ability of the
Consolidated Company to service its debt obligations and to
reduce its total debt will be dependent upon its future
performance, which will be subject to general economic
conditions and to financial, business and other factors
affecting its operations, including, without limitation,
factors beyond its control.
Stroh has advised the Company that it believes
that, following consummation of the Plan of Reorganization,
the cash flow generated from operations by the Consolidated
Company and available cash of the Consolidated Company will
be adequate to make the required payments of principal and
interest on its debt, to fund anticipated capital expendi-
tures (which, in any event, will be limited under the terms
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<PAGE>
of the agreements governing its debt) and to fund working
capital requirements. Such belief is based, however, on
various assumptions, including, without limitation, the
assumptions underlying the Projections. Accordingly, there
can be no assurance that the financial resources will be
sufficient for the Consolidated Company to satisfy its debt
service obligations and other capital requirements.
New Credit Agreement
Stroh has obtained a commitment from Morgan
Guaranty Trust Company of New York relating to the
arrangement of a $250.0 million credit facility to be
governed by a credit agreement (the "New Credit Agreement").
Such financing is required to effect the Transaction and
fund the distributions provided under the Plan of
Reorganization. Under such commitment, the initial funding
under the New Credit Agreement is subject to material
conditions precedent. No assurance can be given that such
conditions precedent shall be satisfied or waived by the
lenders under the New Credit Agreement.
The New Credit Agreement will likely contain
certain restrictions on the operations of the Consolidated
Company and require the Consolidated Company to achieve and
maintain certain financial ratios. Such restrictions will
likely include, among other things, limitations on the
ability of the Consolidated Company and its Subsidiaries to
incur additional indebtedness, to create, incur or permit
the existence of certain liens, to make certain investments,
to make capital expenditures in excess of certain amounts,
to sell certain assets, to make certain payments with
respect to its outstanding stock, to effect certain
fundamental changes and to enter into certain types of
transactions. There can be no assurance that the
Consolidated Company will be able to achieve and maintain
compliance with the prescribed financial ratio tests or
other requirements of the New Credit Agreement. Failure to
achieve or maintain compliance with such financial ratio
tests or other requirements under the New Credit Agreement
would presumably result in a default and could lead to the
acceleration of the obligations of the Consolidated Company
under the New Credit Agreement and, possibly, the
acceleration of any other indebtedness of Stroh which, by
the terms of the instruments creating, evidencing or
governing such indebtedness, would be triggered upon an
acceleration under the New Credit Agreement. The
acceleration of any such indebtedness would result in its
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<PAGE>
becoming immediately due and payable and could have a
material adverse effect on the Consolidated Company.
Certain Taxation Matters
For a summary of the federal income tax conse-
quences of the Plan of Reorganization to holders of Claims
and to the Debtors, see section X entitled "Certain Federal
Income Tax Consequences of the Plan of Reorganization."
Subordination
Each of the New Senior Subordinated Notes and the
New Junior Subordinated Notes will be subordinated in right
of payment to all senior debt of the Consolidated Company,
including, without limitation, the indebtedness under the
New Credit Agreement. The New Junior Subordinated Notes
will be additionally subordinated in right of payment to the
New Senior Subordinated Notes. Accordingly, in the event of
the occurrence of an event of default under the agreements
governing, instruments evidencing or other documents
relating to the senior debt of the Consolidated Company,
holders of such senior debt will be entitled to receive
payment in full prior to any payment being made on account
of the New Senior Subordinated Notes or the New Junior
Subordinated Notes. Similarly, in the event of the
occurrence of an event of default under the New Senior
Subordinated Notes Indenture, holders of the New Senior
Subordinated Notes will be entitled to receive payment in
full prior to any payment being made on account of the New
Junior Subordinated Notes. The indebtedness outstanding
from time to time under the New Credit Agreement will
additionally be secured by substantially all the assets of
the Consolidated Company and its subsidiaries. On a pro
forma basis as of June 30, 1996, after giving effect to the
issuance of the New Senior Subordinates Notes and the New
Junior Subordinated Notes, anticipated borrowings under the
New Credit Agreement and the consummation of the other
transactions contemplated by the Plan of Reorganization, the
total amount of senior debt outstanding would have been
approximately $175.0 million (represented primarily by
borrowings under the New Credit Agreement). In addition,
the Consolidated Company would have had available to it the
ability to borrow approximately $75.0 million of revolving
loans under the New Credit Agreement. See "Description of
the New Senior Subordinated Notes -- Subordination,"
"Description of the New Junior Subordinated Notes."
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<PAGE>
General Decline in Consumption of Alcoholic Beverages
The alcoholic beverage industry in the United
States consists of the production, importation, marketing
and distribution of malt beverages, wine and distilled
spirits products. From 1978 through 1992 (the last calendar
year for which the Company has information), the overall
consumption of alcoholic beverages by adults (ages 21 and
over) declined, with annual malt beverage consumption
declining from 35.5 to 32.1 gallons per capita, annual wine
consumption declining from 3.0 to 2.7 gallons per capita,
and annual distilled spirits consumption declining from 3.1
to 2.0 gallons per capita. These declines have been caused
by a variety of factors, including, without limitation: the
general aging of the population; increased concerns about
the health consequences of consuming alcoholic beverages;
concerns about drinking and driving; a trend toward a diet
including lighter, lower calorie beverages such as diet soft
drinks, juices and sparkling water products; the increased
activity of anti-alcohol consumer groups; an increase in the
minimum drinking age from 18 to 21 in all states; and
increased federal and state excise taxes.
Competition
The domestic malt beverage industry is highly
competitive. The Consolidated Company will compete on the
basis of quality, price, brand recognition and distribution.
The Consolidated Company will compete with other
manufacturers of malt beverages not only for brand
recognition and consumer acceptance, but also for shelf
space in retail stores and marketing focus by the
Consolidated Company's wholesalers. The Consolidated
Company's products compete generally with other alcoholic
and non-alcoholic beverages, certain of the manufacturers of
which have greater financial resources than the Consolidated
Company. Although there are several hundred companies in
the United States engaged in the malt beverage industry, the
business is highly concentrated. See "Certain Elements
Common to the Business Presently Operated by Each of the
Company and Stroh -- Competition."
Margin and Price Point Compression
The Consolidated Company's beer business will be
vulnerable to margin compression due to factors beyond its
control. The variable cost structure of the beer business
is largely comprised of commodities such as aluminum, glass,
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barley and corn, the prices of which are determined in world
markets and subject to significant fluctuations. While the
brewing industry has generally been able to pass commodity
price increases through to its consumers, the timing of such
price recovery has often lagged the increase in costs. In
the event that prices of important commodities were to rise
suddenly, the Consolidated Company would have little
opportunity to increase prices unilaterally to compensate
for cost increases, and profits could be, at least
temporarily, depressed. Moreover, if the Consolidated
Company were to attempt to increase prices to absorb cost
increases, it would reduce the spread between the prices of
its products and those of its more premium-priced
competitors, which would have the potential to significantly
decrease sales.
Dependence on Distribution Channels
The Consolidated Company will sell its products
principally to wholesalers for resale to retail outlets
including grocery stores, convenience stores, package liquor
stores, bars and restaurants. Sales to the top 50
wholesalers of the Consolidated Company are expected to
continue to represent a significant portion of the revenues
of the Consolidated Company.
The relationships of the Consolidated Company with
its wholesalers will be governed by written agreements and
by the laws of the states in which its distributorship are
located. In many of those states, a wholesaler may be
terminated by the Consolidated Company only for "cause" as
defined by applicable state law. Poor performance of the
major wholesalers of the Consolidated Company could
materially and adversely affect the results of operations
and financial condition of the Consolidated Company.
Distribution channels for alcoholic beverages,
particularly at the wholesale level, have been characterized
in recent years by a trend toward consolidation. In
addition, wholesalers and retailers of the Consolidated
Company's products offer other products that compete
directly with the Consolidated Company's products for retail
shelf space and consumer purchases. Accordingly, there is a
risk that these wholesalers or retailers may give higher
priority to products of the Consolidated Company's
competitors. There can be no assurance that the Company's
wholesalers and retailers will continue to purchase the
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Consolidated Company's products or provide the Company's
products with adequate levels of promotional support.
Seasonality
The business of the Consolidated Company will be
seasonal in nature, with sales in June and July varying by
as much as 35.0% to 40.0% from sales in December and
January. As a result, cash receipts during the first and
fourth quarters of the year are typically lower than
receipts during the second and third quarters.
New Taxes and Tariffs and Government Regulations
On January 1, 1991, the federal excise taxes on
certain alcoholic beverages were increased significantly,
including an increase in the excise tax on malt beverages
from $9.00 to $18.00 per barrel. Individual states also
impose excise taxes on alcoholic beverages in varying
amounts, which have also been subject to change. It is
possible that in the future the rate of excise taxation
could be increased by both the federal government and a
number of the states. Further increases in excise taxes on
alcoholic beverages, if enacted, could materially and
adversely affect the financial condition and results of
operations of the Consolidated Company.
The alcoholic beverage industry is subject to
extensive regulation by state and federal agencies of such
matters as licensing requirements, trade and pricing
practices, permitted and required labelling, advertising and
relations with wholesalers and retailers. In recent years,
federal and state governments have required warning labels
in packaging and signage. There can be no assurance that
new or revised regulations or increased licensing fees and
requirements would not have a material adverse effect on the
Consolidated Company's financial condition and its results
of operations. See "Certain Elements Common to the Business
Presently Operated by Each of the Company and Stroh --
Regulatory Matters."
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IX.
ALTERNATIVES TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
The Company has evaluated numerous alternatives
to the Plan of Reorganization, including, without
limitation, the sale of the Company as a going concern,
either as an entirety (other than through the Transaction)
or on limited bases, and the liquidation of the Company.
After studying these alternatives, the Company has concluded
that the Plan of Reorganization is the best alternative and
will maximize recoveries by holders of Claims, assuming
confirmation and consummation of the Plan of Reorganization.
The following discussion provides a summary of the analysis
of the Company supporting its conclusion that a liquidation
or alternative plan of reorganization will not provide
higher value to holders of Claims.
