SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
SILGAN HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 3441; 3085 06-1269834
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code Numbers) Number)
4 Landmark Square
Stamford, Connecticut 06901
(203) 975-7110
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
Harley Rankin, Jr.
Silgan Holdings Inc.
4 Landmark Square
Stamford, Connecticut 06901
(203) 975-7110
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copies of all communications to:
Frank W. Hogan, III, Esq.
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
P.O. Box 6760
Stamford, CT 06904-6760
(203) 348-2300
--------------------
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.[ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of Registration
Registered Registered<F1> Unit<F2> Price<F2> Fee<F3>
========================================================================================================================
<S> <C> <C> <C> <C>
Exchangeable Preferred
Stock 90,000 $1,000.00 $90,000,000 $31,035
Subordinated Debentures
due 2006 $90,000,000 $1.00 $90,000,000 $31,035
========================================================================================================================
<FN>
<F1> The amount of Exchangeable Preferred Stock, par value $.01 per share,
of the Registrant (the" New Preferred Stock"), to be registered is
comprised of the sum of (w) the maximum number of shares of New
Preferred Stock that may be issued pursuant to the offer of the
Registrant to exchange its outstanding Exchangeable Preferred Stock for
an equal amount of New Preferred Stock and (x) the maximum number of
additional shares of New Preferred Stock that may be issued to the
holders of outstanding New Preferred Stock in payment of dividends
thereon pursuant to the Certificate of Designation therefor. The amount
of Subordinated Debentures due 2006 (the "Exchange Debentures") to be
registered is comprised of the sum of (y) the maximum principal amount
of Exchange Debentures that may be issuable pursuant to an offer of
the Registrant to exchange its outstanding Exchangeable Preferred Stock
for Exchange Debentures and (z) the maximum principal amount of
Exchange Debentures that may be issuable to the holders of outstanding
Exchange Debentures in payment of interest thereon pursuant to the
terms of the Exchange Debentures.
<F2> Determined solely for the purposes of calculating the registration fee
in accordance with Rule 457(f)(2) promulgated under the Securities
Act of 1933, as amended.
<F3> The $31,035 fee for the Exchangeable Preferred Stock was paid on
August 8, 1996.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Silgan Holdings Inc.
--------------------
OFFER TO EXCHANGE
ALL OUTSTANDING
EXCHANGEABLE PREFERRED STOCK
MANDATORILY REDEEMABLE 2006
(EXCHANGEABLE AT THE OPTION OF HOLDINGS)
FOR
NEW EXCHANGEABLE PREFERRED STOCK
MANDATORILY REDEEMABLE 2006
(EXCHANGEABLE AT THE OPTION OF HOLDINGS)
-------------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON ____________, 1996 UNLESS EXTENDED
-------------------
Silgan Holdings Inc., a Delaware corporation ("Holdings"), hereby
offers upon the terms and subject to the conditions set forth in this Prospectus
and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange (the "Exchange Offer") its outstanding Exchangeable Preferred Stock
(the "Old Preferred Stock") for an equal amount of newly issued New Exchangeable
Preferred Stock (the "New Preferred Stock"). The form and terms of the New
Preferred Stock will be the same as the form and terms of the Old Preferred
Stock except that the New Preferred Stock will be registered under the
Securities Act of 1933, as amended (the "Securities Act"), and will not bear
legends restricting the transfer thereof. The New Preferred Stock will be
entitled to the benefits of the Silgan Holdings Inc. Certificate of Designation
of the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 13-1/4% Cumulative Exchangeable Redeemable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof, filed with the Secretary
of State of the State of Delaware on July 22, 1996, governing the Preferred
Stock (the "Certificate of Designation"). The New Preferred Stock and the Old
Preferred Stock are sometimes referred to herein as the "Preferred Stock."
Dividends on the New Preferred Stock will be cumulative from the date
of issuance and are payable quarterly in cash or, on or prior to July 15, 2000,
at the option of Holdings, in additional shares of New Preferred Stock, on each
January 15, April 15, July 15 and October 15, commencing on October 15, 1996. If
additional shares of New Preferred Stock are issued in lieu of cash dividends,
such shares will be registered under the Securities Act. Holdings is required to
redeem the New Preferred Stock at the liquidation preference of $1,000 per
share, plus accrued and unpaid dividends on July 15, 2006. The New Preferred
Stock will be redeemable, in whole or in part, at the option of Holdings, at any
time on or after July 15, 2000. The New Preferred Stock will be exchangeable, in
whole but not in part, at the option of Holdings, into Subordinated Debentures
due July 15, 2006 (the "Exchange Debentures"). If issued, the Exchange
Debentures will be redeemable, in whole or in part, at the option of Holdings,
at any time on or after July 15, 2000.
(Continued on next page)
SEE "RISK FACTORS" AT PAGE 23 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN
EVALUATING THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
Holdings will accept for exchange any and all shares of Old Preferred
Stock which are properly tendered in the Exchange Offer prior to 5:00 p.m., New
York City time, on _________________, 1996 (if and as extended, the "Expiration
Date"). Tenders of shares of Old Preferred Stock may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange
Offer is not conditioned upon any minimum number of shares of Old Preferred
Stock being tendered for exchange.
Based on a previous interpretation by the staff of the Securities and
Exchange Commission (the "Commission") set forth in no-action letters to third
parties, including "Exxon Capital Holdings Corporation" (available May 13,
1988), "Morgan Stanley & Co. Incorporated" (available June 5, 1991) (the "Morgan
Stanley Letter"), "Mary Kay Cosmetics, Inc." (available June 5, 1991), "Warnaco,
Inc." (available October 11, 1991) and "K-III Communications Corp." (available
May 14, 1993), Holdings believes that the shares of New Preferred Stock issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) a broker-dealer who purchases
such shares of New Preferred Stock directly from Holdings to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii) a
person that is an affiliate of Holdings (within the meaning of Rule 405 under
the Securities Act)) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that the holder or any other
such person is acquiring the shares of New Preferred Stock in its ordinary
course of business and is not participating, and has no arrangement or
understanding with any person to participate, in the distribution of the shares
of New Preferred Stock. Holders of shares of Old Preferred Stock wishing to
accept the Exchange Offer must represent to Holdings that such conditions have
been met. Holders of Old Preferred Stock who tender their shares of Old
Preferred Stock in the Exchange Offer with the intention to participate in a
distribution of the New Preferred Stock may not rely upon the Morgan Stanley
Letter or other similar letters.
Each broker-dealer that receives shares of New Preferred Stock for its
own account pursuant to the Exchange Offer must acknowledge that it will deliver
a Prospectus in connection with any resale of such shares of New Preferred
Stock. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter," within the meaning of the Securities Act, in connection with
resales of shares of New Preferred Stock received in exchange for shares of Old
Preferred Stock where such shares of Old Preferred Stock were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. Holdings has agreed that, for a period of 90 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
Holdings believes that none of the registered holders of the shares of
Old Preferred Stock is an affiliate (as such term is defined in Rule 405 under
the Securities Act) of Holdings. Prior to this Exchange Offer, there has been no
public market for the shares of Old Preferred Stock. Holdings does not intend to
list the shares of New Preferred Stock on any securities exchange or to seek
approval for quotation through any automated quotation system. There can be no
assurance that an active market for the shares of New Preferred Stock will
develop. To the extent that a market for the shares of New Preferred Stock does
develop, the market value of the shares of New Preferred Stock will depend on
market conditions (including yields on alternative investments), general
economic conditions, Holdings' financial condition and other conditions. Such
conditions may cause the New Preferred Stock, to the extent that it is actively
traded, to trade at a significant discount from its liquidation value. Holdings
has not entered into any arrangement or understanding with any person to
distribute the shares of New Preferred Stock to be received in the Exchange
Offer.
Holdings will not receive any proceeds from the Exchange Offer.
Holdings has agreed to bear the expenses of the Exchange Offer. No underwriter
is being used in connection with the Exchange Offer.
The date of this Prospectus is ____________, 1996.
-------------------------
-2-
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST ADDRESSED TO SILGAN HOLDINGS INC., 4 LANDMARK SQUARE, STAMFORD, CT
06901, ATTENTION: CHIEF FINANCIAL OFFICER (TELEPHONE NUMBER (203) 975-7110). IN
ORDER TO INSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
______________, 1996.
--------------------
TABLE OF CONTENTS
Page
----
Available Information............................................. 4
Information Incorporated by Reference............................. 4
Summary........................................................... 6
Risk Factors...................................................... 23
The Exchange Offer................................................ 32
Capitalization.................................................... 40
Selected Historical and Pro Forma
Financial Information........................................... 42
Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 49
Business.......................................................... 64
Management........................................................ 77
Securities Ownership of Certain Beneficial
Owners and Management........................................... 82
Certain Transactions.............................................. 83
Description of New Preferred Stock................................ 85
Description of Exchange Debentures................................ 113
Description of Certain Holdings Indebtedness...................... 134
Description of Certain Silgan Indebtedness........................ 134
Certain United States Federal Income Tax
Considerations.................................................. 143
Plan of Distribution.............................................. 153
Legal Matters..................................................... 153
Experts........................................................... 154
Index to Consolidated Financial Statements........................ F-1
--------------------
-3-
<PAGE>
No person is authorized in connection with any offering made hereby to
give any information or to make any representation other than as contained in
this Prospectus or the accompanying Letter of Transmittal, and, if given or
made, such information or representation must not be relied upon as having been
authorized by Holdings. Neither this Prospectus nor the accompanying Letter of
Transmittal or both together constitute an offer to sell or a solicitation of an
offer to buy any security other than the shares of New Preferred Stock offered
hereby, nor does it constitute an offer to sell or a solicitation of an offer to
buy any securities offered hereby to any person in any jurisdiction in which it
is unlawful to make such offer or solicitation to such person. Neither the
delivery of this Prospectus or the accompanying Letter of Transmittal or both
together, nor any sale made hereunder, shall under any circumstances imply that
the information contained herein is correct as of any date subsequent to the
date hereof.
AVAILABLE INFORMATION
Holdings has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the shares of New Preferred Stock
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus omits certain information, exhibits and undertakings contained
in the Registration Statement. For further information with respect to Holdings
and the shares of New Preferred Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. Holdings is and has
been subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Summary financial information with
respect to Holdings is contained in Holdings' Exchange Act reports. The
Registration Statement (and the exhibits and schedules thereto), as well as the
periodic reports and other information filed by Holdings with the Commission,
may be inspected and copied at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the Commission located at 75 Park Place, New York,
New York 10007 and Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such materials may be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its public reference facilities in New York, New
York and Chicago, Illinois at the prescribed rates. In addition, the Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants, such as Holdings, that file
electronically with the Commission. The address of such Web site is
"http://www.sec.gov". Statements contained in this Prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed by Holdings with the Commission
and are hereby incorporated by reference and made a part of this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(File No. 33-28409) (excluding the Financial Statements of Silgan
Corporation included therein).
2. Annual Report on Form 10-K/A-1 for the fiscal year ended December 31,
1995 (File No. 33-28409) (excluding the Financial Statements of
Silgan Corporation included therein).
3. Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996 (File No. 33-28409). 4. Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1996 (File No. 33-28409).
4. Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1996 (File No. 33-28409).
-4-
<PAGE>
5. Current Report on Form 8-K dated August 14, 1995, as amended by
Amendment to Current Report on Form 8-K/A dated October 16, 1995 (File
No. 33-28409).
6. Current Report on Form 8-K dated May 31, 1996 (File No. 33-28409).
7. Current Report on Form 8-K dated August 2, 1996 (File No. 33-28409).
8. Current Report on Form 8-K dated September 16, 1996 (File No.
33-28409).
All documents subsequently filed by Holdings with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the
date of this Prospectus and prior to the termination of this offering, shall be
deemed to be incorporated by reference into the Registration Statement of which
this Prospectus is a part and to be a part hereof from the date of such filing.
Any statement contained in a document incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
Holdings hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon oral or written request of such person,
a copy of any and all information that has been incorporated by reference into
this Prospectus (not including exhibits to the information unless such exhibits
are specifically incorporated by reference into such information). Requests for
information should be addressed to: Silgan Holdings Inc., 4 Landmark Square,
Stamford, CT 06901, Attention: Chief Financial Officer (Telephone Number (203)
975-7110).
Until ______________, 1996 (90 days after the date of the Exchange
Offer), all dealers offering transactions in the shares of New Preferred Stock,
whether or not participating in the Exchange Offer, may be required to deliver a
Prospectus.
-5-
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus as well as the information
appearing in the documents incorporated by reference herein. Unless the context
otherwise requires, the term "Company" means the combined business operations of
Holdings and its subsidiaries; and the term "Silgan" means Silgan Corporation, a
Delaware corporation and a wholly owned subsidiary of Holdings. Certain of the
information contained in this summary and elsewhere in this Prospectus,
including information under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and information with respect to the
Company's expected operations, cost savings, plans and strategy for its business
and related financing, are forward-looking statements. For a discussion of
important factors that could cause actual results to differ materially from the
forward-looking statements, see "Risk Factors."
The Company
The Company is a major manufacturer of a broad range of (i) steel and
aluminum containers for human and pet food and (ii) custom designed plastic
containers for health, personal care, food, beverage, pharmaceutical and
household chemical products in North America. Silgan has grown rapidly since its
inception in 1987 primarily as a result of strategic acquisitions, but also
through internally generated growth. In 1995, the Company had net sales of
approximately $1.1 billion and, on a pro forma basis after giving effect to the
acquisition of substantially all of the assets of the Food Metal and Specialty
business ("AN Can") of American National Can Company ("ANC"), would have had net
sales of approximately $1.4 billion. The Company operates through two operating
companies, Silgan Containers Corporation ("Containers") and Silgan Plastics
Corporation ("Plastics"). Management estimates that Containers is currently the
sixth largest can producer and the largest manufacturer of metal food containers
in North America. In 1995, Containers sold approximately 28% of all metal food
containers used in the United States, and on a pro forma basis after giving
effect to the acquisition of AN Can, would have sold approximately 36% of all
metal food containers sold in the United States. Plastics is one of the leading
manufacturers of custom designed, high density polyethylene ("HDPE") and
polyethylene terephthalate ("PET") containers sold in North America for health
and personal care products. The principal executive offices of Holdings are
located at 4 Landmark Square, Stamford, Connecticut 06901, telephone number
(203) 975-7110.
Metal Container Business. In 1995, Containers had net sales of
approximately $882.3 million (representing 80% of the Company's total net sales)
and, on a pro forma basis after giving effect to the acquisition of AN Can,
would have had net sales of approximately $1.2 billion (representing 84% of the
Company's total pro forma net sales). On a pro forma basis after giving effect
to the acquisition of AN Can, Containers has realized compound annual unit sales
growth in excess of 16% since 1987, despite the relative maturity of the U.S.
food can industry. Types of metal containers manufactured by Containers include
those for vegetables, fruit, meat, tomato based products, coffee, soup, seafood,
evaporated milk, infant formula and pet food. Containers has agreements (the
"Nestle Supply Agreements") with Nestle Food Company ("Nestle") pursuant to
which Containers supplies a majority of Nestle's metal container requirements,
and an agreement (the "DM Supply Agreement") with Del Monte Corporation ("Del
Monte") pursuant to which Containers supplies substantially all of Del Monte's
metal container requirements. In addition to Nestle and Del Monte, Containers
has multi-year supply arrangements with other customers. The Company estimates
that approximately 80% of Containers' sales in 1996 will be pursuant to such
supply agreements and arrangements. See "Business--Sales and Marketing."
Containers also manufacturers and sells certain specialty packaging items,
including metal caps and closures, plastic
-6-
<PAGE>
bowls and paper containers primarily used by processors and packagers in the
food industry. In 1995, on a pro forma basis after giving effect to the
acquisition of AN Can, the Company would have had net sales of specialty items
of approximately $83.6 million.
Containers' strategy has been growth through acquisition followed by
the integration and rationalization of the acquired businesses with Containers'
operations, realization of cost synergies as a result of such acquisitions, and
investment in the acquired assets, all aimed at achieving and maintaining a low
cost position. Since the acquisition in 1987 of Nestle's metal container
manufacturing division ("Nestle Can"), Containers has spent approximately $298
million for the acquisition of additional can manufacturing facilities and
equipment and has invested approximately $131 million in its acquired
manufacturing facilities. Containers acquired the U.S. metal container
manufacturing business ("DM Can") of Del Monte in December 1993 and AN Can from
ANC in August 1995, enabling the Company to diversify its customer base and
geographic presence in North America. See "Business--Company History."
Containers has achieved a low cost position, primarily through low production
costs and capital investments that have generated manufacturing and production
efficiencies and by exploiting the favorable geographic location of its plants.
To further enhance its low cost position, Containers has realized cost reduction
opportunities through plant rationalizations and cost synergies resulting from
its acquisitions. Since 1991, Containers has closed eight smaller, higher cost
metal container facilities, including five facilities that were closed in 1995
as a result of the integration of DM Can. The closure of the five facilities in
1995 resulted in a reduction in indirect costs of approximately $7.0 million.
The Company believes that the acquisition of AN Can will enable it to realize
further cost savings from plant rationalizations, from production and
manufacturing synergies from the combined operations and from the integration of
the selling and administrative operations of AN Can into Containers. As a result
of Containers' ability to integrate its acquired businesses and realize cost
savings and synergies from combining the acquired businesses with Containers'
operations, Containers has been able to successfully make acquisitions that have
allowed it to more than triple its overall share of the food can segment in
terms of unit sales, from a share of approximately 10% in 1987 to a share of
approximately 36% in 1995, on a pro forma basis after giving effect to the
acquisition of AN Can.
Plastic Container Business. In 1995, Plastics had net sales of
approximately $219.6 million (representing 16% of the Company's pro forma net
sales). HDPE containers manufactured by Plastics include personal care
containers for shampoos, conditioners, hand creams, lotions, cosmetics and
toiletries, household chemical containers for scouring cleaners, cleaning agents
and lawn and garden chemicals and pharmaceutical containers for tablets,
laxatives and eye cleaning solutions. Plastics manufactures PET custom
containers for mouthwash, liquid soap, skin care lotions, gastrointestinal and
respiratory products, salad dressings, condiments, instant coffees, premium
water and liquor. Many of the containers manufactured by Plastics are
recyclable. See "Business--Products."
Plastics has grown primarily by strategic acquisition. From a sales
base of $89 million in 1987, Plastics' sales have grown at a compound annual
rate of 12%. See "Business--Company History." While many of Plastics' larger
competitors that manufacture extrusion blow-molded plastic containers employ
technology oriented to large bottles and long production runs, Plastics has
focused on mid-sized, extrusion blow-molded plastic containers requiring special
decoration and shorter production runs. Plastics emphasizes value-added design,
fabrication and decoration of custom containers. Plastics is aggressively
pursuing opportunities in custom designed PET and HDPE containers for which the
market has been growing principally due to consumer preferences for plastic
containers. Management believes that PET custom containers are replacing glass
containers for products such as mouthwash, salad dressing, peanut butter and
liquor, and that Plastics is well positioned because of its technologically
advanced equipment to respond to opportunities for future growth in the rigid
plastic container market.
-7-
<PAGE>
Since 1993, Plastics' earnings before depreciation, interest, taxes and
amortization have increased 56% to $27.5 million in 1995. Plastics has achieved
this increase through a consolidation and rationalization program for its
facilities, significant capital investments to improve its manufacturing and
production efficiencies, increased unit sales volume, and lower selling, general
and administrative expenses. Management of Plastics intends to continue to focus
on expanding its market share and on improving its operating margins by pursuing
further cost reduction opportunities.
Operating Strategy. The Company's overall strategy is to continue to
improve its profitability by further lowering its operating costs and continuing
to increase its share of the North American packaging market through selective,
synergistic acquisitions and investments in internally generated opportunities.
The Company will continue to focus on lowering operating costs and improving its
margins, primarily by continuing to rationalize its operations, realize cost
synergies and manufacturing and production efficiencies, maintain low production
costs, reduce its general and administrative expenses as a percentage of sales,
invest in technologically advanced manufacturing and production processes and
exploit the favorable geographic locations of its plants. In pursuing its growth
strategy, the Company intends to focus particular attention on those rigid metal
and plastic container segments where it believes operating synergies are likely.
Financing Strategy. In order to improve its operating and financing
flexibility, the Company has been active in refinancing its higher cost
indebtedness with lower cost indebtedness. In 1995, the Company entered into a
new credit facility in connection with the AN Can acquisition. With borrowings
of $200 million thereunder, Holdings repurchased and redeemed an aggregate of
$204.1 million principal amount of Holdings' 13-1/4% Senior Discount Debentures
due 2002 (the "Discount Debentures"), which will result in $10.2 million of
annual cash interest savings and $18.3 million of current cash tax savings as a
result of the deduction by the Company of the accreted interest amount on the
retired Discount Debentures. In July 1996, Holdings completed a private offering
(the "Private Offering") of the Old Preferred Stock, for aggregate gross
proceeds of $50.0 million. A portion of the net proceeds from the Private
Offering (approximately $35.8 million) was used by Holdings to purchase its
Class B Common Stock, par value $.01 per share (the "Holdings Class B Stock"),
held by Mellon Bank N.A. ("Mellon"), as trustee for First Plaza Group Trust
("First Plaza"), at a lower cost than the cost at which Holdings could have
purchased such shares in the future. The remaining net proceeds from the Private
Offering were used to redeem $12.0 million principal amount of Discount
Debentures on August 26, 1996. As a result of this redemption, the Company will
realize additional annual cash interest expense savings of $1.6 million and
current tax benefits of $1.2 million. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Capital Resources and
Liquidity."
-8-
<PAGE>
The Exchange Offer
The Exchange Offer................. Holdings is offering to exchange one
share of New Preferred Stock for each
share of Old Preferred Stock that is
properly tendered and accepted in the
Exchange Offer. Holdings will issue the
New Preferred Stock on or promptly after
the Expiration Date. There are 50,000
shares of Old Preferred Stock
outstanding. See "The Exchange Offer."
Resale of New Preferred Stock...... Based on an interpretation by the staff
of the Commission set forth in no-action
letters issued to third parties,
including "Exxon Capital Holdings
Corporation" (available May 13, 1988),
the Morgan Stanley Letter, "Mary Kay
Cosmetics, Inc." (available June 5,
1991), "Warnaco, Inc." (available October
11, 1991) and "K-III Communications
Corp." (available May 14, 1993), the
Company believes that shares of New
Preferred Stock issued pursuant to the
Exchange Offer in exchange for shares of
Old Preferred Stock may be offered for
resale, resold and otherwise transferred
by any holder thereof (other than any
such holder which is an "affiliate" of
the Company within the meaning of Rule
405 under the Securities Act) without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that such shares
of New Preferred Stock are acquired in
the ordinary course of such holder's or
any other such person's business and that
such holder or any other such person has
no arrangement or understanding with any
person to participate in the distribution
of such shares of New Preferred Stock.
Holders of Old Preferred Stock who tender
their shares of Old Preferred Stock in
the Exchange Offer with the intention to
participate in a distribution of the New
Preferred Stock may not rely upon the
Morgan Stanley Letter or other similar
letters. Under no circumstances may this
Prospectus be used for an offer to resell
or other retransfer of shares of New
Preferred Stock. In the event that the
Company's belief is inaccurate, holders
of shares of New Preferred Stock who
transfer shares of New Preferred Stock in
violation of the prospectus delivery
provisions of the Securities Act and
without an exemption from registration
thereunder may incur liability
thereunder. The Company does not assume
-9-
<PAGE>
or indemnify holders against such
liability. The Exchange Offer is not
being made to, nor will Holdings accept
surrenders for exchange from, holders of
shares of Old Preferred Stock (i) in any
jurisdiction in which the Exchange Offer
or the acceptance thereof would not be in
compliance with the securities or blue
sky laws of such jurisdiction or (ii) if
any holder is engaged or intends to
engage in a distribution of the New
Preferred Stock. Each broker-dealer that
receives shares of New Preferred Stock
for its own account in exchange for
shares of Old Preferred Stock, where such
shares of Old Preferred Stock were
acquired by such broker-dealer as a
result of market-making activities or
other trading activities, must
acknowledge that it will deliver a
prospectus in connection with any resale
of such shares of New Preferred Stock.
The Company has not entered into any
arrangement or understanding with any
person to distribute the shares of New
Preferred Stock to be received in the
Exchange Offer. See "Plan of
Distribution."
Expiration Date.................... The Exchange Offer will expire at 5:00
p.m., New York City time, on
______________, 1996 unless extended, in
which case the term "Expiration Date"
shall mean the latest date and time to
which the Exchange Offer is extended.
Holdings will accept for exchange any and
all Old Preferred Stock which are
properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time,
on the Expiration Date. The shares of New
Preferred Stock issued pursuant to the
Exchange Offer will be delivered on or
promptly after the Expiration Date.