A. Liquidation Under Chapter 7
If no plan of reorganization can be confirmed, the
chapter 11 cases of the Debtors may be converted to cases
under chapter 7 of the Bankruptcy Code, in which event a
trustee would be elected or appointed to liquidate the
properties and interests in property of the Debtors for
distribution to their creditors in accordance with the
priorities established by the Bankruptcy Code. The Company
believes that liquidation under chapter 7 would result in
(i) smaller distributions being made to creditors than those
provided for under the Plan of Reorganization because of
(a) additional administration expenses involved in the
appointment of a trustee and attorneys and other pro-
fessionals to assist such trustee, (b) additional expenses
and claims, some of which would be entitled to priority,
that would be generated during the liquidation and from the
rejection of executory contracts and unexpired leases in
connection with a cessation of the operations of the
Debtors, and (c) failure to realize the greater, going
concern value of the properties and interests in property of
the Debtors; and (ii) no distributions being made to holders
of Subordinated Unsecured Claims or Equity Interests.
B. Alternative Plan of Reorganization
If the Plan of Reorganization is not confirmed,
the Debtors or any other party in interest could undertake
to formulate a different plan of reorganization. Such a
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plan of reorganization might involve either a reorganization
and continuation of the business of the Debtors or an
orderly liquidation of the properties and interests in
property of the Debtors. With respect to an alternative
plan of reorganization, the Company has explored various
other alternatives in connection with the process involved
in the formulation and development of the Plan of
Reorganization. The Company believes that the Plan of
Reorganization, as described herein, enables holders of
Claims and Equity Interests to realize the best recoveries
under the present circumstances. In a liquidation under
chapter 11, the properties and interests in property of the
Debtors would be sold in an orderly fashion over a more
extended period of time than in a liquidation under chapter
7, probably resulting in marginally greater recoveries.
Further, if a trustee were not appointed, since one is not
required in a chapter 11 case, the expenses for professional
fees would most likely be lower than in a chapter 7 case.
Although preferable to a chapter 7 liquidation, the Company
believes that a liquidation under chapter 11 is a much less
attractive alternative to holders of Claims and Equity
Interests than the Plan of Reorganization because the
recovery realized by holders of Claims and Equity Interests
under the Plan of Reorganization is likely to be greater
than the recovery under a chapter 11 liquidation.
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X.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE PLAN OF REORGANIZATION
The following discussion summarizes certain
federal income tax consequences of the implementation of the
Plan of Reorganization to the Debtors and the Consolidated
Company, the holders of Subordinated Unsecured Claims and
the holders of Equity Interests in Holding. The following
summary does not address the federal income tax consequences
to holders that are entitled to payment in full in cash
under the Plan of Reorganization (Priority Non-Tax Claims
and the Senior Secured Claims) or assumed in accordance with
the Acquisition Agreement (Other Secured Claims and General
Unsecured Claims).
The following summary is based on the Tax Code,
Treasury regulations promulgated and proposed thereunder,
judicial decisions and published administrative rules and
pronouncements of the Internal Revenue Service ("IRS") as in
effect on the date hereof. Changes in such rules or new
interpretations thereof may have retroactive effect and
could significantly affect the federal income tax
consequences described below.
The federal income tax consequences of the Plan of
Reorganization are complex and are subject to significant
uncertainties. The Debtors have not requested a ruling from
the IRS or an opinion of counsel with respect to any of the
tax aspects of the Plan of Reorganization. Thus, no
assurance can be given as to the interpretation that the IRS
will adopt. In addition, this summary does not address
foreign, state or local tax consequences of the Plan of
Reorganization, nor does it purport to address the federal
income tax consequences of the Plan of Reorganization to
special classes of taxpayers (such as foreign taxpayers,
broker-dealers, banks, mutual funds, insurance companies,
financial institutions, small business investment companies,
regulated investment companies, broker-dealers and
tax-exempt organizations, and investors in pass-through
entities).
ACCORDINGLY, THE FOLLOWING SUMMARY OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES IS FOR INFORMATIONAL
PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR CAREFUL TAX
PLANNING AND ADVICE BASED UPON A HOLDER'S INDIVIDUAL
CIRCUMSTANCES. ALL CREDITORS ARE URGED TO CONSULT THEIR OWN
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TAX ADVISORS FOR THE FEDERAL, STATE, LOCAL AND OTHER TAX
CONSEQUENCES APPLICABLE UNDER THE PLAN OF REORGANIZATION.
A. Consequences to the Debtors and the Consolidated Company
The Debtors expect to report consolidated net
operating loss ("NOL") carryforwards for federal income tax
purposes of approximately $373.0 million as of December 31,
1995 (of which approximately $116.0 million are subject to
existing limitations under Section 382 of the Tax Code, as
discussed below). Such NOL carryforwards (including the
extent to which such NOL carryforwards are subject to
existing limitations) remain open to examination by the IRS.
As discussed below, the Debtors believe that the amount of
available NOL carryforwards will be sufficient to offset any
gain recognized upon consummation of the Transaction for
federal income tax purposes, subject to an alternative
minimum tax ("AMT") liability. In addition, the Debtors
would incur a state tax liability upon consummation of the
Transaction.
1. Discharge of Indebtedness. A taxpayer
generally must include in gross income the amount of any
discharge of indebtedness income realized during the taxable
year, unless payment of the liability would have given rise
to a deduction. Discharge of indebtedness income is
realized to the extent that the adjusted issue price of any
indebtedness exceeds the amount of cash and the fair market
value of property used to satisfy such indebtedness. An
exception exists, however, if the discharge of indebtedness
income arises in a case under the Bankruptcy Code pursuant
to a confirmed bankruptcy plan. Under this bankruptcy
exception, the taxpayer does not include the discharge of
indebtedness in income, but must reduce certain tax
attributes (including NOL carryforwards and possibly tax
basis). The reduction in tax attributes is made after the
determination of any tax imposed for the taxable year of the
discharge. Accordingly, any reduction in the Debtors' tax
attributes will not affect the determination of the federal
income tax liability of the Debtors in respect of any gains
recognized by them upon implementation of the Plan of
Reorganization, including the Transaction and the subsequent
liquidation of the Debtors.
2. Limitations on NOL Carryforwards and Other Tax
Attributes of the Debtors. As a result of prior changes in
the stock ownership -- the first in connection with the
Company's emergence from its prior bankruptcy case in
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December 1991, and the second in connection with the
acquisition of the Company by HMT&F in January 1994 -- a
significant portion of the Debtors' NOL carryforwards are
subject to existing limitations under Section 382 of the Tax
Code.
Under Section 382 of the Tax Code, if a
corporation undergoes an "ownership change," the amount of
its pre-change losses (and certain other tax attributes)
that may be utilized to offset future taxable income
generally is subject to an annual limitation. Subject to
the special built-in gain rule discussed below, the amount
of the annual limitation generally is equal to the product
of: (i) the value of the corporation's stock immediately
before the ownership change (or, in the case of an ownership
change occurring pursuant to a confirmed bankruptcy plan,
the lesser of the value of the outstanding corporation's
stock immediately after the ownership change or the value of
the corporation's gross assets immediately before such
change), with certain adjustments; and (ii) the "long-term
tax exempt rate" in effect for the month in which the
ownership change occurs (5.68% for ownership changes
occurring in May 1996). Any unused limitation carries over
and effectively serves to increase the amount of NOL
carryforwards available in the succeeding taxable year.
However, if the corporation does not continue its historic
business or use a significant portion of its assets in a new
business for two years after the ownership change, the
annual limitation would be zero. As a result of the
Company's prior ownership changes, the portion of the
Debtors' NOL carryforwards currently subject to limitation
under Section 382 are subject to an annual limitation (and,
accordingly, can only offset taxable income) of at most
approximately $3.0 million, prior to any increase for
recognized "built-in" gains.
Under a special rule, the Section 382 annual
limitation may be increased for certain recognized "built-
in" gains, that is, gain or income that is economically
accrued at the time of, but not recognized until after, the
ownership change. Under this rule, if a corporation has a
net "built-in" gain on the date of the ownership change, any
such built-in gains recognized during the following five
years (up to the amount of the original net built-in gain)
generally will increase the annual limitation in the year
recognized, such that the corporation would be permitted to
use its pre-change losses against such built-in gain income
in addition to its regular annual allowance.
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At the time of each of the Debtors' prior two
ownership changes, the Debtors were in a substantial net
built-in gain position. The Debtors have since reported (or
will report for the taxable year ended December 31, 1995)
the recognition of significant built-in gains, which, due to
sizeable current losses in the taxable years in which such
gains were recognized, had the effect of increasing the
amount of the Debtors' reported NOL carryforwards not
subject to limitation by approximately $142 million. The
Debtors believe that the amount of their available NOL
carryforwards will be further increased by the recognition
of additional "built-in" gains upon consummation of the
Transaction.
3. Alternative Minimum Tax. In general, an AMT
is imposed on a corporation's alternative minimum taxable
income at a 20% rate to the extent such tax exceeds the
corporation's regular federal income tax. For purposes of
computing taxable income for AMT purposes, certain tax
deductions and other beneficial allowances are modified or
eliminated. In particular, even though a corporation might
otherwise be able to offset all of its taxable income for
regular tax purposes by available NOL carryforwards, only
90.0% of a corporation's taxable income for AMT purposes may
be offset by available NOL carryforwards (as recomputed for
AMT purposes). Accordingly, even though the Debtors believe
that the amount of available NOL carryforwards will be
sufficient to offset any gain recognized for regular federal
income tax purposes upon the implementation of the Plan of
Reorganization (including the Transaction and the
liquidation of the Debtors), an AMT will still be incurred.
See "Disposition of Assets", below.
4. Disposition of Assets. Upon implementation of
the Plan of Reorganization, and pursuant to the Acquisition
Agreement, the Transaction will be consummated. The
Transaction consists of separate acquisitions of all of the
assets of each of the Debtors (other than Holding), subject
to certain liabilities to be assumed by the Consolidated
Company, in consideration for a package of consideration
comprised of cash (aggregating at least $200.0 million), up
to $75.0 million of subordinated notes, and New Warrants.
In accordance with the Restructuring Transactions, each of
the Debtors thereafter will be liquidated and the sales
proceeds distributed to the creditors and shareholders of
the Debtors.
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The Transaction has been structured as a taxable
transaction, whereby the Consolidated Company would obtain a
stepped-up fair market value tax basis in the acquired
assets, although there is no assurance that the Transaction
would be so treated by the IRS. As a result of the
Transaction and subsequent liquidation of the Debtors, the
Debtors expect to recognize a substantial net gain, which
the Debtors believe will be fully offset for regular federal
income tax purposes by current operating losses and
available NOL carryforwards. The Debtors will, however,
incur a consolidated federal AMT liability, as well as a
state tax liability. See "Alternative Minimum Tax", above.