Conditions to the Exchange Offer... The Company may terminate the Exchange
Offer if it determines that its ability
to proceed with the Exchange Offer could
be materially impaired due to any legal
or governmental action, any new law,
statute, rule or regulation, any
interpretation by the staff of the
Commission of any existing law, statute,
rule or regulation or the failure to
obtain any necessary approvals of
governmental agencies or holders of
shares of Old Preferred Stock. The
Company does not expect any of the
foregoing conditions to occur, although
there can be no assurance that such
conditions will not occur.
Procedures for Tendering
Old Preferred Stock............... Each holder of Old Preferred Stock
wishing to participate in the Exchange
Offer must complete,
-10-
<PAGE>
sign and date the Letter of Transmittal,
or a facsimile thereof, in accordance
with the instructions contained herein
and therein, and mail or otherwise
deliver such Letter of Transmittal, or
such facsimile, together with such Old
Preferred Stock and any other required
documentation to Fleet National Bank as
transfer agent for the Preferred Stock
(the "Transfer Agent") at the address set
forth herein. By executing the Letter of
Transmittal, each holder will represent
to Holdings that, among other things, the
New Preferred Stock acquired pursuant to
the Exchange Offer is being obtained in
the ordinary course of business of the
person receiving such New Preferred
Stock, whether or not such person has an
arrangement or understanding with any
person to participate in the distribution
of such New Preferred Stock, and that
neither the holder nor any such other
person is an "affiliate," as defined in
Rule 405 under the Securities Act, of the
Company.
Special Procedures for Beneficial
Owners............................. Any beneficial owner whose Old Preferred
Stock is registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee and who wishes
to tender such Old Preferred Stock in the
Exchange Offer should contact such
registered holder promptly and instruct
such registered holder to tender such Old
Preferred Stock on such beneficial
owner's behalf. If such beneficial owner
wishes to tender such Old Preferred Stock
on such owner's own behalf, such owner
must, prior to completing and executing
the Letter of Transmittal and delivering
its Old Preferred Stock, either make
appropriate arrangements to register
ownership of the Old Preferred Stock in
such owner's name or obtain a properly
completed bond power from the registered
holder. The transfer of registered
ownership may take considerable time and
may not be able to be completed prior to
the Expiration Date.
Guaranteed Delivery Procedures..... Holders of Old Preferred Stock who wish
to tender their Old Preferred Stock and
whose Old Preferred Stock is not
immediately available or who cannot
deliver their Old Preferred Stock or the
Letter of Transmittal to the Transfer
Agent prior to the Expiration Date, must
tender their Old Preferred Stock
according to the guaranteed delivery
procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
-11-
<PAGE>
Withdrawal Rights.................. Tenders of Old Preferred Stock may be
withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration
Date.
Certain Federal Income Tax
Considerations..................... For a discussion of certain federal
income tax considerations relating to the
exchange of the New Preferred Stock for
the Old Preferred Stock, as well as the
ownership of the New Preferred Stock and,
if applicable, the Exchange Debentures,
see "Certain United States Federal Income
Tax Considerations."
Transfer Agent..................... Fleet National Bank is the Transfer Agent
for the Exchange Offer. Its telephone
number is (800) 666-6431 or (860)
986-1271. The address of the Transfer
Agent is as set forth in "The Exchange
Offer--Transfer Agent."
The New Preferred Stock
Securities Offered................. 50,000 shares of New Exchangeable
Preferred Stock.
Dividends.......................... Dividends are cumulative at 13-1/4% per
annum, and are payable quarterly in cash
or, on or prior to July 15, 2000 at the
sole option of Holdings, in additional
shares of New Preferred Stock, on January
15, April 15, July 15 and October 15,
commencing October 15, 1996. Dividends on
the New Preferred Stock will accrue and
be cumulative from the date of issuance
thereof. See "Certain United States
Federal Income Tax Considerations." If by
July 22, 1997 the New Preferred Stock has
not been exchanged for Exchange
Debentures, the dividend rate on the New
Preferred Stock will increase by 0.5% per
annum to 13-3/4% per annum of the
liquidation preference per share of New
Preferred Stock until such exchange
occurs.
Liquidation Preference............. $1,000 per share, plus accrued and unpaid
dividends.
Voting............................. Holders of the New Preferred Stock will
have no voting rights except as provided
by law and as provided in Holdings'
Restated Certificate of Incorporation
(the "Certificate of Incorporation") or
in the Certificate of Designation. In the
event that
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<PAGE>
dividends are not paid for four
consecutive quarters or upon certain
other events (including failure to comply
with covenants and failure to pay the
mandatory redemption price when due),
then the number of directors constituting
Holdings' Board of Directors will be
adjusted to permit the holders of the
majority of the then outstanding
Preferred Stock, voting separately as a
class, to elect the number of directors
that is equal to the greater of (i) one
and (ii) the whole number obtained
(rounding down to the nearest whole
number) by (a) multiplying 1/6 by the
number of directors then in office and
(b) adding one. The Certificate of
Incorporation provides that even if a
majority of the directors of Holdings
vote in favor of an action, the directors
elected by either of the Holdings Class A
Stock (as defined in "Securities
Ownership of Certain Beneficial Owners
and Management--Certain Beneficial Owners
of Holdings' Capital Stock") or the
Holdings Class B Stock could block such
action. See "Description of New Preferred
Stock--Voting Rights."
Mandatory
Redemption......................... Holdings is required to redeem the New
Preferred Stock on July 15, 2006 (subject
to the legal availability of funds
therefor) at a redemption price equal to
the liquidation preference, plus accrued
and unpaid dividends to the redemption
date. See "Description of New Preferred
Stock--Mandatory Redemption."
Optional Redemption................ On or after July 15, 2000, the New
Preferred Stock is redeemable, at the
option of Holdings, in whole or in part,
at the redemption prices set forth
herein, plus accrued and unpaid dividends
to the redemption date. In addition, at
any time, or from time to time, on or
prior to July 15, 2000, Holdings may, at
its option, redeem all (but not less than
all) of the outstanding shares of
Preferred Stock at a redemption price
equal to 110% of the liquidation
preference thereof, plus accrued and
unpaid dividends to the redemption date,
with the proceeds of one or more sales of
common stock. See "Description of New
Preferred Stock--Optional Redemption."
Ranking............................ The Preferred Stock will rank (i) senior
to all common stock of Holdings and to
all other capital stock of Holdings
unless the terms of such stock
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<PAGE>
expressly provide that it ranks senior to
or on a parity with the Preferred Stock;
(ii) on a parity with any capital stock
of Holdings the terms of which expressly
provide that it will rank on a parity
with the Preferred Stock; and (iii)
junior to all capital stock of Holdings
the terms of which expressly provide that
such stock will rank senior to the
Preferred Stock. As of the date of this
Prospectus, all outstanding capital stock
of Holdings ranks junior to the Preferred
Stock. See "Description of New Preferred
Stock--Ranking."
Optional Exchange Feature.......... The Preferred Stock is exchangeable into
Exchange Debentures at any time at the
option of Holdings, in whole but not in
part, subject to (i) such exchange being
permitted under Holdings' and Silgan's
instruments and agreements governing
their indebtedness, including the Silgan
Credit Agreement (as defined in "Risk
Factors--High Leverage; Deficiency in
Stockholders' Equity") and the Discount
Debentures Indenture (as defined in "Risk
Factors--Ability of Holdings to Pay Cash
Dividends and Cash Interest"), and (ii)
the conditions therefor described in the
Certificate of Designation being
satisfied. See "Description of New
Preferred Stock--Exchange" and
"Description of Exchange Debentures."
Certain
Covenants.......................... The Certificate of Designation contains
certain covenants which, among other
things, will restrict the ability of
Holdings and its Restricted Subsidiaries
(as defined under "Description of New
Preferred Stock--Certain Definitions") to
incur additional indebtedness and issue
preferred stock; pay dividends or make
distributions in respect of their capital
stock; purchase, redeem or otherwise
acquire for value shares of capital
stock; make any voluntary or optional
principal payments or voluntary or
optional redemption, repurchase,
defeasance or other acquisition or
retirement for value of any securities
junior to the New Preferred Stock; make
investments in any affiliate or
Unrestricted Subsidiary (as defined under
"Description of New Preferred
Stock--Certain Definitions") of Holdings;
enter into transactions with shareholders
or affiliates; create restrictions on the
ability of Restricted Subsidiaries of
Holdings to make certain payments; issue
or sell stock of Restricted Subsidiaries;
engage in sales of assets;
-14-
<PAGE>
and engage in mergers or consolidations.
See "Description of New Preferred
Stock--Certain Covenants."
Change of Control.................. Upon a Change of Control (as defined in
"Description of New Preferred
Stock--Certain Definitions"), Holdings is
required to make an offer to purchase the
shares of Preferred Stock at a purchase
price equal to 101% of their liquidation
preference, plus accrued and unpaid
dividends to the date of purchase. See
"Description of New Preferred
Stock--Change of Control."
The Exchange Debentures
Exchange Debentures................ Subordinated Debentures due July 15, 2006
in an aggregate principal amount equal to
the aggregate liquidation preference of,
and accrued but unpaid dividends on, the
Preferred Stock outstanding on the
Exchange Date (as defined in "Description
of New Preferred Stock--Exchange").
Interest;
Interest Payment Dates............. Each Exchange Debenture will bear
interest at the dividend rate in effect
with respect to the New Preferred Stock
on the date the Exchange Debentures are
issued from the Exchange Date or from the
most recent interest payment date to
which interest has been paid or provided
for. Interest will be payable on January
15 and July 15 of each year, commencing
with the first of such dates to occur
after the Exchange Date. On or prior to
July 15, 2000, Holdings may pay interest
on the Exchange Debentures by issuing
additional Exchange Debentures.
Optional Redemption................ On or after July 15, 2000, the Exchange
Debentures will be redeemable, at the
option of Holdings, in whole or in part,
at the redemption prices set forth
herein, plus accrued and unpaid interest
to the redemption date. In addition, at
any time, or from time to time, on or
prior to July 15, 2000, Holdings may, at
its option, redeem all (but not less than
all) outstanding Exchange Debentures at a
redemption price equal to 110% of the
principal amount thereof, plus accrued
and unpaid interest to the redemption
date, with the proceeds of one or more
sales of common stock. See "Description
of Exchange Debentures--Optional
Redemption."
Ranking........................... The Exchange Debentures will be
subordinated indebtedness of Holdings,
subordinated to the prior payment when
due of the principal of, and premium, if
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<PAGE>
any, and accrued and unpaid interest on,
all existing and future Senior
Indebtedness (as defined in "Description
of Exchange Debentures--Subordination")
of Holdings (including indebtedness under
the Silgan Credit Agreement and the
Discount Debentures). In addition, the
Exchange Debentures will be effectively
subordinated to all liabilities
(including trade payables) of Holdings'
subsidiaries. As of June 30, 1996, on a
pro forma basis after giving effect to
the Refinancing (as defined in "Summary
Historical and Pro Forma Financial
Information"), Holdings would have had
$911.1 million of Senior Indebtedness
(which includes $717.2 million of
indebtedness of Holdings' subsidiaries
that is guaranteed by Holdings and
includes the 11-3/4% Notes (as defined in
"Risk Factors--Ability of Holdings to Pay
Cash Dividends and Cash Interest") which
would become Senior Indebtedness upon a
Holdings Merger (as defined in
"Description of New Preferred
Stock--Certain Definitions") or similar
transaction) and Holdings' subsidiaries
would have had $1,098.7 million of
indebtedness and other liabilities.
Certain Covenants................. The Exchange Debenture Indenture (as
defined in "Description of Exchange
Debentures") contains certain
covenants which, among other things, will
restrict the ability of Holdings and its
Restricted Subsidiaries to incur
additional indebtedness; pay dividends or
make distributions in respect of their
capital stock; purchase, redeem, or
otherwise acquire for value shares of
their capital stock; make any voluntary
or optional principal payments or
voluntary or optional redemption,
repurchase, defeasance or other
acquisition or retirement for value of
any Indebtedness (as defined in
"Description of New Preferred
Stock--Certain Definitions") subordinated
to the Exchange Debentures; make
investments in any affiliate or
Unrestricted Subsidiary of Holdings;
enter into transactions with shareholders
or affiliates; create restrictions on the
ability of Restricted Subsidiaries of
Holdings to make certain payments; issue
or sell stock of Restricted Subsidiaries;
engage in sales of assets; and engage in
mergers or consolidations. See
"Description of Exchange
Debentures--Covenants."