The Debtors estimate that the implementation of the Plan of
Reorganization will result in a federal AMT and state tax
liability aggregating approximately $4.0 million.
B. Consequences to Holders of Subordinated Unsecured Claims
Pursuant to the Plan of Reorganization, holders of
Subordinated Unsecured Claims will receive, in discharge of
their Allowed Claims, a beneficial interest in two escrows
established in accordance with the Acquisition Agreement:
Escrow A and Escrow B (collectively, the "Escrows"). Escrow
A will contain the New Senior Subordinated Notes and the New
Junior Subordinated Notes and Escrow B will contain the New
Warrants. Although the New Senior Subordinated Notes and a
portion of the New Warrants should be released and
distributed to the beneficial holders of the respective
escrows within approximately six months (and most are
expected to be released after approximately 45 days), the
Junior Subordinated Notes and the remainder of the New
Warrants will remain in escrow for an extended period of up
to approximately 3-1/2 years or more. During the period held
in escrow, both the amount of the New Senior Subordinated
Notes and New Junior Subordinated Notes are subject to
adjustment in accordance with the Acquisition Agreement. In
no event, however, may the aggregate principal amount of the
New Senior Subordinated Notes and New Junior Subordinated
Notes exceed $75.0 million. In addition, the portion of the
amount of the New Warrants allocable to the holders of
beneficial interests received on account of Subordinated
Unsecured Claims is governed by a formula and subject to
redetermination throughout the duration of the Escrows.
As discussed below, it has been assumed, for
purposes of the discussion herein, that both Escrow A and
Escrow B would be treated as taxable trusts for federal
income tax purposes and, accordingly, that the holders of
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Subordinated Unsecured Claims would be treated for federal
income tax purposes as only receiving a beneficial interest
in such escrows, rather than being treated as the direct
recipients of the New Senior Subordinated Notes, the New
Junior Subordinated Notes and the New Warrants held by such
escrows. It has also been assumed that the Transaction will
be respected as a taxable transaction for federal income tax
purposes. See "Federal Income Tax Treatment of the
Escrows", below, and "Consequences to the Debtors and the
Consolidated Company -- Disposition of Assets", above.
HOLDERS OF SUBORDINATED UNSECURED CLAIMS ARE
STRONGLY URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX TREATMENT UNDER THE PLAN OF REORGANIZATION OF THEIR
CLAIMS, THE TAX TREATMENT OF THE SALES ESCROW AND WARRANT
ESCROW AND THE TAX CONSEQUENCES OF RECEIVING, HOLDING AND
DISPOSING OF THE NEW SENIOR SUBORDINATED NOTES, THE NEW
JUNIOR SUBORDINATED NOTES AND THE NEW WARRANTS.
1. Gain or Loss. In general, each holder of a
Subordinated Unsecured Claim will recognize gain or loss
upon implementation of the Plan of Reorganization in an
amount equal to the difference between (i) the "amount
realized" in respect of its Claim (other than any Claim for
accrued interest) and (ii) the tax basis in its Claim (other
than any Claim for accrued interest). See "Distribution in
Discharge of Accrued Interest", below. A holder's "amount
realized" in respect of its Claim will equal the fair market
value of the consideration received (including the fair
market value of its beneficial interests in the Escrows).
See "Federal Income Tax Treatment of the Escrows", below.
The character of any gain or loss recognized by a
holder in respect of its Claim as long-term or short-term
capital gain or loss or as ordinary income or loss will be
determined by a number of factors, including the tax status
of the holder, whether the Claim constitutes a capital asset
in the hands of the holder, whether the Claim has been held
for more than one year or was purchased at a discount, and
whether and to what extent the holder has previously claimed
a bad debt deduction.
A holder's tax basis in the property received (its
interest in the Escrows) will be the fair market value of
such property. The holder's holding period for such
property received will begin on the day following their
issuance or transfer.
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2. Distribution in Discharge of Accrued Interest.
To the extent any amount received by a holder (whether a
beneficial interest in the Escrows, cash or other property)
is received in discharge of a Claim for interest accrued
during its holding period other than any interest which is
tax-exempt, such amount will be taxable to the holder as
interest income (if not previously included in the holder's
gross income). A holder will recognize a deductible loss
(or, possibly, a write-off against a reserve for bad debts)
to the extent any accrued interest claimed was previously
included in its gross income and is not paid in full.
Pursuant to the Plan of Reorganization, any con-
sideration received by holders of Subordinated Unsecured
Claims shall be allocated first to the principal portion of
the Claim (to the extent thereof) and second to any Claim
for accrued and unpaid interest. There is no assurance,
however, that such allocation will be respected for federal
income tax purposes. Accordingly, all holders are advised
to consult their own tax advisors to determine the amount of
consideration received under the Plan of Reorganization that
may be allocable to interest.
3. Consequences of Holding New Senior
Subordinated Notes and New Junior Subordinated Notes.
a. Original Issue Discount. Under the original
issue discount ("OID") provisions of the Tax Code, it is
possible that the New Junior Subordinated Notes may be
considered issued with OID in respect of the two percentage
point increase in the stated interest rate on the New
Subordinated Notes from 11.0% per annum to 13.0% per annum
after the seventh anniversary. If so treated, the aggregate
amount of additional interest that would accrue over the
term of the New Junior Subordinated Notes due to the in-
crease in the interest rate (the "Additional Interest") will
constitute OID and be accrued and includable in the holders'
gross income over the term of the notes, as discussed below.
The Consolidated Company intends to take the position that
the Additional Interest does not constitute OID.
In addition, under certain circumstances, the New
Senior Subordinated Notes may be treated as issued with OID
for federal income tax purposes. In general, the New Senior
Subordinated Notes would have OID to the extent, if any,
that (i) the stated principal amount of the notes exceeds
(ii) their "issue price". Under a de minimis rule, there
would be no OID if the OID would be less than .25% of the
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stated principal amount multiplied by the number of complete
years to maturity of such debt (or, in the case of an
obligation with fixed periodic redemptions, the weighted
average maturity).
The "issue price" of the New Senior Subordinated
Notes would be the stated principal amount of such notes (in
which event there would be no resulting OID), unless a
substantial portion of the New Senior Subordinated Notes is
listed on an "established securities market" and initially
trades at a discount. In the latter event, the issue price
of the New Senior Subordinated Notes would be the fair
market value of such notes. Pursuant to Treasury
regulations, an "established securities market" includes a
system of general circulation (including a computer listing
disseminated to subscribing brokers, dealers, or traders)
that provides a reasonable basis to determine fair market
value by disseminating either recent price quotations or
actual prices of recent sale transactions.
Because the New Junior Subordinated Notes will be
held in Escrow A for an extended period of time, the "issue
price" of such notes should be equal to their stated
principal amount. As such, subject to the treatment of the
Additional Interest, no OID should be created with respect
to the New Junior Subordinated Notes.
Subject to the discussion of "Applicable High-
Yield Discount Obligations," below, if any OID were
considered to arise with respect to the New Junior
Subordinated Notes or the New Senior Subordinated Notes,
such OID would have to be accrued and includible in the
holder's gross income as interest over the term of the
respective notes, based on the constant interest method. As
a result, holders would be required to include amounts in
gross income in advance of any receipt of cash in respect of
such income.
b. Market Discount. In addition, because the New
Junior Subordinated Notes and the New Senior Subordinated
Notes will be issued to the Debtors by the Consolidated
Company under the Acquisition Agreement and thereafter be
placed in escrow and distributed to holders of Subordinated
Unsecured Claims in accordance with the provisions of Escrow
A, such holders may be subject to the market discount rules
of the Tax Code with respect to any New Junior Subordinated
Notes or New Senior Subordinated Notes actually (or deemed)
received by them. Each holder would be subject to the
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market discount rules with respect to the New Junior
Subordinated Notes or the New Senior Subordinated Notes (as
the case may be) if such notes contain "market discount" (as
defined below) that exceeds a statutorily defined de minimis
amount. Gain recognized on the disposition of a debt
obligation that has accrued market discount (discussed
below) will be treated as ordinary income, and not capital
gain, to the extent of the accrued market discount. In
addition, partial principal payments on the debt obligation
are includable as ordinary income upon receipt to the extent
of the accrued market discount.
In general, "market discount" is defined as the
excess (if any) of (i) the stated principal amount of the
debt obligation less any unamortized portion of such
principal amount treated as OID over (ii) the tax basis of
the obligation in the hands of the holder immediately after
its acquisition. Each holder of Subordinated Unsecured
Claims generally should have a tax basis in the New Junior
Subordinated Notes and New Senior Subordinated Notes
received in respect of its Claim equal to the fair market
value of such notes at issuance. Under a de minimis rule,
there is no market discount if the discount would be less
than .25% of the stated redemption price at maturity
multiplied by the number of complete years from the
acquisition to maturity (or, in the case of an obligation
with fixed periodic redemptions, the weighted average
maturity).
In general, market discount accrues ratably over
the period from the date of the holder's acquisition until
maturity. A holder may, however, elect with respect to any
debt obligation to accrue the market discount utilizing the
constant interest method rather than a ratable accrual.
Such an election would be irrevocable. The accrued market
discount is only includable in income as, and to the extent,
principal payments are made or upon a disposition of the
debt obligation. If a holder of a debt obligation acquired
at a market discount disposes of the debt obligation in any
transaction other than a sale, exchange or involuntary
conversion, such holder would be deemed to have realized an
amount equal to the fair market value of the debt obligation
and would be required to recognize as ordinary income (not
to exceed the gain realized) any accrued market discount not
previously included in income.
A holder of a debt obligation acquired at a market
discount also may be required to defer the deduction of all
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or a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the debt obligation until it
is disposed of in a taxable transaction, unless an election
is made to accrue the market discount into income on a
current basis. This election would apply to all market
discount obligations acquired on or after the first day of
the first taxable year to which the election applies, and
may be revoked only with the consent of the IRS.
c. Applicable High-Yield Discount Obligations.
If the New Junior Subordinated Notes or the New Senior
Subordinated Notes are considered to be issued with OID and
are treated as applicable high-yield discount obligations
("AHYDO") within the meaning of Section 163(e)(5) of the Tax
Code, a portion of the Consolidated Company's interest
deduction for accrued OID (if otherwise allowable) may be
disallowed or deferred and a portion of a corporate holder's
income with respect to such accrued OID may be treated as
dividend income. The portion of the Consolidated Company's
interest deduction that is disallowed, if any, is called the
"disqualified portion" (as discussed below).
A corporate holder's share of any accrued OID with
respect to the New Junior Subordinated Notes or the New
Senior Subordinated Notes attributable to the "disqualified
portion" (if any) of the Consolidated Company's interest
deduction otherwise allowable with respect to such notes as
accrued OID may be treated as a dividend for purposes of the
dividend-received-deduction to the extent such amount would
be so treated if it had been a distribution made by the
Consolidated Company with respect to its stock (that is, to
the extent the Consolidated Company has sufficient earnings
and profits such that a distribution in respect of stock
would constitute a dividend for federal income tax purposes
and, presumably, subject to certain holding period and
taxable income requirements and other limitations on the
dividend-received-deduction).
If issued with OID, the New Junior Subordinated
Notes and the New Senior Subordinated Notes may be treated
as AHYDOs if, among other requirements, the yield to
maturity of such notes is at least five percentage points
over the applicable federal rate in effect for the calendar
month in which such notes are issued (6.72% for May 1996).
The "disqualified portion" of any interest deduction
otherwise allowable as accrued OID on a debt is that
portion, if any, of the total OID multiplied by a fraction,
the numerator of which is equal to the "disqualified yield"
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(that is, the excess of the yield to maturity of the debt
over the sum of the applicable federal rate for the calendar
month in which the debt is issued plus six percentage
points) and the denominator of which is equal to the total
yield to maturity of the debt.
Non-corporate holders of the New Junior
Subordinated Notes and the New Senior Subordinated Notes are
not affected by the AHYDO rules, and must include all OID on
such notes as interest income as it accrues under the
regular OID rules.
4. Federal Income Tax Treatment of the Escrows.
As discussed above, it has been assumed, for purposes of the
foregoing discussion, that the Escrows will be treated for
federal income tax purposes as taxable (or "complex") trusts
and, accordingly, that the holders of Subordinated Unsecured
Claims would be treated for federal income tax purposes as
only receiving a beneficial interest in such escrows, rather
than being treated as the direct recipients of the New
Senior Subordinated Notes, the New Junior Subordinated Notes
and the New Warrants held by such escrows. Moreover, the
escrow agent for the Escrows shall be instructed by the
selling Debtors and the Consolidated Company to treat such
escrows as "complex trusts" for federal income tax purposes,
except as otherwise required by law.
Under Section 468B(g) of the Tax Code, amounts
earned by an escrow account, settlement fund or similar fund
must be subject to current tax. Although certain Treasury
regulations have recently been issued under this section, no
Treasury regulations have as yet been promulgated to address
the tax treatment of accounts in circumstances similar to
those here where an escrow account is established with
respect to sale proceeds and the beneficial interest in such
escrow is distributed to creditors.
As complex trusts, both Escrow A and Escrow B
would be treated as separate taxable entities in accordance
with the "complex trust" provisions of the Tax Code (Section
641 et seq.). Accordingly, any income earned by each escrow
would be separately taxable to it, subject to applicable
deductions (including expenses of administration and
deductions for current distributions to beneficiaries). The
complex trust provisions of the Tax Code are generally
intended to exact a single level of tax as between the trust
and its beneficiaries (although, in the case of ordinary
income that is not distributed in the year earned, at the
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higher of the trust's or the beneficiary's effective tax
rate). In general, the mechanism for this is (i) the trust
deduction permitted for current distributions to
beneficiaries and (ii) with respect to any distribution of
prior year income, an additional tax imposed on the
beneficiary with respect to its share if, and to the extent,
the beneficiary would pay a higher tax on such income than
that paid by the trust. Each beneficiary receiving a
distribution from an escrow in any given year generally will
be taxable on a portion of the escrow's income for that year
on a pass-through-type basis. In general, a holder's tax
basis in any New Senior Subordinated Notes, New Junior
Subordinated Notes or New Warrants distributed should be the
same as the escrow's adjusted tax basis at the time of
distribution, and a holder's holding period should include
the holding period of the escrow.
Holders of Subordinated Unsecured Claims are urged
to consult their tax advisors regarding the potential
taxation of the Escrows (including the effect on the
computation of such holder's gain or loss in respect of its
Claim and the subsequent taxation of any distributions from
such escrows). For example, if the Escrows were treated as
grantor trusts, the holders of Subordinated Unsecured Claims
would be treated as receiving directly the New Senior
Subordinated Notes, the New Junior Subordinated Notes and
their portion of the New Warrants held in such escrows. As
a result, each holder would be required to report on its
federal income tax return(s) such holder's allocable share
of any income, gain, loss, deduction or credit recognized or
incurred by the Escrows. Moreover, due to the possibility
that the amounts of the notes may increase or decrease, and
that the amount of the New Warrants allocable to the holders
of Subordinated Unsecured Claims may change, if the Escrows
were treated as grantor trusts it is possible that a holder
of Subordinated Unsecured Claims could be prevented from
recognizing a loss until the time for making such
adjustments had expired (most likely at least 3-1/2 years
after the Consummation Date).
5. Ownership and Disposition of the New Warrants.
The federal income tax consequences of the ownership and
disposition of the New Warrants is uncertain and depends
primarily upon the tax status of the New Warrants,
particularly whether the New Warrants will be respected as
warrants for federal income tax purposes or, possibly,
treated as contingent payment debt obligation (due to the
put/call provisions of the New Warrants).
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Unless the New Warrants are treated as a
contingent payment debt obligation (as discussed below), a
holder of a New Warrant will not recognize gain or loss upon
the exercise of the New Warrant (except possibly in respect
of any cash received in lieu of fractional shares). The
holder's tax basis in the New Common Stock received upon
exercise of the New Warrant would be equal to the sum of the
holder's tax basis in the New Warrant and the Exercise Price
(less, possibly, the portion of such tax basis allocable to
any fractional share, as discussed below). The holding
period of the New Common Stock received upon exercise of a
New Warrant would commence not later than the date of the
exercise of such New Warrant. Upon the lapse or disposition
of the New Warrant, the holder generally should recognize
gain or loss equal to the difference between the amount
received (nothing in the case of a lapse) and its tax basis
in the warrant. In general, such gain or loss should be a
capital gain or loss, long-term or short-term depending on
whether the requisite holding period was satisfied.
If the New Warrants are treated as a contingent
payment debt obligation, a portion of any amount received in
respect of the New Warrants (whether cash or stock) would be
treated as OID. In addition, under proposed Treasury
regulations, it is possible that all or part of such OID
would be required to be included in income as interest
income in advance of actual payment. However, such proposed
regulations remain subject to change and, by their terms,
would only apply to contingent debt obligations issued after
such regulations become final. Other than the recognition
of OID, it is likely that the exercise of the New Warrants
for New Common Stock or the lapse or disposition of the New
Warrants would be treated similar to that described in the
preceding paragraph, although the holder's tax basis would
be increased by the amount of OID includable in income as it
accrues.
The federal income tax treatment of the receipt of
cash in lieu of a fractional share upon exercise of the New
Warrants is unclear. One possibility is that the cash would
be viewed as a reduction in the Exercise Price of the shares
actually acquired. Alternatively, a holder may recognize
income or loss equal to the difference between the amount of
cash received and the sum of the Exercise Price for the
fractional share and the portion of the holder's tax basis
in the New Warrants allocable to such fractional share.
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Adjustments in the number of shares of New Common
Stock for which the New Warrants may be exercised or in the
Exercise Price pursuant to the anti-dilution or other
provisions of the New Warrants to reflect distributions to
holders of New Common Stock may result in constructive
distributions to New Warrant holders that could be taxable
to them as dividends under Section 305 of the Tax Code.
The Debtors and the Consolidated Company intend to
treat the New Warrants as warrants for federal income tax
purposes. All recipients of the New Warrants are urged to
consult their tax advisors regarding the tax status of the
New Warrants for federal income tax purposes (whether as
warrants, debt or otherwise) and the tax consequences to
them resulting therefrom.
6. Withholding. All distributions to holders of
Allowed Claims under the Plan of Reorganization are subject
to any applicable withholding (including employment tax
withholding). Under federal income tax law, interest,
dividends and other reportable payments may, under certain
circumstances, be subject to "backup withholding" at a 31.0%
rate. Backup withholding generally applies if the holder
(a) fails to furnish its social security number or other
taxpayer identification number ("TIN"), (b) furnishes an
incorrect TIN, (c) fails properly to report interest or
dividends, or (d) under certain circumstances, fails to
provide a certified statement, signed under penalty of
perjury, that the TIN provided is its correct number and
that it is not subject to backup withholding. Backup
withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in
an overpayment of tax. Certain persons are exempt from
backup withholding, including, in certain circumstances,
corporations and financial institutions.
It is possible that the cash portion of the
distributions to be made under the Plan of Reorganization in
respect of a Claim will be less than the amount required to
be withheld in respect of such Claim (as described in the
preceding paragraph). In such event, such holder's entire
distribution will be held back pending the sale of a
sufficient portion of the non-cash distribution, or the
receipt from the holder of cash, sufficient to satisfy the
amount required to be withheld in respect of such Claim.
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C. Holders of Equity Interests in Heileman Holding Company
Pursuant to the Plan of Reorganization and after
giving effect to the Restructuring Transactions, holders of
Equity Interests in Holding will receive, in liquidation of
their Equity Interests, a beneficial interest in the Escrows
in respect of a portion of the New Warrants (which is
governed by a formula and subject to redetermination
throughout the duration of the Escrows) and a portion of any
New Junior Subordinated Notes in excess of $5.0 million.
Upon the liquidation of Holding pursuant to the
Plan of Reorganization, it appears that each holder of an
Equity Interest in Holding should recognize gain or loss
equal to the difference between the fair market value of the
consideration received (namely its interest in the Escrows
assuming the Escrows are treated as taxable trusts for
federal income tax purposes) and its tax basis in its Equity
Interest. Such loss should be a capital gain or loss, and
would be a long-term capital gain or loss if the Equity
Interest were held for more than one year. A holder's tax
basis in the property received will be the fair market value
of such property and its holding period for such property
received will begin on the day following their issuance or
transfer.
For a discussion of the federal income tax
treatment of the Escrows (including its affect on a holder's
computation of gain or loss) and the taxation of any
subsequent distribution from the Escrows, see "Consequences
to Holders of Subordinated Unsecured Notes -- Federal Income
Tax Treatment of the Escrows", above.
For a discussion of the federal income tax
consequences of holding and disposing of the New Junior
Subordinated Notes and the New Warrants, see "Consequences
to Holders of Subordinated Unsecured Notes -- Consequences
of Holding New Senior Subordinated Notes and New Junior
Subordinated Notes" and "Ownership and Disposition of the
New Warrants", above.