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<PAGE>
Registration
Requirements....................... The Exchange Debentures may not be issued
unless such issuance is registered under
the Securities Act or is exempt from
registration.
Change of Control.................. Upon a Change of Control, Holdings will
be required to make an offer to purchase
the Exchange Debentures at a purchase
price equal to 101% of their principal
amount on the date of purchase, plus
accrued and unpaid interest to the date
of purchase. See "Description of Exchange
Debentures--Covenants--Change of
Control."
Risk Factors
For a discussion of certain factors that should be considered in
evaluating an investment in the New Preferred Stock, see "Risk Factors."
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<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following summary historical and pro forma consolidated financial
information of Holdings were derived from, and should be read in conjunction
with, the historical financial statements and pro forma financial information of
Holdings, including the notes thereto, that appear elsewhere in this Prospectus.
The summary unaudited pro forma operating data and other data for the
six months ended June 30, 1996 give effect to (i) the Private Offering and the
use of the proceeds therefrom and (ii) the incurrence of $125 million of
additional B term loans in July 1996 and $17.4 million of working capital loans
in June 1996 under the Silgan Credit Agreement, as recently amended in May 1996,
and the use of such proceeds to redeem a portion of the Discount Debentures
(collectively, the "Refinancing"), as if such events had occurred as of January
1, 1996. Additionally, the summary unaudited pro forma balance sheet data at
June 30, 1996 give effect to the Refinancing (other than events that occurred
prior to such date) as if it had occurred as of such date.
The summary unaudited pro forma operating data and other data for the
fiscal year ended December 31, 1995 give effect to (i) the acquisition of AN
Can, (ii) proceeds received under the Silgan Credit Agreement (which was entered
into on August 1, 1995 and provided Silgan with $225 million of A term loans and
$225 million of B term loans and provided Containers and Plastics with a
commitment of $225 million for working capital loans) which were used to finance
the acquisition of AN Can, repay in full amounts owing under the Company's
previous credit agreement and Silgan's Senior Secured Floating Rate Notes due
1997 (the "Secured Notes"), and repurchase $61.7 million principal amount at
maturity of Discount Debentures, (iii) the Private Offering and the use of the
proceeds therefrom and (iv) the incurrence of $125 million of additional B term
loans in July 1996 and $17.4 million of working capital loans in June 1996 under
the Silgan Credit Agreement and the use of such proceeds to redeem a portion of
the Discount Debentures, as if such events had occurred as of January 1, 1995.
The summary unaudited pro forma consolidated financial information for
the six months ended June 30, 1996 and for the fiscal year ended December 31,
1995 assume the Refinancing occurred at the beginning of the periods presented.
The amount necessary to purchase the Holdings Class B Stock held by Mellon
increased over time. Because the Refinancing did not occur at the beginning of
the periods presented and because the Discount Debentures accreted in value, the
aggregate principal amount of the Discount Debentures outstanding after the
Refinancing will be greater than the aggregate principal amount used to
calculate interest expense in the pro forma consolidated financial information.
Currently, there is approximately $59.0 million aggregate principal amount of
Discount Debentures that remain outstanding. As a result, actual interest
expense of the Company will be greater than the interest expense reflected in
the pro forma consolidated financial information.
The unaudited pro forma financial information does not purport to
represent what the Company's financial position or results of operations would
actually have been if such events had in fact occurred as of such dates or at
the beginning of the periods presented, or to project the Company's financial
position or results of operations for any future date or period. The unaudited
pro forma adjustments are based upon available information and upon certain
assumptions that Holdings believes are reasonable. The unaudited pro forma
financial data and accompanying notes should be read in conjunction with the
unaudited pro forma condensed statements of operations and the historical
financial information of Holdings, including notes thereto, included elsewhere
in this Prospectus.
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
Six Months ended June 30,
-------------------------------------------
Pro Forma
1996(a) 1996 1995
---- ------ ------
(Dollars in thousands)
(Unaudited)
Operating Data:
<S> <C> <C> <C>
Net sales.................................................... $606,922 $606,922 $404,990
Cost of goods
sold......................................................... 521,683 521,683 346,144
------- ------- -------
Gross profit................................................. 85,239 85,239 58,846
Selling, general and administrative expenses................. 27,210 27,210 17,729
------- ------- -------
Income from operations....................................... 58,029 58,029 41,117
Interest expense and other related financing costs........... 41,795 45,861 34,797
------- ------- -------
Income before income taxes................................... 16,234 12,168 6,320
Income tax provision......................................... 1,900 2,500 4,200
------- ------- -------
Net income (b)............................................... 14,334 9,668 2,120
Preferred stock dividend requirement......................... 3,367 -- --
------- ------- -------
Net income applicable to common
stockholders............................................. $ 10,967 $ 9,668 $ 2,120
======== ======= =======
Ratio of earnings to fixed charges and preferred
stock dividends(c)....................................... 1.27 1.25 1.17
Balance Sheet Data (at end of period):
Fixed assets................................................. $482,723 $482,723 $255,453
Total assets................................................. 1,004,184 1,004,606 552,176
Total long-term debt......................................... 732,298 745,550 525,884
Cumulative exchangeable redeemable preferred
stock of Holdings ($50 million liquidation value)........ 50,000 -- --
Deficiency in stockholders' equity........................... (209,814) (170,136) (155,878)
Other Data:
EBDITA(d).................................................... $ 89,588 $ 89,588 $ 58,838
EBDITA as a percentage of net sales.......................... 14.8% 14.8% 14.5%
Capital expenditures......................................... 29,031 29,031 19,671
Depreciation and amortization(e)............................. 29,664 29,664 16,915
(footnotes follow)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
Year Ended December 31,
-------------------------------------------------------------------------------
Pro Forma
1995(a) 1995(f) 1994(g) 1993(g) 1992 1991(h)
------- ------- ------- ------- ---- -------
(Dollars in thousands)
Operating Data:
- --------------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................ $1,404,382 $1,101,905 $861,374 $645,468 $630,039 $678,211
Cost of goods sold....................... 1,239,529 970,491 748,290 571,174 554,972 605,185
--------- --------- ------- ------- ------- -------
Gross profit............................. 164,853 131,414 113,084 74,294 75,067 73,026
Selling, general and administrative
expenses............................. 57,360 46,848 37,997 32,495 32,809 33,733
Reduction in carrying value of assets(i). 14,745 14,745 16,729 -- -- --
--------- --------- ------- ------- ------- -------
Income from operations................... 92,748 69,821 58,358 41,799 42,258 39,293
Interest expense and other related
financing costs...................... 76,764 80,710 65,789 54,265 57,091 55,996
Minority interest expense................ -- -- -- -- 2,745 3,889
--------- --------- ------- ------- ------- -------
Income (loss) before income taxes........ 15,984 (10,889) (7,431) (12,466) (17,578) (20,592)
Income tax provision..................... 2,000 5,100 5,600 1,900 2,200 --
--------- --------- ------- ------- ------- -------
Income (loss) before extraordinary
charges and cumulative effect of
changes in accounting principles..... 13,984 (15,989) (13,031) (14,366) (19,778) (20,592)
--------- --------- ------- ------- ------- -------
Extraordinary charges relating to early
extinguishment of debt(b)............ -- (5,817) -- (1,341) (23,597) --
Cumulative effect of changes in
accounting principles(j)............. -- -- -- (6,276) -- --
--------- --------- ------- ------- ------- -------
Net income (loss)........................ 13,984 (21,806) (13,031) (21,983) (43,375) (20,592)
Preferred stock dividend requirement..... 6,962 -- -- -- -- --
--------- --------- ------- ------- ------- -------
Net income (loss) applicable to common
stockholders......................... $ 7,022 $ (21,806) $(13,031) $(21,983) $(43,375) $(20,592)
========== ========== ======== ======= ======= ========
Deficiency of earnings available to cover
fixed charges and preferred
stock dividends(c)................... $ -- $ 10,889 $ 7,431 $ 12,466 $ 17,578 $ 20,592
Ratio of earnings to fixed charges and
preferred stock dividends(c)......... 1.10 -- -- -- -- --
Balance Sheet Data (at end of period):
Fixed assets............................. -- $ 487,301 $251,810 $290,395 $223,879 $230,501
Total assets............................. -- 900,046 504,292 497,633 389,035 390,693
Total long-term debt..................... -- 750,873 510,763 505,718 383,232 315,461
Redeemable preferred stock of Silgan
(minority interest of Holdings)...... -- -- -- -- -- 27,878
Deficiency in stockholders' equity....... -- (179,804) (157,998) (144,967) (137,984) (94,609)
Other Data:
EBDITA(d)................................ $ 168,647 $ 132,428 $114,489 $ 76,095 $ 74,012 $ 72,141
EBDITA as a percentage of net sales...... 12.0% 12.0% 13.3% 11.8% 11.7% 10.6%
Capital expenditures..................... $ 54,890 $ 51,897 $ 29,184 $ 42,480 $ 23,447 $ 21,834
Depreciation and amortization(e)......... $ 57,932 $ 45,388 $ 37,187 $ 33,818 $ 31,754 $ 32,848
Number of employees (at end of
period)(k)........................... 5,110 5,110 4,000 3,330 3,340 3,560
(footnotes follow)
</TABLE>
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<PAGE>
Notes to Summary Historical and Pro Forma Financial Information
(a) For a detailed presentation of the pro forma results of operations of
the Company for the six months ended June 30, 1996 and the year ended
December 31, 1995, see the unaudited pro forma condensed statements of
operations, including the notes thereto, included elsewhere in this
Prospectus. For purposes of the pro forma financial information for the
year ended December 31, 1995, balance sheet data is not included.
(b) The pro forma consolidated operating data for the six months ended June
30, 1996 and the year ended December 31, 1995 do not include an
extraordinary charge, net of tax, that the Company expects to incur in
the third quarter of 1996 of $1.7 million for the write-off of
unamortized deferred financing costs related to the early redemption of
the Discount Debentures. See "Capitalization." In addition, the pro
forma consolidated operating data for the year ended December 31, 1995
does not include the historical extraordinary charge, net of taxes,
incurred as a result of the early extinguishment of amounts owing under
the Company's debt facilities.
(c) For purposes of computing the ratio of earnings to fixed charges and
preferred stock dividends and the deficiency of earnings available to
cover fixed charges and preferred stock dividends, earnings consist of
income (loss) before income taxes plus fixed charges, excluding
capitalized interest, and fixed charges consist of interest, whether
expensed or capitalized, minority interest expense, amortization of
debt expense and discount or premium relating to any indebtedness,
whether expensed or capitalized, such portion of rental expense that is
representative of the interest factor and preferred stock dividends.
(d) "EBDITA" means consolidated net income before extraordinary charges,
cumulative effect of changes in accounting principles and preferred
stock dividends plus, to the extent reflected in the income statement
for the period for which consolidated net income is to be determined,
without duplication, (i) consolidated interest expense (including
minority interest expense), (ii) income tax expense, (iii) depreciation
expense, (iv) amortization expense, (v) expenses relating to
postretirement health care costs which amounted to $1.5 million and
$0.4 million for the six months ended June 30, 1996 and 1995,
respectively, and $1.7 million, $0.7 million and $0.5 million for the
years ended December 31, 1995, 1994 and 1993, respectively, (vi)
charges relating to the vesting of benefits under stock appreciation
rights ("SARs") of $0.4 million for each of the six months ended June
30, 1996 and 1995, and $0.8 million and $1.5 million in 1995 and 1994,
respectively, and (vii) the reduction in carrying value of assets of
$14.7 million and $16.7 million in 1995 and 1994, respectively. EBDITA
is being presented by the Company as a supplement to the discussion of
the Company's operating income and cash flow from operations analysis
because the Company believes that certain persons may find it to be
useful in measuring the Company's performance and ability to service
its debt. EBDITA is not a substitute for generally accepted accounting
principles ("GAAP") operating and cash flow data.
(e) Depreciation and amortization excludes amortization of debt financing
costs.
(f) On August 1, 1995, the Company acquired from ANC substantially all of
the assets of ANC's Food Metal and Specialty business for a purchase
price of $362.0 million (including the purchase from ANC of its St.
Louis facility in May 1996 for $13.2 million). The acquisition was
accounted for as a purchase transaction and the results of operations
have been included with the Company's historical results from the
acquisition date. See Note 3 to the Consolidated Financial Statements
for the year ended December 31, 1995 included elsewhere in this
Prospectus.
(g) On December 21, 1993, the Company acquired from Del Monte substantially
all of the fixed assets and certain working capital of its container
manufacturing business. The acquisition was accounted for as a purchase
transaction and the results of operations have been included with the
Company's historical results from the acquisition date. See
"Business--Company History." See Note 3 to the Consolidated Financial
Statements for the year ended December 31, 1995 included elsewhere in
this Prospectus.