HOLDERS OF EQUITY INTERESTS ARE STRONGLY URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
TREATMENT UNDER THE PLAN OF REORGANIZATION OF THEIR
INTERESTS, THE TAX TREATMENT OF THE ESCROWS AND THE TAX
CONSEQUENCES OF RECEIVING, HOLDING AND DISPOSING OF THE NEW
JUNIOR SUBORDINATED NOTES AND THE NEW WARRANTS.
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D. Importance of Obtaining Professional Tax Assistance
The foregoing discussion is only intended as a
summary of certain material federal income tax consequences
of the Plan of Reorganization, and is not a substitute for
careful tax planning with a tax professional. The tax
consequences of the Plan of Reorganization are in many cases
uncertain and may vary depending on a holder's individual
circumstances. Accordingly holders of Claims and Equity
Interests are strongly urged to consult their own tax
advisors concerning the federal, state, local and other tax
consequences of the Plan of Reorganization, and the effect
of their personal circumstances.
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XI.
VOTING PROCEDURES AND REQUIREMENTS
A. Parties in Interest Entitled to Vote
Generally, any holder of an Allowed Claim against
or Equity Interest in any of the Debtors at the date on
which the order approving this Disclosure Statement (the
"Disclosure Statement Order") is entered by the Clerk of the
Bankruptcy Court whose Claim or Equity Interest has not
previously been disallowed by the Bankruptcy Court is
entitled to vote to accept or reject the Plan of
Reorganization if such Claim or Equity Interest is impaired
under the Plan of Reorganization and is not of a class that
is deemed to have rejected the Plan of Reorganization under
section 1126(g) of the Bankruptcy Code.
Solicitation materials including, without
limitation, this Disclosure Statement will be served upon
(i) each registered holder of the Existing Senior
Subordinated Notes or Equity Interests (or its agent, if
applicable) as of May 6, 1996 at 8:00 a.m. in accordance
with the provisions of Bankruptcy Rule 3017 (the "Record
Date"); (ii) each entity that has filed, on or before the
Record Date, a proof of claim against the Debtors and such
claim has not been disallowed by an order of the Court
entered on or before the Record Date; and (iii) all known
holders of impaired claims against, and holders of equity
interests in, the Debtors as of the Record Date.
All votes to accept or reject the Plan must be
cast by using the appropriate ballot (a "Ballot") or, in the
case of a brokerage firm, bank, trust company or other
nominee holding Notes or Equity Interests in its own name on
behalf of the beneficial owners (each, a "Depository"), the
master ballot ("Master Ballot"). Votes which are cast in
any other manner will not be counted. All Ballots and
Master Ballots must be actually received by the Balloting
Agent (as defined below) no later than June 17, 1996 at 4:30
p.m. (Mountain Standard Time).
For purposes of voting to accept or reject the
Plan, only the beneficial owners of Existing Senior
Subordinated Notes and Equity Interest will be deemed the
holders of claims represented by such Existing Senior
Subordinated Notes or Equity Interests.
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Any brokerage or proxy intermediary having the
power of attorney or grant of proxy to vote on behalf of a
beneficial owner of Existing Senior Subordinated Notes or
Equity Interests in "street name" can vote by (a) completing
all that applicable information on the appropriate Ballot or
Master Ballot, (b) executing the Ballot or Master Ballot
(unless the Ballot or Master Ballot has already been
executed by a Depository), (c) certifying the authority of
the executing entity to deliver the Ballot or Master Ballot
on behalf of the beneficial holder of Existing Senior
Subordinated Notes or Equity Interests and further certify-
ing that to best of such Entity's knowledge, the beneficial
holder of Existing Senior Subordinated Notes or Equity
Interests has not completed and returned an individual
Ballot or has provided information for all other Existing
Senior Subordinated Notes or Equity Interests for which such
beneficial owner has submitted additional Ballot(s) and
(d) returning the Ballot or Master Ballot to the Balloting
Agent. Any Ballot or Master Ballot submitted to a brokerage
or proxy intermediary will not be counted until such broker-
age or proxy intermediary either (a) properly executes and
delivers such Ballot to the Balloting Agent or (b) properly
completes and delivers a Master Ballot, as appropriate, to
the Balloting Agent.
Any holder of Existing Senior Subordinated Notes
or Equity Interests holding such Existing Senior
Subordinated Notes or Equity Interests in its own name can
vote to accept or reject the Plan of Reorganization by
completing and signing the Ballot and returning such Ballot
directly to the Balloting Agent.
A Depository holding Existing Senior Subordinated
Notes or Equity Interests for beneficial owners shall vote
on behalf of such owners by (a) promptly distributing the
solicitation materials (including, without limitation, the
Ballots) to such holders of Existing Senior Subordinated
Notes and Equity Interests, (b) collecting such Ballots,
(c) completing a Master Ballot by compiling the votes and
other information from the Ballots collected from such
owners, and (d) promptly transmitting such completed Master
Ballot to the Balloting Agent. A brokerage or proxy
intermediary acting on behalf of a Depository shall follow
the procedures in this paragraph to vote on behalf of such
beneficial holder of Existing Senior Subordinated Notes or
Equity Interests.
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With respect to all holders of impaired Claims and
Equity Interests which cannot be identified or located by
the Debtors or the Balloting Agent as of the Record Date,
the Debtors will provide notice of the approval of the
Disclosure Statement, the date fixed by the Court as the
Voting Deadline and the scheduling of the Confirmation
Hearing in substantially the form annexed to the Disclosure
Statement Order as Exhibit B thereto by publishing in each
of The Wall Street Journal (national edition) and The New
York Times (national edition) one day per week for a period
of two consecutive weeks commencing no later than five (5)
business days after the Record Date. The Balloting Agent,
upon being contacted by such holders, will promptly provide
each such holder with solicitation materials after such
holder has adequately evidenced its claim against the
Debtors, including, without limitation, the ownership of (or
discretionary control over) the Existing Senior Subordinated
Notes or Equity Interests.
If more than one Ballot is received from any
holder of an impaired claim or equity interest, including
the Ballot of any holder of Existing Senior Subordinated
Notes or Equity Interests (or its agent) for the same
securities, the latter dated Ballot, if received on or
before the Voting Deadline, shall be deemed to supersede the
earlier dated Ballot. The Balloting Agent will not accept
ballots by facsimile transmission.
Creditors must vote all of their claims within a
particular class under the Plan of Reorganization either to
accept or reject the Plan and may not split their vote, and
accordingly, a Ballot that partially rejects and partially
accepts the Plan of Reorganization will not be counted.
Any Claim or Equity Interest as to which an
objection has been filed is not entitled to vote, unless the
Bankruptcy Court, upon application of the holder to whose
Claim or Equity Interest an objection has been made
temporarily allows such Claim or Equity Interest to the
extent that it deems proper for the purpose of accepting or
rejecting the Plan of Reorganization.
A vote may be disregarded if the Bankruptcy Court
determines, after notice and a hearing, that such vote was
not solicited or procured in good faith or in accordance
with the provisions of the Bankruptcy Code.
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B. Classes Impaired and Entitled to Vote Under the Plan of
Reorganization
The following classes and subclasses of Claims
and Equity Interests are impaired under the Plan of Re-
organization and are entitled to vote to accept or reject
the Plan of Reorganization: Class 2 (Senior Secured
Claims), Class 3 (Other Secured Claims) and each subclass
thereof, Class 4 (General Unsecured Claims) and each
subclass thereof, Class 5 (Intercompany Affiliate Unsecured
Claims) and each subclass thereof, Class 6 (Subordinated
Unsecured Claims) and Class 7 (Equity Interests) and each
subclass thereof. All other classes of Claims or Equity
Interests are unimpaired under the Plan of Reorganization.
C. Vote Required for Acceptance by Class of Claims
The Bankruptcy Code defines acceptance of a plan
by a class of claims as acceptance by holders of at least
two-thirds in dollar amount, and more than one-half in
number, of the claims of that class that are actually voted
for acceptance or rejection of the plan of reorganization.
Accordingly, acceptance by a class or subclass of claims
occurs only if at least two-thirds in amount and a majority
in number of the holders of claims voting cast their ballots
in favor of acceptance. The Plan of Reorganization provides
that for purposes of calculating the number of Allowed
Claims held by holders of Allowed Claims that have voted to
accept or reject the Plan of Reorganization, all Allowed
Claims held by an Entity or any affiliate (as defined in the
rules under the Securities Act) of any Entity that acquired
record ownership of such Allowed Claims after the Petition
Date will be aggregated and treated as one Allowed Claim. A
vote may be disregarded if the Bankruptcy Court determines,
after notice and a hearing, that such acceptance or
rejection was not solicited or procured in good faith or in
accordance with the provisions of the Bankruptcy Code.
D. Vote Required for Acceptance by Class of
Equity Interests
The Bankruptcy Code defines acceptance of a plan
of reorganization by a class of equity interests as
acceptance by holders of at least two-thirds in amount of
the allowed equity interests in that class which actually
cast ballots for acceptance or rejection of the plan of
reorganization. A vote may be disregarded if the Bankruptcy
Court determines, after notice and a hearing, that such
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acceptance or rejection was not solicited or procured in
good faith or in accordance with the provisions of the
Bankruptcy Code.
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XII.
CONFIRMATION OF THE PLAN OF REORGANIZATION
Under the Bankruptcy Code, the following steps must be
taken to confirm the Plan.
A. Confirmation Hearing
Section 1128(a) of the Bankruptcy Code requires
the Bankruptcy Court, after notice, to hold a hearing on
confirmation of the Plan of Reorganization. Section 1128(b)
of the Bankruptcy Code provides that any party in interest
may object to the confirmation of a plan.
The Company is presently prosecuting confirmation
of the Plan of Reorganization. In connection therewith, the
Bankruptcy Court has scheduled the Confirmation Hearing for
June 26, 1996, at 2:30 p.m. Notice of the Confirmation
Hearing will be provided to, among other entities, holders
of the Existing Senior Subordinated Notes. The Confirmation
Hearing may be adjourned from time to time by the Bankruptcy
Court without further notice except for an announcement of
the adjourned date made at the Confirmation Hearing or any
adjournment thereof. Objections to confirmation must be
made in writing, specifying in detail the name and address
of the Entity objecting, the grounds for the objection, and
the nature and amount of the Claim or Equity Interest held
by the objector. Objections must be filed with the
Bankruptcy Court, with a copy to chambers of the Honorable
Peter J. Walsh, together with proof of service, and served
upon the parties identified below no later than June 17,
1996 at 4:30 p.m.:
(1) G. HEILEMAN BREWING COMPANY, INC.
9399 West Higgins Road, Suite 700
Rosemont, Illinois 60018
Attn: Randy J. Smith, Esq.
Senior Vice President, General
Counsel & Secretary
(2) WEIL, GOTSHAL & MANGES LLP
Co-Attorneys for the Debtors and
Debtors in Possession
767 Fifth Avenue
New York, New York 10153
Attn: Edward A.C. Sutherland, Esq.
Adam C. Rogoff, Esq.
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(3) WEIL, GOTSHAL & MANGES LLP
Co-Attorneys for the Debtors and
Debtors and Possession
100 Crescent Court
Dallas, Texas 75201
Attn: Glenn D. West, Esq.
(4) RICHARDS, LAYTON & FINGER, P.A.
Co-Attorneys for the Debtors and
Debtors and Possession
One Rodney Square
P.O. Box 551
Wilmington Delaware 19899
Attn: Thomas L. Ambro, Esq.
(5) THE STROH BREWERY COMPANY
100 River Place
Detroit, Michigan 48207
Attn: George E. Kuehn, Esq.
(6) SIMPSON THACHER & BARTLETT
Attorneys for The Stroh Brewery Company
425 Lexington Avenue
New York, New York 10012
Attn: David B. Chapnick, Esq.
Mark J. Thompson, Esq.
(7) STROOCK & STROOCK & LAVAN
Co-Attorneys for the Statutory Creditors'
Committee
Seven Hanover Square
New York, New York 10004
Attn: Daniel H. Golden, Esq.
Lisa Beckerman, Esq.
(8) YOUNG, CONAWAY, STARGATT & TAYLOR
Co-Attorneys for the Statutory Creditors'
Committee
Rodney Square North, Eleventh Floor
P.O. Box 391
Wilmington, Delaware 19899
Attn: Laura Davis Jones, Esq.
(9) OFFICE OF THE UNITED STATES TRUSTEE
601 Walnut Street
Curtis Center, Suite 950-W
Philadelphia, Pennsylvania 19106
Attn: John D. McLaughlin, Esq.
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Objections to confirmation of the Plan of
Reorganization are governed by Bankruptcy Rule 9014 and any
local rules of the Bankruptcy Court. UNLESS AN OBJECTION TO
CONFIRMATION IS TIMELY SERVED AND FILED, IT WILL NOT BE
CONSIDERED BY THE BANKRUPTCY COURT.
B. Conditions to Confirmation of the Plan of Reorganiza-
tion
At the confirmation hearing, the Bankruptcy Court
will confirm the Plan only if all of the conditions to
confirmation under section 1129 of the Bankruptcy Code are
satisfied.
Such conditions include the following:
1. The Plan of Reorganization complies with the
applicable provisions of the Bankruptcy Code.
2. Each of the Debtors has complied with the
applicable provisions of the Bankruptcy Code.
3. The Plan of Reorganization has been proposed
in good faith and not by any means proscribed by law.
4. Any payment made or promised by any of the
Debtors or by an entity issuing securities or acquiring
property under the Plan of Reorganization for services or
for costs and expenses in, or in connection with, the
Reorganization Cases, or in connection with the Plan of
Reorganization and incident to the Reorganization Cases, has
been disclosed to the Bankruptcy Court; and any such payment
made before the confirmation of the Plan of Reorganization
is reasonable, or if such payment is to be fixed after
confirmation of the Plan of Reorganization, such payment is
subject to the approval of the Bankruptcy Court as
reasonable.
5. Each of the Debtors has disclosed the identity
and affiliations of any individual proposed to serve, after
confirmation of the Plan of Reorganization, as a director,
officer or voting trustee of such Debtor or a successor to
such Debtor under the Plan of Reorganization and the
appointment to, or continuance in, such office of such
individual is consistent with the interests of creditors and
equity holders and with public policy, and such Debtor has
disclosed the identity of any insider that will be employed
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or retained by such Debtor, and the nature of any compensa-
tion for such insider.
6. With respect to each impaired class or
subclass of Claims or Equity Interests, each holder of an
impaired Claim or impaired Equity Interest either has
accepted the Plan of Reorganization or will receive or
retain under the Plan of Reorganization, on account of the
Claims or Equity Interests held by such entity, property of
a value, as of the Consummation Date of the Plan of
Reorganization, that is not less than the amount that such
entity would receive or retain if the Debtors were
liquidated on such date under chapter 7 of the Bankruptcy
Code.
7. In the event that the Debtors do not move to
confirm the Plan of Reorganization nonconsensually, each
class or subclass of Claims or Equity Interests entitled to
vote has either accepted the Plan of Reorganization or is
not impaired under the Plan of Reorganization. See "Non-
consensual Confirmation."
8. Except to the extent that the holder of a
particular Claim has agreed to a different treatment of such
Claim, the Plan of Reorganization provides that Administra-
tion Expense Claims and Priority Non-Tax Claims will be paid
in full on the Consummation Date and that Priority Tax
Claims will be paid in full, in cash, on the Consummation
Date or as soon as practicable thereafter; however, the
Debtors shall have the right to make deferred cash payments
on account of such Priority Tax Claims over a period not
exceeding six (6) years after the date of assessment of such
Claims, having a value, as of the Consummation Date, equal
to the allowed amount of such Claims.
9. At least one impaired class of Claims has
accepted the Plan of Reorganization, determined without
including any acceptance of the Plan of Reorganization by
any insider holding a Claim in such class.
10. Confirmation of the Plan of Reorganization is
not likely to be followed by the liquidation or the need for
further financial reorganization of the Company or any
successor to the Company under the Plan of Reorganization,
unless such liquidation or reorganization is proposed in the
Plan of Reorganization. See "Feasibility."
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11. All fees payable under section 1930 of title
28, United States Code, as determined by the Bankruptcy
Court at the Confirmation Hearing, have been paid or the
Plan of Reorganization provides for the payment of all such
fees on the Consummation Date of the Plan of Reorganization.
12. The Plan of Reorganization provides for the
continuation after the Consummation Date of payment of all
retiree benefits at the level established under section
1114(e)(1)(B) or (g) of the Bankruptcy Code at any time
prior to confirmation of the Plan of Reorganization, for the
duration of the period each of the Debtors has obligated
itself to provide such benefits.
The Company believes that the Plan of
Reorganization will satisfy all the statutory provisions of
chapter 11 of the Bankruptcy Code, that each of the Debtors
has complied or will have complied with all of the
provisions of the Bankruptcy Code, and that the Plan of
Reorganization is being proposed and will be submitted to
the Bankruptcy Court in good faith.
Acceptance. Class 2 (Senior Secured Claims),
Class 3 (Other Secured Claims) and each subclass thereof,
Class 4 (General Unsecured Claims), and each subclass
thereof, Class 5 (Intercompany Affiliate Unsecured Claims)
and each subclass thereof, Class 6 (Subordinated Unsecured
Claims) and Class 7 (Equity Interests) and each subclass
thereof, under the Plan of Reorganization are impaired under
the Plan of Reorganization and, therefore, must accept the
Plan of Reorganization for it to be confirmed without
application of the provisions described in "Nonconsensual
Confirmation" below. As stated above, such classes or
subclasses of Claims, as applicable, will have accepted the
Plan of Reorganization if the Plan of Reorganization is
accepted, with reference to a class or subclass of Claims,
by at least two-thirds in amount and more than one-half in
number of the Claims of each such class or subclass of
Claims or, with reference to a class or subclass of Equity
Interests, by at least two-thirds in amount of the Equity
Interests of each such class or subclass (other than any
such Claim or Equity Interest, as applicable, designated
under section 1126(e) of the Bankruptcy Code) that have
voted to accept or reject the Plan of Reorganization. In
addition, subclasses of Equity Interests will have accepted
the Plan of Reorganization if the Plan of Reorganization is
accepted by the holders of at least two-thirds of the total
Equity Interests in such subclass (other than any such
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Equity Interest designated under section 1126(e) of the
Bankruptcy Code) that actually have voted to accept or
reject the Plan of Reorganization.
Best Interests Test. With respect to each
impaired class of holders of Claims and Equity Interests,
confirmation of the Plan of Reorganization requires that
each such holder either (a) accept the Plan of
Reorganization or (b) receive or retain under the Plan of
Reorganization property of a value, as of the Consummation
Date of the Plan of Reorganization, that is not less than
the value such holder would receive or retain if the Debtors
were liquidated under chapter 7 of the Bankruptcy Code.
To determine what holders of Claims and Equity
Interests of each impaired class would receive if the
Debtors were liquidated, the Bankruptcy Court must determine
the proceeds that would be generated from the liquidation of
the properties and interests in property of the Debtors in a
chapter 7 liquidation case. The proceeds that would be
available for satisfaction of Unsecured Claims against and
Equity Interests in the Debtors would consist of the pro-
ceeds generated by disposition of the unencumbered equity in
the properties and interests in property of the Debtors and
the cash held by the Debtors at the time of the commencement
of the liquidation case. Such proceeds would be reduced by
the costs and expenses of the liquidation and by such addi-
tional administration and priority claims that may result
from the termination of the business of the Debtors and the
use of chapter 7 for the purposes of liquidation.
The costs of liquidation under chapter 7 of the
Bankruptcy Code would include the fees payable to a trustee
in bankruptcy, and the fees that would be payable to addi-
tional attorneys and other professionals that such a trustee
may engage, plus any unpaid expenses incurred by the Debtors
during the Reorganization Cases, such as compensation for
attorneys, financial advisors, accountants and costs and
expenses of members of the Statutory Committee that are
allowed in the chapter 7 case. In addition, Claims would
arise by reason of the breach or rejection of obligations
incurred and executory contracts entered into or assumed by
the Debtors during the pendency of the Reorganization Cases.
The foregoing types of Claims and such other
Claims which may arise in the liquidation cases or result
from the pending Reorganization Cases would be paid in full
from the liquidation proceeds before the balance of those
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proceeds would be made available to pay Unsecured Claims
arising on or before the Petition Date.
To determine if the Plan of Reorganization is in
the best interests of each impaired class or subclass, the
present value of the distributions from the proceeds of the
liquidation of the properties and interests in property of
the Debtors (net of the amounts attributable to the afore-
said claims) is then compared with the present value offered
to such classes or subclasses of Claims and Equity Interests
under the Plan of Reorganization.