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<PAGE>
(h) On November 15, 1991, the Company sold its nonstrategic PET carbonated
beverage bottle business. For 1991, sales from the PET carbonated
beverage business were $33.4 million. See "Business--Company History."
(i) Based upon a review of its depreciable assets, the Company determined
that certain adjustments were necessary to properly reflect net
realizable values. In 1995, the Company recorded a write-down of $14.7
million for the excess of carrying value over estimated realizable
value of machinery and equipment at existing facilities which had
become underutilized due to excess capacity. In 1994, charges of $16.7
million were recorded which included $2.6 million to write-down the
excess carrying value over estimated realizable value of various plant
facilities held for sale and $14.1 million for technologically obsolete
and inoperable machinery and equipment.
(j) During 1993, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers Accounting for Postretirement
Benefits Other than Pensions," SFAS No. 109, "Accounting for Income
Taxes" and SFAS No. 112, "Employers Accounting for Postemployment
Benefits." The Company did not elect to restate prior years' financial
statements for any of these pronouncements.
(k) The number of employees at December 31, 1995 includes approximately
1,400 employees who joined the Company on August 1, 1995 as a result of
the acquisition by Containers of AN Can. The number of employees at
December 31, 1993 excludes 650 employees who joined the Company on
December 21, 1993 as a result of the acquisition by Containers of DM
Can.
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RISK FACTORS
An investment in the New Preferred Stock offered hereby involves a high
degree of risk. The following risk factors, together with the other information
set forth in this Prospectus and appearing in the documents incorporated by
reference herein, should be considered when evaluating an investment in the New
Preferred Stock.
High Leverage; Deficiency in Stockholders' Equity
The Company is highly leveraged primarily as a result of the financing
of the acquisitions of its metal and plastic container businesses and as a
result of the issuance by Holdings in 1992 of its Discount Debentures. See
"Business--Company History." Holdings has also guaranteed the obligations and
liabilities of Silgan and its subsidiaries under the credit agreement dated as
of August 1, 1995 among Silgan and certain of its subsidiaries, the lenders
named therein (the "Banks"), Bankers Trust Company ("Bankers Trust"), as
Administrative Agent and Co-Arranger, and Bank of America Illinois ("Bank of
America"), as Documentation Agent and Co-Arranger, as amended (the "Silgan
Credit Agreement"). See "Description of Certain Silgan Indebtedness--Description
of the Silgan Credit Agreement." At June 30, 1996, on a pro forma basis after
giving effect to the Refinancing (assuming that the Refinancing occurred as of
such date), Holdings would have had approximately $911.1 million of total
consolidated indebtedness and $50 million liquidation value of Preferred Stock.
See "Capitalization." Also, as of June 30, 1996, Holdings' deficiency in
stockholders' equity was $170.1 million and, on a pro forma basis after giving
effect to the Refinancing, would have been $209.8 million. See "Capitalization."
Additionally, Holdings' pro forma ratio of earnings to fixed charges and
preferred stock dividends for the six months ended June 30, 1996 and the year
ended December 31, 1995 were 1.27 and 1.16, respectively. A significant amount
of the Company's cash flow must be used to service the Company's debt and cannot
be used in the Company's business. Holdings' high level of indebtedness and
deficiency in stockholders' equity pose substantial risks to holders of the
Preferred Stock.
Ability of Holdings to Pay Cash Dividends and Cash Interest
Cash dividends on the Preferred Stock (and cash interest payments on
the Exchange Debentures, if issued) are payable commencing on October 15, 2000.
The Silgan Credit Agreement permits Silgan to pay cash dividends and to advance
funds to Holdings in order to enable Holdings to pay cash dividends on the
Preferred Stock or cash interest on the Exchange Debentures, if issued, on or
after the earlier of (i) the third anniversary of the issuance of the Old
Preferred Stock and (ii) the second anniversary of the issuance of the Old
Preferred Stock if Holdings has theretofore consummated a registered public
offering of its common stock, in each case so long as no default under the
Silgan Credit Agreement then exists or would result therefrom and the Company
meets an interest coverage ratio test under the Silgan Credit Agreement. See
"Description of Certain Silgan Indebtedness--Description of the Silgan Credit
Agreement."
In addition, under the indenture in respect of the Discount Debentures
(the "Discount Debentures Indenture"), Holdings is permitted to pay cash
dividends on the Preferred Stock only if amounts determined in accordance with
the Discount Debentures Indenture are available for such payments. On a pro
forma basis after giving effect to the Refinancing, as of June 30, 1996,
Holdings would not have had any amount available under the Discount Debentures
Indenture to pay cash dividends on the Preferred Stock. So long as Holdings does
not have any amount available to it under the Discount Debentures Indenture to
pay cash dividends, Holdings will be prohibited under the Discount Debentures
Indenture from paying cash dividends on the Preferred Stock. The ability of
Holdings to pay cash
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dividends on the Preferred Stock when required may depend upon the ability of
Holdings to refinance the remaining Discount Debentures. Currently, there is
approximately $59.0 million principal amount of Discount Debentures outstanding.
There can be no assurance that Holdings will be able to refinance the remaining
Discount Debentures or that Holdings will be permitted to pay cash dividends on
the Preferred Stock when required. The Discount Debentures Indenture does not
limit payments of cash interest on the Exchange Debentures. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Under the indenture (the "11-3/4% Notes Indenture") in respect of
Silgan's 11-3/4% Senior Subordinated Notes due 2002 (the "11-3/4% Notes"),
Silgan may pay cash dividends to Holdings (which would enable Holdings to pay
cash dividends on the Preferred Stock (subject to the matters described in the
preceding paragraph) or cash interest on the Exchange Debentures) only if
certain financial tests are met. On a pro forma basis after giving effect to the
Refinancing, as of June 30, 1996, the 11-3/4% Notes Indenture would not have
permitted Silgan to pay cash dividends to Holdings to fund Holdings' payment of
cash dividends (or interest) on the Preferred Stock (or, if issued, the Exchange
Debentures). Accordingly, so long as Silgan cannot pay cash dividends to
Holdings under the terms of the 11-3/4% Notes Indenture, Holdings may not be
able to pay cash dividends on the Preferred Stock or cash interest on the
Exchange Debentures. The ability of Silgan to pay cash dividends to Holdings to
enable Holdings to pay cash dividends on the Preferred Stock or cash interest on
the Exchange Debentures when required will depend upon the future performance of
Silgan and its subsidiaries and may depend upon the ability of Silgan to
refinance the remaining 11-3/4% Notes. There can be no assurance that Silgan
will be able to refinance the 11-3/4% Notes or that Silgan will be permitted to
pay cash dividends to Holdings to enable Holdings to pay cash dividends on the
Preferred Stock or cash interest on the Exchange Debentures when required.
Management believes that the cash dividend or cash interest obligations of
Holdings with respect to the Preferred Stock or Exchange Debentures will be met
by Silgan through cash generated by operations or borrowings or by Holdings
through refinancings of its existing indebtedness or additional debt or equity
financings. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Capital Resources and Liquidity" and "Description of
Certain Silgan Indebtedness."
Under Delaware law, dividends on capital stock may only be paid from
"surplus" or if there is no "surplus," from the corporation's net profits for
the then current or the preceding fiscal year. The ability of Holdings to pay
cash dividends on the Preferred Stock will require the availability of adequate
"surplus," which is defined as the excess, if any, of Holdings' net assets
(total assets less total liabilities) over its capital (generally the par value
of its issued capital stock). There can be no assurance that adequate surplus
will be available to pay cash dividends on the Preferred Stock or that, even if
such surplus is available, Holdings will have sufficient cash to pay dividends
on the Preferred Stock.
Ability of Silgan to Provide Financial Support to Holdings
Holdings is not required to pay cash dividends on the Preferred Stock,
or cash interest on the Exchange Debentures, if issued, until October 15, 2000.
Since Holdings' only asset is its investment in Silgan, its ability to pay cash
dividends on the Preferred Stock and cash interest on the Exchange Debentures
may depend upon its receipt of funds paid by dividend or otherwise loaned,
advanced or transferred by Silgan to Holdings. While Silgan has no legal
obligation to make such funds available, it is expected that Silgan will do so
if it then has sufficient funds available for such purpose and if it is then
permitted to make such funds available to Holdings under its instruments and
agreements governing its indebtedness. See "--Ability of Holdings to Pay Cash
Dividends and Cash Interest" above. If sufficient funds to pay such dividends or
interest are not generated by the operations of Silgan and its subsidiaries,
Holdings or Silgan may seek to borrow or otherwise finance the amount of such
payments or refinance
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the Preferred Stock or the Exchange Debentures. There can be no assurance that
Holdings or Silgan will be able to borrow or otherwise finance such payments or
refinance the Preferred Stock or the Exchange Debentures.
Holding Company Structure; Subordination
Holdings is a holding company with no significant assets other than its
investment in Silgan. The operations of Holdings are conducted through Silgan's
operating subsidiaries, Containers and Plastics, each of which is a wholly owned
subsidiary of Silgan. Therefore, Holdings' ability to pay cash dividends on the
Preferred Stock when cash dividends are required to be paid, to redeem the
Preferred Stock as required and to pay interest on, and repay the principal
amount at maturity of, the Exchange Debentures, if issued, is largely dependent
upon the future performance and the cash flow of such operating subsidiaries,
which will be subject to prevailing economic conditions and to financial,
business and other factors (including the state of the economy and the financial
markets, demand for the products of the Company, costs of raw materials,
legislative and regulatory changes and other factors beyond the control of such
operating subsidiaries) affecting the business and operations of such operating
subsidiaries. Silgan and its subsidiaries are legally distinct from Holdings and
have no obligation, contingent or otherwise, to pay amounts due with respect to
the Preferred Stock or the Exchange Debentures or to make funds available for
such payments. Because Silgan and its subsidiaries do not guarantee the
obligations of Holdings under the Preferred Stock or the Exchange Debentures,
claims of holders thereof effectively will be subordinated to the claims of
creditors of Silgan and its subsidiaries, including claims of the Banks pursuant
to the Silgan Credit Agreement, which is guaranteed directly by all of the
operating subsidiaries of Silgan, claims of holders of the 11-3/4% Notes and
claims of trade creditors, except to the extent that Holdings may be a creditor
with recognized claims against Silgan or such subsidiaries. At June 30, 1996, on
a pro forma basis after giving effect to the Refinancing (assuming that the
Refinancing occurred as of such date), Silgan and its subsidiaries would have
had $1,098.7 million of indebtedness and other liabilities.
All existing and future liabilities of Holdings (including the Discount
Debentures) will generally have priority as to the assets of Holdings over the
claims of the holders of the Preferred Stock. The Exchange Debentures, if and
when issued, will be subordinate in right of payment to the prior payment in
full of the Discount Debentures and all other existing and future Senior
Indebtedness (including Holdings' guaranty of the Silgan Credit Agreement).
Consequently, in the event of Holdings' bankruptcy, insolvency, liquidation,
reorganization, dissolution or other winding up, or upon acceleration of certain
of Holdings' indebtedness, the holders of Holdings' indebtedness (or holders of
Senior Indebtedness in the case of the Exchange Debentures, including the Banks
and the holders of the Discount Debentures) must be paid in full before holders
of the Preferred Stock or the Exchange Debentures may be paid. Although the
Certificate of Designation and the Exchange Debenture Indenture impose certain
limitations on Holdings' and its subsidiaries' ability to incur additional
indebtedness, Holdings and its subsidiaries are not prohibited from incurring
additional indebtedness (including Senior Indebtedness). See "Description of New
Preferred Stock--Certain Covenants" and "Description of Exchange
Debentures--Covenants." At June 30, 1996, on a pro forma basis after giving
effect to the Refinancing (assuming that the Refinancing occurred as of such
date), Holdings would have had $1,164.0 million of total consolidated
liabilities (excluding the Preferred Stock) and $911.1 million of Senior
Indebtedness (including the 11-3/4% Notes which would become Senior Indebtedness
upon a Holdings Merger or similar transaction).