In applying the "best interests" test, it is
possible that Claims and Equity Interests in the chapter 7
cases may not be classified according to the seniority of
such Claims and Equity Interests as provided in the Plan of
Reorganization. In the absence of a contrary determination
by the Bankruptcy Court, all Unsecured Claims arising on or
before the Petition Date which have the same rights upon
liquidation would be treated as one class for the purposes
of determining the potential distribution of the liquidation
proceeds resulting from the chapter 7 cases of the Debtors.
The distributions from the liquidation proceeds would be
calculated ratably according to the amount of the Claim held
by each creditor. Therefore, creditors who claim to be
third-party beneficiaries of any contractual subordination
provisions might have to seek to enforce such contractual
subordination provisions in the Bankruptcy Court or other-
wise. The Debtors believe that the most likely outcome of
liquidation proceedings under chapter 7 would be the applic-
ation of the rule of absolute priority of distributions.
Under that rule, no junior creditor receives any distribu-
tion until all senior creditors are paid in full with
interest, and no stockholder receives any distribution until
all creditors are paid in full with interest. Consequently,
the Debtors believe that under chapter 7, holders of Sub-
ordinated Unsecured Claims and Equity Interests would
receive no distributions.
After consideration of the effects that a
chapter 7 liquidation would have on the ultimate proceeds
available for distribution to creditors in the chapter 11
cases, including: (i) the increased costs and expenses of a
liquidation under chapter 7 arising from fees payable to a
trustee in bankruptcy and professional advisors to such
trustee; (ii) the erosion in value of assets in a chapter 7
case in the context of the expeditious liquidation required
under chapter 7 and the "forced sale" environment in which
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such a liquidation would occur; (iii) the adverse effects on
the salability of business segments as a result of the
departure of key employees and the loss of customers; and
(iv) the substantial increases in claims which would be
satisfied on a priority basis or on parity with creditors in
the chapter 11 cases, the Debtors have determined that
confirmation of the Plan will provide each holder of a Claim
or Equity Interest with a greater recovery than it would
receive pursuant to liquidation of the Debtors under chapter
7 of the Bankruptcy Code.
The Debtors' liquidation analysis is attached
hereto as Exhibit C.
The Debtors also believe that the value of any
distributions from the liquidation proceeds to each class of
Allowed Claims in chapter 7 cases would be less than the
value of distributions on a consolidating basis under the
Plan of Reorganization because such distributions in chapter
7 cases would not occur for a substantial period. It is
likely that distribution of the proceeds of the liquidation
could be delayed for one year or more after the completion
of such liquidation in order to resolve Claims and prepare
for distributions. In the likely event litigation were
necessary to resolve Claims asserted in the chapter 7 cases,
the delay could be prolonged.
Feasibility. The Bankruptcy Code conditions
confirmation of a plan of reorganization on, among other
things, a finding that it not likely to be followed by the
liquidation or the need for further financial reorganization
of a debtor. For purposes of determining whether the Plan
of Reorganization satisfies this condition, the Company has
analyzed the capacity of the Consolidated Company to service
its obligations under the Plan of Reorganization. As part
of this analysis, the Company reviewed the Projections. The
Projections, and the significant assumptions on which they
are based, are included in section V, entitled "Projec-
tions." Based upon its analysis of such Projections, the
Company believes the Consolidated Company will be able to
make all payments required to be made under the Plan of
Reorganization.
The Projections include:
(1) Significant Assumptions;
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(2) Projected Pro Forma Consolidated Statements
of Operations;
(3) Projected Consolidated Statements of Cash
Flows; and
(4) Projected Pro Forma Consolidated Balance
Sheets.
The Projections are based on the assumption that
the Plan of Reorganization will be confirmed by the Bank-
ruptcy Court and, for projection purposes, that the Consum-
mation Date under the Plan of Reorganization and distribu-
tions thereunder occur as of June 30, 1996.
Stroh has prepared the Projections based upon
certain assumptions that Stroh has advised the Company it
believes to be reasonable under the circumstances. Those
assumptions considered to be significant are described in
section V entitled "Projections." The Projections have not
been examined or compiled by independent accountants. Stroh
makes no representation as to the accuracy of the Projec-
tions or the ability of Stroh with the Consolidated Company,
as applicable, to achieve the projected results. Many of
the assumptions on which the Projections are based are
subject to significant uncertainties. Inevitably, some
assumptions will not materialize and unanticipated events
and circumstances may affect the actual financial results.
Therefore, the actual results achieved may vary from the
projected results and the variations may be material. It is
urged that all of the assumptions be examined carefully in
evaluating the Plan of Reorganization.
Nonconsensual Confirmation. In the event that any
impaired class or subclass does not accept the Plan of Re-
organization, the Debtors nevertheless may move for confir-
mation of the Plan of Reorganization. To obtain such con-
firmation, it must be demonstrated to the Bankruptcy Court
that the Plan of Reorganization "does not discriminate
unfairly" and is "fair and equitable" with respect to such
class.
No Unfair Discrimination. A plan of reorganiza-
tion "does not discriminate unfairly" if (a) the legal
rights of a nonaccepting class are treated in a manner that
is consistent with the treatment of other classes whose
legal rights are related to the legal rights of the non-
accepting class, and (b) no class receives payments in
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excess of that which it is legally entitled to receive for
its Claims or Equity Interests. The Company believes that
under the Plan of Reorganization all impaired classes and
subclasses of Claims and Equity Interests are treated in a
manner that is consistent with the treatment of other
classes of Claims and Equity Interests to which their legal
rights are related, if any, and no class or subclass of
Claims or Equity Interests will receive payments or property
with an aggregate value greater than the aggregate value of
the Allowed Claims and Allowed Equity Interests in such
class or subclass. Accordingly, the Company believes the
Plan of Reorganization does not discriminate unfairly as to
any impaired class or subclass of Claims or Equity
Interests.
Fair and Equitable Test. The Bankruptcy Code
establishes different "fair and equitable" tests for secured
creditors, unsecured creditors and equity interestholders as
follows:
Secured Creditors. Either (i) each impaired
secured creditor retains its liens securing its
secured claim and it receives on account of its
secured claim deferred cash payments having a
present value equal to the amount of its allowed
secured claim, (ii) each impaired secured creditor
realizes the indubitable equivalent of its allowed
secured claim, or (iii) the property securing the
claim is sold free and clear of liens, with such
liens to attach to the proceeds and the treatment
of such liens on proceeds as provided in clause
(i) or (ii) of this subparagraph.
Unsecured Creditors. Either (i) each
impaired unsecured creditor receives or retains
under the plan property of a value equal to the
amount of its allowed claim or (ii) the holders of
claims and interests that are junior to the claims
of the dissenting class will not receive any
property under the plan of reorganization, subject
to the applicability of the judicial doctrine of
contributing new value.
Equity Interestholders. Either (i) each
equity interestholder will receive or retain under
the plan of reorganization property of a value
equal to the greater of (a) the fixed liquidation
preference or redemption price, if any, of such
stock or (b) the value of the stock or (ii) the
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holders of interests that are junior to the stock
will not receive any property under the plan of
reorganization, subject to the applicability of
the judicial doctrine of contributing new value.
The Debtors believe that the Plan of Reorganiza-
tion may be confirmed on a nonconsensual basis if the
holders of impaired Equity Interests classified in Class 7
(Equity Interests) vote as a class to reject the Plan of
Reorganization. The Debtors believe that the Plan of
Reorganization may not be confirmed on a nonconsensual basis
if the holders of acquired Allowed Claims classified in
Class 6 (Subordinated Unsecured Claims) vote as a class to
reject the Plan of Reorganization. If necessary, the
Debtors will show at the Confirmation Hearing that the Plan
of Reorganization provides recoveries to the holders of such
Allowed Claims that satisfy the conditions of section
1129(b).
THE DEBTORS MAY MOVE FOR CONFIRMATION OF THE PLAN OF RE-
ORGANIZATION IF LESS THAN THE REQUISITE HOLDERS OF CLAIMS OR
EQUITY INTERESTS VOTE TO ACCEPT THE PLAN.
C. Consummation
The Plan of Reorganization will be consummated on
the Consummation Date. The "Consummation Date" will occur
on the later of (i) the eleventh day following the Confirma-
tion Date if no stay of the Confirmation Order is in effect
or (ii) such other date as is fixed from time to time after
the Confirmation Date by the Debtors in accordance with the
provisions of the Plan of Reorganization. The Debtors
believe that the Consummation Date will occur on or about
July 1, 1996 and that the distributions under the Plan of
Reorganization will commence on or about such date. The
Debtors cannot, however, provide any assurances that the
Consummation Date will occur on such date or on any other
date.
The Plan of Reorganization is to be implemented in
accordance with provisions of the Bankruptcy Code.
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XIV.
CONCLUSION
The Debtors believe that the Plan of Reorganiza-
tion is in the best interest of all holders of Claims and
Equity Interests, and urge all holders of Claims against and
Equity Interests in the Debtors to vote to accept the Plan
and to evidence such acceptance by returning their ballots
in accordance with the instructions accompanying the
Disclosure Statement.
Dated: Wilmington, Delaware
May 6, 1996
Respectfully submitted,
G. HEILEMAN BREWING COMPANY, INC.
ET AL.
By:
Daniel J. Schmid, Jr.
Title:
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
-and-
100 Crescent Court
Dallas, Texas 75201
(214) 746-7700
-and-
RICHARDS, LAYTON & FINGER, P.A.
Attorneys for the Debtors
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
By:
Thomas L. Ambro (No. 677)
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EXHIBIT A
JOINT PLAN OF REORGANIZATION
<PAGE>
EXHIBIT B
ORDER APPROVING DISCLOSURE STATEMENT
<PAGE>
EXHIBIT C
LIQUIDATION ANALYSIS
The following analysis has been prepared by the Debtors
as an estimate of the values which might be realized by all
classes of creditors in the event that the properties and
interests in property of the Debtors were liquidated in a chapter
7 case under the Bankruptcy Code. A chapter 7 liquidation
consists generally of the cessation of business, the
identification and assembly of and effecting distressed or
"forced" sales of the debtor's properties and interests in
property by a court-appointed chapter 7 trustee, with subsequent
distribution of the net proceeds of such dispositions to
creditors in accordance with statutory priorities.
The proceeds from chapter 7 sales and recoveries would
be first applied to satisfy the claims of senior secured
creditors and the costs and expenses of the chapter 7 case,
(including, without limitation, fees of the trustee and counsel
and other professionals including financial advisors and
accountants retained by the trustee, disposition expenses,
litigation costs, and claims arising from the winding-up of
operations of the debtor's business during the chapter 7
proceedings).
This liquidation analysis assumes hypothetically that
chapter 7 cases are commenced on July 1, 1996 and that the
chapter 7 trustee, who would be responsible for liquidating the
Debtors' properties and interests in property and winding down
the business prior to their disposition, would require
approximately one (1) year.
During the liquidation period, it is assumed that
various marketing and promotional expenditures would be continued
during the wind-down period, so as to minimize the negative
impact of the liquidation and maximize the value of the Debtors'
assets.
The Debtors believe that based on the assumptions
contained in this liquidation analysis, no proceeds would be
available for distribution on account of Unsecured Claims or
Equity Interests and the secured creditors would suffer a very
substantial deficiency significantly worse than their anticipated
treatment and recovery under the Plan of Reorganization.
Accordingly, the Debtors believe the Plan of Reorganization
results in a far greater recovery to general creditors and equity
interest holders than would be realized in chapter 7
liquidations.
<PAGE>
EXHIBIT C
CHAPTER 7 LIQUIDATION ANALYSIS (DOLLARS IN MILLIONS)
Pro-forma June 30, 1997
Liquidation Value of Assets (Note 1):
Total proceeds from liquidation $170.9
Net cash flow from operations
during liquidation period 4.6
Gross Liquidation Proceeds 175.5
Administrative Costs (Note 2):
Liquidation tax liabilities --
Trustee and professional fees (10.0)
(10.0)
Net Liquidation Proceeds 165.5
Less secured claims (including
accrued interest) (236.1)
Priority and secured claims in excess of
liquidation value $(70.6)
Net proceeds available for distribution to
unsecured and equity classes $ -0-
The Plan of Reorganization meets the requirements of the
Bankruptcy Code because each holder of a Claim or Equity Interest
impaired under the Plan of Reorganization will recover more under
the Plan of Reorganization than they would in a chapter 7
liquidation of the Debtors.
Notes to Liquidation Analysis
The following footnotes set forth the assumptions and
methodology employed in the preceding chapter 7 liquidation
analysis. There is no precedent on which to base a hypothetical
liquidation analysis of a brewing company of the size of the
Debtors. For purposes of computing estimated proceeds, a
discount of 35.0% was applied to the overall business value as
indicated by the contemplated acquisition of the properties and
interests in the property of the Debtors by Stroh. The discount
that would actually result in a chapter 7 liquidation could be
larger or smaller than 35.0% and could vary for each region of
the United States if the business were sold in segments. This
analysis was materially completed on or about March 31, 1996 and
the debtors are not aware of any events subsequent to such date
that would materially impact this analysis.
<PAGE>
EXHIBIT C
Note 1 - Liquidation Value of Assets
The Debtors' principal properties and interests in
property are their brands or malt beverages and the operating
facilities employed in the production of beverages bearing such
brands. The total proceeds from liquidation were calculated
based on the following assumptions: (a) The chapter 7
liquidation process is commenced on June 30, 1996, at which time
a trustee is appointed by the Bankruptcy Court; (b) The chapter 7
trustee would operate the business until the most commercially
reasonable sale or sales could be arranged, but not beyond one
(1) year after the commencement of the chapter 7 case. Prior to
the sale of all or parts of the business, various marketing and
promotional expenditures would be maintained at the levels
planned prior to the chapter 7 case to maintain the value of the
Debtors' principal properties and interests in property. Capital
expenditures would be reduced to maintenance levels; (c) the
proceeds realized from the sale of the business was computed
based on the value of the Debtors as indicated by the
contemplated acquisition of the properties and interests in
property of the Debtors by Stroh and after reflecting a discount
of 35.0% from such value, to estimate the impact of the chapter 7
liquidation assumption; this discount is an estimate of the
impact of (1) pressure to convert the properties and interests in
property of the Debtors into cash in a relatively short period of
time (one year), and (2) the disruption of normal business
operations caused by the adverse effects on both the wholesalers'
and retailers' commitments to the distribution of the Debtors'
products, vendors' willingness to ship materials to the Debtors
and on employee morale.
During the liquidation period, the net cash flow
generated from operations would be less than the amounts which
would otherwise normally be expected. The liquidation cash flow
was estimated by adjusting the estimated cash flow of $45.0
million for the one year liquidation period to $14.6 million to
account for the estimated impact on the business as discussed
above, a reduced level of capital expenditures to $10.0 million
and the estimated timing of the actual sale or sales of the
business.
Note 2 - Administrative Costs
No federal tax liabilities were assumed to arise as a result
of the sale of the properties and interests in property of the
Debtors in a chapter 7 liquidation. The Debtors have
approximately $380.0 million of net operating tax loss
<PAGE>
EXHIBIT C
carryforwards that would be available to offset any taxable gain
on dispositions.
It is assumed that the chapter 7 trustee would employ
various professionals (including, attorneys, accountants,
investment bankers, brokers and other agents) to assist in the
liquidation process. Fees for the services are estimated to be
$10.0 million and represent approximately 6.0% of the estimated
proceeds from liquidation of the properties and interests in the
property of the Debtors.
<PAGE>
TABLE OF CONTENTS
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . 1
A. General Information . . . . . . . . . . . . . . . . . 1
B. Summary of Distributions Under the Plan of
Reorganization . . . . . . . . . . . . . . . . . . . 5
C. The Confirmation Hearing . . . . . . . . . . . . . . 6
II. GENERAL INFORMATION . . . . . . . . . . . . . . . . . . 9
A. Business of the Consolidated Company . . . . . . . . 9
B. Business Presently Operated by the Company . . . . . 9
C. Business Presently Operated by Stroh . . . . . . . . 18
D. Certain Elements Common to the Business Presently
Operated by Each of the Company and Stroh. . . . . . 26
E. Board of Directors and Executive Officers of
the Company . . . . . . . . . . . . . . . . . . . . . 30
F. Board of Directors and Executive Officers of Stroh . 33
G. Board of Directors and Executive Officers of
the Consolidated Company . . . . . . . . . . . . . . 36
H. Existing Financing Transactions of the Debtors . . . 36
III. THE REORGANIZATION CASES . . . . . . . . . . . . . . . . 40
A. Events Preceding Commencement of the Reorganization
Cases . . . . . . . . . . . . . . . . . . . . . . . . 40
B. Commencement of the Reorganization Cases . . . . . . 71
C. Statutory Creditors' Committee . . . . . . . . . . . 71
D. Anticipated Proceedings in the Reorganization Cases . 72
IV. THE JOINT PLAN OF REORGANIZATION . . . . . . . . . . . . 75
A. Introduction . . . . . . . . . . . . . . . . . . . . 75
B. General Description of the Treatment of Claims and
Equity Interests Under the Plan of Reorganization . 75
C. General Description of New Securities . . . . . . . . 83
D. Other Provisions of the Plan of Reorganization . . . 133
E. Release from Claims and Liabilities . . . . . . . . . 142
V. PROJECTIONS . . . . . . . . . . . . . . . . . . . . . . 150
VI. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . 159
A. General . . . . . . . . . . . . . . . . . . . . . . . 159
VII. VALUATION . . . . . . . . . . . . . . . . . . . . . . . 160
VIII. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . 161
IX. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION
OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . 168
A. Liquidation Under Chapter 7 . . . . . . . . . . . . . 168
B. Alternative Plan of Reorganization . . . . . . . . . 168
<PAGE>
X. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
THE PLAN OF REORGANIZATION . . . . . . . . . . . . . . . 170
A. Consequences to the Debtors and the
Consolidated Company . . . . . . . . . . . . . . . . 171
B. Consequences to Holders of Subordinated
Unsecured Claims . . . . . . . . . . . . . . . . . . 174
C. Holders of Equity Interests in Heileman
Holding Company . . . . . . . . . . . . . . . . . . . 184
D. Importance of Obtaining Professional Tax
Assistance . . . . . . . . . . . . . . . . . . . . . 185
XI. VOTING PROCEDURES AND REQUIREMENTS . . . . . . . . . . . 186
A. Parties in Interest Entitled to Vote . . . . . . . . 186
B. Classes Impaired and Entitled to Vote Under
the Plan of Reorganization . . . . . . . . . . . . . 189
C. Vote Required for Acceptance by Class of Claims . . . 189
D. Vote Required for Acceptance by Class of
Equity Interests . . . . . . . . . . . . . . . . . . 189
XII. CONFIRMATION OF THE PLAN OF REORGANIZATION . . . . . . . 191
A. Confirmation Hearing . . . . . . . . . . . . . . . . 191
B. Conditions to Confirmation of the Plan of
Reorganization . . . . . . . . . . . . . . . . . . . 193
C. Consummation . . . . . . . . . . . . . . . . . . . . 201
XIV. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . 202
<PAGE>
EXHIBITS
Joint Plan of Reorganization . . . . . . . . . . . . . . . . . A
Order Approving Disclosure Statement . . . . . . . . . . . . . B
Liquidation Analysis . . . . . . . . . . . . . . . . . . . . . C
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0256895
(State of Incorporation) (I.R.S. Employer
Identification No.)
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
THE STROH BREWERY COMPANY
(Exact name of registrant as specified in its charter)
Arizona 38-1078840
(State of Incorporation) (I.R.S. Employer
Identification No.)
100 River Place
Detroit MI 48207
(Address of Principal Executive Offices) (Zip Code)
Junior Subordinated Notes due 2008
(Title of the Indenture Securities)
<PAGE>
GENERAL
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.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this
statement of eligibility and qualification. Each of the exhibits listed
below is incorporated by reference from a previous registration numbered
333-643.
1. Copy of Articles of Association.
2. Copy of Certificate of Authority to Commence Business.
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).
4. Copy of existing By-Laws.
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the
act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee
has no reason to doubt the accuracy of any such information, it cannot accept
any responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, First Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested,
all in the City of Saint Paul and State of Minnesota on the 6th day of May,
1996.
FIRST BANK NATIONAL ASSOCIATION
[SEAL]
/s/ Richard Prokosch
________________________
Richard Prokosch
Trust Officer
/s/ Kathe Barrett
______________________
Kathe Barrett
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, FIRST BANK NATIONAL ASSOCIATION hereby consents that reports
of examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: May 6, 1996
FIRST BANK NATIONAL ASSOCIATION
/s/ Richard Prokosch
_________________________
Richard Prokosch
Trust Officer