In the event Holdings and Silgan are combined pursuant to a Holdings
Merger or any similar transaction between Holdings and Silgan, all existing and
future indebtedness of the resulting entity, including indebtedness under the
Silgan Credit Agreement, the 11-3/4% Notes and the Discount
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Debentures, will generally have priority as to the assets of the resulting
entity over claims of the holders of the Preferred Stock and all Senior
Indebtedness would have priority over the Exchange Debentures. As a result, in
the event of the resulting entity's bankruptcy, insolvency, liquidation,
reorganization, dissolution or other winding up, or upon acceleration of certain
indebtedness of the resulting entity, holders of indebtedness (or Senior
Indebtedness in the case of the Exchange Debentures) must be paid in full before
holders of the Preferred Stock or Exchange Debentures may be paid. A Holdings
Merger or any similar transaction between Holdings and Silgan is not permitted
under the Silgan Credit Agreement so long as any of the Discount Debentures are
outstanding.
Ability of the Company to Incur Additional Indebtedness
Although the Silgan Credit Agreement limits the incurrence by the
Company of additional indebtedness, the 11-3/4% Notes, the Discount Debentures,
the Preferred Stock and, if issued, the Exchange Debentures permit, subject to
certain limitations, the incurrence by Holdings and its subsidiaries of a
substantial amount of additional indebtedness, including additional Senior
Indebtedness and other indebtedness that would be effectively senior to the
Preferred Stock and the Exchange Debentures. The Preferred Stock and the
Exchange Debentures also permit Silgan and its subsidiaries to incur
indebtedness the holders of which would have priority as to the assets of Silgan
and its subsidiaries over claims of holders of the Preferred Stock and the
Exchange Debentures, if, after giving effect to the incurrence of such
indebtedness, Silgan's Interest Coverage Ratio (as defined under "Description of
the New Preferred Stock--Certain Definitions") is at least 1.75 to 1. For the
twelve month period ended June 30, 1996 on a pro forma basis after giving effect
to the Refinancing, Silgan's Interest Coverage Ratio would have been 2.18 to 1.
See "Description of New Preferred Stock" and "Description of the Exchange
Debentures." The Company may make additional acquisitions in the future and may
finance such acquisitions with additional indebtedness, including Senior
Indebtedness, as permitted under its instruments and agreements governing its
indebtedness.
Refinancing Risk
Under the Silgan Credit Agreement, Containers and Plastics have
available to them up to $225 million of revolving loans which may be borrowed,
repaid and reborrowed from time to time until December 31, 2000, on which date
all such revolving loans mature and are payable in full. As of June 30, 1996, on
a pro forma basis after giving effect to the Refinancing (assuming that the
Refinancing occurred as of such date), there were $220.0 million of A term loans
outstanding under the Silgan Credit Agreement, which A term loans are payable in
installments through December 31, 2000, and there were $347.3 million of B term
loans outstanding under the Silgan Credit Agreement, which B term loans are
payable in installments through March 15, 2002. See "Description of Certain
Silgan Indebtedness--Description of Silgan Credit Agreement." Additionally, the
11-3/4% Notes ($135 million) mature on June 15, 2002 and the Discount Debentures
that currently remain outstanding (approximately $59.0 million) mature on
December 15, 2002.
The Company will have to refinance a substantial amount of its
indebtedness prior to December 31, 2000. The Company's ability to do so will
depend on, among other things, its financial condition at the time, the
restrictions in the instruments governing its indebtedness, including the Silgan
Credit Agreement, the Discount Debentures Indenture, the 11-3/4% Notes
Indenture, the Preferred Stock and, if applicable, the Exchange Debenture
Indenture, and other factors, including market conditions, which are beyond the
control of the Company. There can be no assurance that the Company will be able
to refinance any of such indebtedness, and if the Company is unable to effect
such refinancings, the Company's ability to make payments of cash dividends on,
or payments in respect of the mandatory redemption of, the Preferred Stock or
cash interest and principal payments on the Exchange Debentures,
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if issued, would be adversely affected. In addition, the Preferred Stock and, if
issued, the Exchange Debentures, permit the Company to incur a substantial
amount of additional indebtedness, which may mature and need to be refinanced
prior to the mandatory redemption date for the Preferred Stock or the maturity
date of the Exchange Debentures, if issued.
Restrictive Covenants under Financing Agreements
In connection with the incurrence of their indebtedness, Holdings and
Silgan have entered into instruments and agreements governing such indebtedness
(the "Financing Agreements"), which Financing Agreements contain numerous
covenants, including financial and operating covenants, certain of which are
quite restrictive. In particular, certain financial covenants under the Silgan
Credit Agreement become more restrictive over time in anticipation of scheduled
debt amortization and improved operating results. Such covenants also affect,
and in many respects limit or prohibit, among other things, the ability of the
Company to incur additional indebtedness, create liens, sell assets, engage in
mergers and acquisitions, make certain capital expenditures and pay dividends.
For a description of such covenants, see "Description of Certain Holdings
Indebtedness" and "Description of Certain Silgan Indebtedness."
The ability of the Company to satisfy such covenants and its other
obligations (including scheduled reductions of its indebtedness under the Silgan
Credit Agreement and its obligations under the 11-3/4% Notes, the Discount
Debentures, the Preferred Stock and, if issued, the Exchange Debentures) depends
upon, among other things, the future financial performance of Silgan and its
subsidiaries, which will be subject to prevailing economic conditions and to
financial, business and other factors (including the state of the economy and
the financial markets, demand for the products of the Company, costs of raw
materials, legislative and regulatory changes and other factors beyond the
control of the Company) affecting the business and operations of Silgan and its
subsidiaries.
The factors described above could adversely affect the Company's
ability to meet its financial obligations, including its obligations to holders
of the Preferred Stock or the Exchange Debentures, if issued. These factors
could also limit the ability of the Company to take advantage of business and
investment opportunities and to effect financings and could otherwise restrict
corporate activities.
Management believes that the Company will be able to comply with the
financial covenants and other restrictions in the Financing Agreements and that
it will have sufficient cash flow available from operations to meet its
obligations; however, there can be no assurance of such compliance or of the
availability of sufficient cash flow. If the Company anticipates that it will be
unable to comply with covenants in any Financing Agreement or that its cash flow
will be insufficient to meet its debt service, dividend and other operating
needs, the Company might be required to seek amendments or waivers to its
Financing Agreements, refinance its debts or dispose of assets. There can be no
assurance that any such action could be effected on satisfactory terms or would
be permitted under the terms of the Financing Agreements. In the event of a
default under the terms of any of the Financing Agreements, the obligees
thereunder would be permitted to accelerate the maturity of such obligations and
cause defaults under other obligations of the Company. Such defaults could be
expected to delay or preclude payment of dividends on, or the redemption price
of, the Preferred Stock and interest on, or the principal of, the Exchange
Debentures, if issued.
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Supply Agreements with Customers
The Nestle Supply Agreements and the DM Supply Agreement provide
Containers with a potential market for a substantial portion of its can output
during the terms of these agreements. In 1995, approximately 21% of the
Company's sales were to Nestle and approximately 15% of the Company's sales were
to Del Monte. On a pro forma basis after giving effect to the acquisition of AN
Can in 1995, approximately 17% and 11% of the Company's sales would have been to
Nestle and Del Monte, respectively. See "Business--Sales and Marketing."
Under the Nestle Supply Agreements that were extended through 2001
(representing approximately 70% of the Company's 1995 unit sales to Nestle),
Nestle has the right to receive competitive bids under narrowly limited
circumstances, and Containers has the right to match any such bids. If
Containers matches a competitive bid, it may result in reduced sales prices to
Nestle with respect to the cans that are the subject of such competitive bid. In
the event that Containers chooses not to match a competitive bid, Nestle may
purchase cans from the competitive bidder at the competitive bid price for the
term of the bid. The Company cannot predict the effect, if any, of such bids
upon its financial condition or results of operations. The Company is currently
engaged in discussions with Nestle regarding the extension beyond 2001 of the
term for the can requirements under these Nestle Supply Agreements in return for
certain price concessions by the Company. On a pro forma basis after giving
effect to the acquisition of AN Can, such can requirements would have
represented approximately 11% of the Company's 1995 sales. See "Business--Sales
and Marketing."
The term of the other Nestle Supply Agreements expires in August 1997
(representing approximately 30% of the Company's 1995 unit sales to Nestle). The
Company has commenced discussions with Nestle with respect to the continuation
beyond 1997 of the other Nestle Supply Agreements, which would have represented
approximately 6% of the Company's sales in 1995 on a pro forma basis after
giving effect to the acquisition of AN Can. Although the Company intends to make
every effort to extend these Nestle Supply Agreements on reasonable terms and
conditions, there can be no assurance that these Nestle Supply Agreements will
be extended or that they will be extended on terms favorable to the Company. See
"Business--Sales and Marketing."
Under the DM Supply Agreement, beginning in December 1998 Del Monte
may, under certain circumstances, receive proposals with terms more favorable
than those under the DM Supply Agreement from independent commercial can
manufacturers for the supply of containers of a type and quality similar to the
metal containers that Containers furnishes to Del Monte, which proposals shall
be for the remainder of the term of the DM Supply Agreement and for 100% of the
annual volume of containers at one or more of Del Monte's canneries. Containers
has the right to retain the business subject to its meeting the terms and
conditions of such competitive proposal, which could result in lower sales
prices to Del Monte with respect to the containers that are the subject of such
competitive proposal. See "Business--Sales and Marketing."
Although the Nestle Supply Agreements require Nestle to purchase a
majority of its can requirements from the Company and the DM Supply Agreement
requires Del Monte to purchase substantially all of its can requirements from
the Company, neither the Nestle Supply Agreements nor the DM Supply Agreement
requires the purchase of minimum amounts, and should Nestle's or Del Monte's
demand decrease, the Company's consolidated sales could decrease. In addition,
should Nestle terminate any of the Nestle Supply Agreements or Del Monte
terminate the DM Supply Agreement because of Containers' inability to meet
quality or other requirements, it is highly unlikely that the Company or its
subsidiaries could quickly replace the amount of sales represented thereby.
Therefore,
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it is probable that any such termination would have a material adverse effect on
the Company. See "Business--Sales and Marketing."
Potential Fraudulent Conveyance Liability
Various laws enacted for the protection of creditors may apply to the
purchase by Holdings of the Holdings Class B Stock held by Mellon, as trustee
for First Plaza, and the incurrence by Holdings of indebtedness from the
issuance of Exchange Debentures, if and when issued (together, the "Offering
Transactions"). If a court in a lawsuit by an unpaid creditor or representative
of creditors of Holdings, such as a trustee in bankruptcy or Holdings as debtor
in possession, were to find that, at the time of the closing of the Private
Offering or either Offering Transaction, Holdings (i) was insolvent or rendered
insolvent by reason of either or both of the Offering Transactions, (ii) was
engaged in a business or transaction for which the assets remaining with
Holdings constituted or constitute unreasonably small capital, (iii) intended
to, or believed that it would, incur debts beyond its ability to pay as such
debts matured or (iv) intended to hinder, delay or defraud its creditors, such
court could, under state or federal fraudulent conveyance law, avoid the
purchase by Holdings of the shares of Holdings Class B Stock held by Mellon and
void the Exchange Debentures and order all payments made by Holdings with
respect thereto be returned to it or to a fund for the benefit of its creditors.
The measure of insolvency for purposes of the foregoing would vary
depending upon the law of the jurisdiction being applied. Generally, however, a
company would be considered insolvent if the sum of such company's debts were
greater than all of such company's property at a fair valuation or if the
present saleable value of the company's assets were less than the amount that
would be required to pay its probable liability on its existing debts (including
contingent liabilities) as they become absolute and matured. Accordingly,
Holdings does not believe that the fact that its liabilities exceed the book
value of its assets, as reflected on its balance sheet (which is not based on
fair saleable value or fair value), would be a significant factor in any
fraudulent conveyance analysis.
Holdings believes that, on the date of this Prospectus and at the time
of each Offering Transaction, Holdings will not come within any of the clauses
(i) through (iv) above and that therefore each Offering Transaction will not
constitute fraudulent transfers. These beliefs are based on management's
analysis of, among other things, internal cash flow projections based on
Holdings' historical financial information and historical valuations of certain
assets and liabilities of Holdings. There can be no assurance, however, that a
court passing on such questions would agree with Holdings' analysis.
Certain Federal Income Tax Consequences for Holders of New Preferred Stock and
Exchange Debentures and the Company
Distributions of cash or, to the extent of their issue price,
distributions of additional shares of New Preferred Stock on the New Preferred
Stock will be treated as dividends taxable as ordinary income to holders thereof
to the extent of Holdings' current and accumulated earnings and profits as
determined under U.S. federal income tax principles. If the amount of a
distribution on the New Preferred Stock exceeds Holdings' current and
accumulated earnings and profits, such distribution to the extent of the excess
will be treated as a nontaxable return of capital and will be applied against
and reduce the adjusted tax basis of the New Preferred Stock in the hands of
each holder (but not below zero), thus increasing the amount of any gain (or
reducing the amount of any loss) which would otherwise be realized by such
holder upon the sale or other taxable disposition of such New Preferred Stock.
There can be no assurance that for any particular taxable year Holdings will
have current or accumulated earnings and profits.
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Upon a redemption of New Preferred Stock in exchange for Exchange
Debentures, the holder will have capital gain or loss equal to the difference
between the issue price of the Exchange Debentures received and the holder's
adjusted basis in the New Preferred Stock redeemed, except to the extent all or
a portion of the Exchange Debentures received is treated as a dividend payment.
Because of Holdings' option through July 15, 2000 to pay interest on the
Exchange Debentures by issuing additional Exchange Debentures, any Exchange
Debentures issued prior to that date will be treated as issued with original
issue discount ("OID") for U.S. federal income tax purposes, unless under
special rules for interest holidays the amount of OID is treated as de minimis.
Holders would have to accrue all such OID into income over the entire term of
the Exchange Debentures, but would not treat the receipt of stated interest on
the Exchange Debentures as interest income for U.S. federal income tax purposes.
An Exchange Debenture may be subject to the rules for "applicable high
yield discount obligations" ("AHYDOS"), in which case the Holdings' deduction
for OID on such Exchange Debentures will be substantially deferred, and a
portion of such deduction may be disallowed.
For a discussion of these and other tax issues, see "Certain United
States Federal Income Tax Considerations."
Competition
The manufacture and sale of metal and plastic containers is highly
competitive and many of the Company's competitors have substantially greater
financial resources than the Company. See "Business--Competition."
Dependence on Key Personnel
The success of the Company depends to a large extent on a number of key
employees, and the loss of the services provided by them could materially
adversely affect the Company. In particular, the loss of the services provided
by R. Philip Silver, the Chairman of the Board and Co-Chief Executive Officer of
Holdings and Silgan, and D. Greg Horrigan, the President and Co-Chief Executive
Officer of Holdings and Silgan, could materially adversely affect the Company.
However, the Company's operations are conducted through Containers and Plastics,
each of which has its own independent management. S&H, Inc. ("S&H"), a company
wholly owned by Messrs. Silver and Horrigan, has agreed to provide certain
general management and administrative services to each of Holdings, Silgan,
Containers and Plastics pursuant to management services agreements which are
effective through June 1999. See "Certain Transactions--Management Agreements."
Other Management Interests
In the future, Messrs. Silver and Horrigan, possibly together with
Morgan Stanley & Co. Incorporated ("Morgan Stanley") or its affiliates, may form
additional corporations or partnerships or enter into other transactions for the
purpose of making other acquisitions. In connection therewith, Messrs. Silver
and Horrigan may provide certain general management and administrative services
to such corporations and partnerships. Additionally, circumstances could arise
in which the interests of Messrs. Silver and Horrigan, Morgan Stanley and its
affiliates and such new corporations or partnerships could conflict with the
interests of the Company.
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Certain Interests of Affiliates
The Morgan Stanley Leveraged Equity Fund II, L.P. ("MSLEF II") owns 50%
of the outstanding voting common stock of Holdings. See "Securities Ownership of
Certain Beneficial Owners and Management--Certain Beneficial Owners of Holdings'
Capital Stock." The general partner of MSLEF II and Morgan Stanley are both
wholly owned subsidiaries of Morgan Stanley Group Inc. ("MS Group"), and two of
the directors of Holdings and Silgan are officers of Morgan Stanley. As a result
of these relationships, MS Group and its affiliates will continue to have
significant influence over the management policies and corporate affairs of the
Company. Morgan Stanley also receives compensation for ongoing financial advice
to the Company and its affiliates. See "Certain Transactions."
Certain decisions concerning the operations or financial structure of
the Company may present conflicts of interest between the owners of Holdings'
common stock and the holders of the Preferred Stock or the Exchange Debentures.
For example, if the Company encounters financial difficulties, or is unable to
pay its debts as they mature, the interests of the holders of Holdings' common
stock might conflict with those of the holders of the Preferred Stock or the
Exchange Debentures. In addition, the holders of Holdings' common stock may have
an interest in pursuing acquisitions, divestitures, financings or other
transactions that, in their judgment, could enhance their equity investment,
even though such transactions might involve risks to the holders of the
Preferred Stock or the Exchange Debentures.
Absence of Public Market
The New Preferred Stock is, and the Exchange Debentures, if issued,
will be, a new issue of securities for which there is currently no active
trading market. No assurance can be given as to the liquidity of, or trading
market for, the New Preferred Stock. If the New Preferred Stock is traded after
its initial issuance, it may trade at a discount from its liquidation value,
depending upon the liquidity of such securities, the market for similar
securities and other factors, including general economic conditions and the
financial condition, performance of, and prospects for the Company.
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<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Old Preferred Stock was sold by Morgan Stanley & Co. Incorporated
(the "Placement Agent") on July 22, 1996 to a limited number of institutional
investors (the "Purchasers"). In connection with the sale of the Old Preferred
Stock, the Company and the Placement Agent entered into the Registration Rights
Agreement, dated July 22, 1996, between Holdings and the Placement Agent (the
"Registration Rights Agreement"), which requires the Company, among other
things, to file with the Commission a registration statement under the
Securities Act covering the offer by Holdings to exchange all of the Old
Preferred Stock for the New Preferred Stock and to use its best efforts to cause
such registration statement to become effective under the Securities Act. The
Company is further obligated, upon the effectiveness of that registration
statement, to offer the holders of the Old Preferred Stock the opportunity to
exchange their Old Preferred Stock for a like number of shares of New Preferred
Stock, which will be issued without a restrictive legend and may be reoffered
and resold by the holder without restrictions or limitations under the
Securities Act. A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
Exchange Offer is being made pursuant to the Registration Rights Agreement to
satisfy the Company's obligations thereunder. The term "Holder" with respect to
the Exchange Offer means any person in whose name Old Preferred Stock is
registered on the Company's books or any other person who has obtained a
properly completed assignment from the registered holder.
In order to participate in the Exchange Offer, a Holder must represent
to the Company, among other things, that (i) the New Preferred Stock acquired
pursuant to the Exchange Offer is being obtained in the ordinary course of
business of the person receiving such New Preferred Stock, whether or not such
person is the Holder, (ii) neither the Holder nor any such other person is
engaging in or intends to engage in a distribution of such New Preferred Stock,
(iii) neither the Holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Preferred Stock, and (iv) neither the Holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated under the Securities Act, of
the Company. In the event that any Holder of Old Preferred Stock cannot make the
requisite representations to the Company in order to participate in the Exchange
Offer, such Holder may be entitled to have such Holder's Old Preferred Stock
registered in a "shelf" registration statement on an appropriate form pursuant
to Rule 415 under the Securities Act.
Based on a previous interpretation by the staff of the Commission set
forth in no-action letters issued to third parties, including "Exxon Capital
Holdings Corporation" (available May 13, 1988), "Morgan Stanley & Co.
Incorporated" (available June 5, 1991), "Mary Kay Cosmetics, Inc." (available
June 5, 1991), "Warnaco, Inc." (available October 11, 1991) and "K-III
Communications Corp." (available May 14, 1993), the Company believes that the
New Preferred Stock issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any Holder of such New Preferred
Stock (other than any such Holder which is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Preferred Stock is acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Preferred Stock. Any
Holder who tenders in the Exchange Offer with the intention of participating in
a distribution of the New Preferred Stock cannot rely on such interpretation by
the staff of the Commission as set forth in the Morgan Stanley Letter and other
similar letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Under no circumstances may this Prospectus be used for an offer to
resell, a resale or other retransfer of the New Preferred Stock. In the
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<PAGE>
event that the Company's belief is inaccurate, Holders of the New Preferred
Stock who transfer New Preferred Stock in violation of the prospectus delivery
provisions of the Securities Act and without an exemption from registration
thereunder may incur liability thereunder. The Company does not assume or
indemnify Holders against such liability. The Exchange Offer is not being made
to, nor will the Company accept surrenders for exchange from, Holders of Old
Preferred Stock in any jurisdiction in which the Exchange Offer or the
acceptance thereof would not be in compliance with the securities or blue sky
laws of such jurisdiction. Each broker-dealer that receives New Preferred Stock
for its own account in exchange for Old Preferred Stock, where such Old
Preferred Stock was acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Preferred Stock. The
Company has not entered into any arrangement or understanding with any person to
distribute the New Preferred Stock to be received in the Exchange Offer. See
"Plan of Distribution."
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Preferred Stock validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date.
The form and terms of the New Preferred Stock will be the same as the
form and terms of the Old Preferred Stock except that the New Preferred Stock
will be registered under the Securities Act and hence will not bear legends
restricting the transfer thereof. The New Preferred Stock will evidence the same
rights, privileges and obligations as the Old Preferred Stock. The New Preferred
Stock will be issued under and entitled to the benefits of the Certificate of
Designation which also authorized the issuance of the Old Preferred Stock, such
that both series will be treated as a single class of equity securities under
the Certificate of Designation.
As of the date of this Prospectus, 50,000 shares of Old Preferred Stock
are outstanding. This Prospectus, together with the Letter of Transmittal, is
being sent to all registered Holders of the Old Preferred Stock.
The Company intends to conduct the Exchange Offer in accordance with
the provisions of the Registration Rights Agreement and the applicable
requirements of the Act, and the rules and regulations of the Commission
thereunder. Old Preferred Stock that is not tendered for exchange under the
Exchange Offer will remain outstanding and will be entitled to the rights as set
forth in the Certificate of Designation.
The Company shall be deemed to have accepted validly tendered Old
Preferred Stock when, as and if the Company shall have given oral or written
notice thereof to the Transfer Agent. The Transfer Agent will act as agent for
the tendering Holders for the purposes of receiving the New Preferred Stock from
the Company.
If any tendered Old Preferred Stock is not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Preferred Stock
will be returned, without expense, to the tendering Holder thereof as promptly
as practicable after the Expiration Date.
Holders who tender Old Preferred Stock in the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange
pursuant to the Exchange Offer. The Company will pay all charges and
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<PAGE>
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses" below.
Expiration Date; Extensions; Amendments
The term "Expiration Date," shall mean 5:00 p.m., New York City time on
__________, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the
Transfer Agent of any extension by oral or written notice and will mail to the
registered Holders an announcement thereof, prior to 9:00 a.m., New York City
time, on the next business day after the Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Preferred Stock, to extend the Exchange Offer or to terminate
the Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied by giving oral or written notice of such delay,
extension or termination to the Transfer Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptances, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered Holders. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the amendment and the manner of disclosure to
the registered Holders, if the Exchange Offer would otherwise expire during such
five to ten business day period.
Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
Upon satisfaction or waiver of all the conditions to the Exchange
Offer, the Company will accept, promptly after the Expiration Date, all Old
Preferred Stock properly tendered and will issue the New Preferred Stock
promptly after acceptance of the Old Preferred Stock. See "--Conditions" below.
For purposes of the Exchange Offer, the Company shall be deemed to have accepted
properly tendered Old Preferred Stock for exchange when, as and if the Company
shall have given oral or written notice thereof to the Transfer Agent.
In all cases, issuance of the New Preferred Stock for Old Preferred
Stock that are accepted for exchange pursuant to the Exchange Offer will be made
only after timely receipt by the Transfer Agent of a properly completed and duly
executed Letter of Transmittal and all other required documents; provided,
however, that the Company reserves the absolute right to waive any defects or
irregularities in the tender or conditions of the Exchange Offer. If any
tendered Old Preferred Stock is not accepted for any reason set forth in the
terms and conditions of the Exchange Offer or if Old Preferred Stock is
submitted for a greater number of shares than the Holder desires to exchange,
then such unaccepted or non-exchanged Old Preferred Stock evidencing the
unaccepted portion, as appropriate, will be returned without expense to the
tendering Holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
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<PAGE>
Conditions
Notwithstanding any other term of the Exchange Offer, the Company will
not be required to exchange any New Preferred Stock for any Old Preferred Stock
and may terminate the Exchange Offer before the acceptance of any Old Preferred
Stock for exchange, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the Company's reasonable judgment, might materially impair the ability
of the Company to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by the
staff of the Commission, which, in the Company's reasonable judgment, might
materially impair the ability of the Company to proceed with the Exchange Offer;
or
(c) any governmental approval or approval by Holders of the Old
Preferred Stock has not been obtained, which approval the Company shall, in its
reasonable judgment, deem necessary for the consummation of the Exchange Offer
as contemplated hereby.
If the Company determines in its sole discretion that any of these
conditions are not satisfied, the Company may (i) refuse to accept any Old
Preferred Stock and return all tendered Old Preferred Stock to the tendering
Holders, (ii) extend the Exchange Offer and retain all Old Preferred Stock
tendered prior to the expiration of the Exchange Offer, subject, however, to the
rights of Holders who tendered such Old Preferred Stock to withdraw their
tendered Old Preferred Stock or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Preferred
Stock which has not been withdrawn. If such waiver constitutes a material change
to the Exchange Offer, the Company will promptly disclose such waiver by means
of a prospectus supplement that will be distributed to the registered Holders,
and the Company will extend the Exchange Offer for a period of five to ten
business days, depending upon the significance of the waiver and the manner of
disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
Procedures for Tendering
To tender in the Exchange Offer, a Holder must complete, sign and date
the Letter of Transmittal, or facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Transfer Agent prior
to the Expiration Date. In addition, either (i) certificates for such Old
Preferred Stock must be received by the Transfer Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Old Preferred Stock, if such procedure is available, into
the Transfer Agent's account at the Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below must be received by the Transfer Agent prior to the Expiration Date, or
(iii) the Holder must comply with the guaranteed delivery procedures described
below. To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Transfer Agent at the address set forth below
under "--Transfer Agent" prior to the Expiration Date.
The tender by a Holder of Old Preferred Stock that is not withdrawn
prior to the Expiration Date will constitute an agreement between such Holder
and the Company in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
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<PAGE>
THE METHOD OF DELIVERY OF OLD PREFERRED STOCK AND THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE TRANSFER AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED
THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE TRANSFER AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD PREFERRED STOCK SHOULD BE SENT
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Old Preferred Stock is registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender its Old Preferred Stock should contact the registered
Holder promptly and instruct such registered Holder to tender such Old Preferred
Stock on such beneficial owner's behalf. If such beneficial owner wishes to
tender its Old Preferred Stock on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Preferred Stock, either make appropriate arrangements to register
ownership of the Old Preferred Stock in such owner's name or obtain a properly
completed assignment from the registered Holder. The transfer of registered
ownership of Old Preferred Stock may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Preferred Stock tendered pursuant thereto is tendered (i) by a
registered Holder who has not completed the box entitled "Special Payment
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantor must be a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule l7Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Old Preferred Stock listed therein, such Old Preferred
Stock must be endorsed or accompanied by a properly completed bond or stock
power, as the case may be, signed by such registered Holder as such registered
Holder's name appears on such Old Preferred Stock.
If the Letter of Transmittal or any Old Preferred Stock or bond or
stock powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Preferred Stock and withdrawal of tendered
Old Preferred Stock will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Preferred Stock not properly tendered or any Old
Preferred Stock the Company's acceptance of which would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the right to
waive any defects, irregularities or conditions of tender as to particular Old
Preferred Stock. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Preferred
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<PAGE>
Stock must be cured within such time as the Company shall determine. Although
the Company intends to notify Holders of defects or irregularities with respect
to tenders of Old Preferred Stock, none of the Company, the Transfer Agent or
any other person shall incur any liability for failure to give such
notification. Tenders of Old Preferred Stock will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any Old
Preferred Stock received by the Transfer Agent that is not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Transfer Agent to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Preferred Stock that remain outstanding
subsequent to the Expiration Date or, as set forth above under "--Conditions"
above, to terminate the Exchange Offer and, to the extent permitted by
applicable law, purchase Old Preferred Stock in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
By tendering, each Holder will represent to the Company that, among
other things, (i) the New Preferred Stock acquired pursuant to the Exchange
Offer is being obtained in the ordinary course of business of the person
receiving such New Preferred Stock, whether or not such person is the Holder,
(ii) neither the Holder nor any such other person is engaging in or intends to
engage in a distribution of such New Preferred Stock, (iii) neither the Holder
nor any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Preferred Stock, and (iv) neither
the Holder nor any such other person is an "affiliate," as defined in Rule 405
of the Securities Act, of the Company.
In all cases, issuance of New Preferred Stock pursuant to the Exchange
Offer will be made only after timely receipt by the Transfer Agent of
certificates for such Old Preferred Stock or a timely Book-Entry Confirmation of
such Old Preferred Stock into the Transfer Agent's account at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Preferred Stock is not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Preferred Stock is submitted for a greater number of shares than
the Holder desires to exchange, such unaccepted or non-exchanged Old Preferred
Stock will be returned without expense to the tendering Holder thereof (or, in
the case of Old Preferred Stock tendered by book-entry transfer into the
Transfer Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described below, such non-exchanged Old Preferred
Stock will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of the
Exchange Offer.
Book-Entry Transfer
The Transfer Agent will make a request to establish an account with
respect to the Old Preferred Stock at the Book-Entry Transfer Facility for the
purposes of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of Old
Preferred Stock by causing the Book-Entry Transfer to transfer such Old
Preferred Stock into the Transfer Agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of Old Preferred Stock may be effected
through book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal or facsimile thereof, with any required signature guarantees and any
other required documents, must, in any case, be transmitted to and received by
the Transfer Agent at the address set forth below under "--Transfer Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
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<PAGE>
Guaranteed Delivery Procedures
Holders who wish to tender their Old Preferred Stock and (i) whose Old
Preferred Stock is not immediately available or (ii) who cannot deliver their
Old Preferred Stock, the Letter of Transmittal or any other required documents
to the Transfer Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Transfer Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder, the certificate number(s) of such Old Preferred
Stock and the number of shares of Old Preferred Stock tendered and stating that
the tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of Transmittal
(or facsimile thereof) together with the certificate(s) representing the Old
Preferred Stock and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Transfer Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered Old
Preferred Stock in proper form for transfer and other documents required by the
Letter of Transmittal are received by the Transfer Agent within five New York
Stock Exchange trading days after the Expiration Date.
Upon request to the Transfer Agent, a Notice of Guaranteed Delivery
will be sent to Holders who wish to tender their Old Preferred Stock according
to the guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Old Preferred Stock may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
To withdraw a tender of Old Preferred Stock in the Exchange Offer, a
written or facsimile transmission notice of withdrawal must be received by the
Transfer Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Preferred Stock to be withdrawn (the
"Depositor"), (ii) identify the Old Preferred Stock to be withdrawn (including
the certificate number), (iii) be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Preferred
Stock was tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Transfer Agent
register the transfer of such Old Preferred Stock in the name of the person
withdrawing the tender and (iv) specify the name in which any such Old Preferred
Stock is to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Preferred Stock so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no New Preferred Stock will be issued with respect thereto unless the Old
Preferred Stock so withdrawn is validly retendered. Any Old Preferred Stock that
has been tendered but that is not accepted for payment will be returned to the
Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Preferred Stock may be retendered by following one of the
procedures described above under "--Procedures for Tendering" at any time prior
to the Expiration Date.
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Transfer Agent
Fleet National Bank has been appointed Transfer Agent of the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or the Letter of Transmittal and requests for a Notice of
Guaranteed Delivery with respect to the Old Preferred Stock should be addressed
to the Transfer Agent as follows:
By Registered Mail, Certified Mail or Overnight
Courier:
Fleet National Bank
Corporate Trust Operations
Attention: REORG
Mail Stop: CT/MO/0224
777 Main Street
Hartford, CT 06115
By Telephone: (800) 666-6431
(860) 986-1271
By Facsimile: (860) 986-5195
Fees and Expenses
The expenses of soliciting tenders in connection with the Exchange
Offer will be paid by the Company. The principal solicitation is being made by
mail; however, additional principal solicitation may be made by telecopier,
telephone or in person by officers and regular employees of the Company and its
affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers-dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Transfer Agent reasonable and customary fees for their services and will
reimburse them for their reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company and are estimated in the aggregate to be
approximately $125,000. Such expenses include registration fees, fees and
expenses of the Transfer Agent, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the
exchange of the Old Preferred Stock pursuant to the Exchange Offer. If, however,
certificates representing Old Preferred Stock for shares not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of Old Preferred Stock tendered,
or, if tendered, the Old Preferred Stock is registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of the Old Preferred Stock
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such transfer
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.
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CAPITALIZATION
The following table sets forth the unaudited consolidated
capitalization of Holdings as of June 30, 1996, and the unaudited pro forma
consolidated capitalization of Holdings as of June 30, 1996 after giving effect
to the Refinancing (other than events that occurred prior to such date). This
table should be read in conjunction with the historical and pro forma
consolidated financial information of Holdings included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
June 30, 1996
-----------------------------------
Actual Pro Forma
------ ---------
(Dollars in thousands)
Short-term debt:
<S> <C> <C>
Current portion of term loans...................................... $ 27,192 $ 28,455
Working capital loans(a)........................................... 148,550 150,350
------- -------
Total short-term debt(b)............................. $175,742 $178,805
======== ========
Long-term debt:
Term loans......................................................... $414,610 $538,347
11-3/4% Senior Subordinated Notes due 2002......................... 135,000 135,000
13-1/4% Senior Discount Debentures due 2002........................ 195,940 58,951(c)
------- -------
Total long-term debt (b) 745,550 732,298
Preferred Stock offered hereby..................................... -- 50,000
Deficiency in stockholders' equity:
Common stock.............................................. 12 9
Additional paid-in capital................................ 33,606 16,410(d)
Accumulated deficit....................................... (203,754) (226,232)(d)(e)
------- -------
Total deficiency in stockholders' equity............. (170,136) (209,814)(d)
------- -------
Total capitalization............................................... $575,414 $572,484
======== ========
</TABLE>
- --------------------
(a) As is common in the packaging industry, the Company accesses its
working capital facility to build inventory and finance accounts
receivable to meet seasonal demands. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Capital
Resources and Liquidity."
(b) See "Description of Certain Holdings Indebtedness" and "Description of
Certain Silgan Indebtedness."
(c) For pro forma purposes,
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it is assumed that (i) the proceeds of the Private Offering were used
to purchase 250,000 shares of Holdings Class B Stock for $35.8 million
on June 30, 1996 and (ii) the proceeds remaining from the Private
Offering, after the purchase of such shares of Holdings Class B Stock,
net of $2.2 million in transaction costs, of $12.0 million were used to
redeem a portion of the Discount Debentures.
(d) The pro forma increase in the deficiency in stockholders' equity
relates to the purchase of 250,000 shares of Holdings Class B Stock for
$35.8 million, its purchase price on June 30, 1996 and related
transaction costs. Additional paid in capital was reduced by the
proceeds from the original issuance of such Holdings Class B Stock of
$15.0 million less the par value of such shares and $2.2 million of
transaction fees. The remainder of the payment for the stock purchase
was applied to accumulated deficit.
(e) Includes an extraordinary charge, net of tax, of $1.7 million for the
write-off of unamortized deferred financing costs related to the
redemption of Discount Debentures. Such charge will be incurred in the
third quarter of 1996.
-41-
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
Set forth below are selected historical consolidated financial data of
Holdings at June 30, 1996 and 1995 and for the six months then ended, and at
December 31, 1995, 1994, 1993, 1992 and 1991 and for the years then ended. Also
set forth below are unaudited pro forma consolidated financial data of Holdings
at June 30, 1996 and for the six months then ended, and for the fiscal year
ended December 31, 1995.
The selected historical consolidated financial data of Holdings for the
six months ended June 30, 1996 and 1995 is unaudited, but, in the opinion of
management, such information reflects all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the financial data for
the interim periods. The results for the interim periods presented are not
necessarily indicative of the results for the corresponding full years. The
selected historical consolidated financial data of Holdings at December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995
(with the exception of employee data) were derived from the historical
consolidated financial statements of Holdings for such periods that were audited
by Ernst & Young LLP, independent auditors, whose report appears elsewhere in
this Prospectus. The selected historical consolidated financial data of Holdings
at December 31, 1993, 1992 and 1991 and for the years ended December 31, 1992
and 1991 were derived from the historical audited consolidated financial
statements of Holdings for such periods.
The selected unaudited pro forma operating data and other data for the
six months ended June 30, 1996 give effect to the Refinancing as if it had
occurred as of January 1, 1996. Additionally, the selected unaudited pro forma
balance sheet data at June 30, 1996 give effect to the Refinancing (other than
events that occurred prior to such date) as if it had occurred as of such date.
The selected unaudited pro forma operating data and other data for the
fiscal year ended December 31, 1995 give effect to (i) the acquisition of AN
Can, (ii) proceeds received under the Silgan Credit Agreement (which was entered
into on August 1, 1995 and provided Silgan with $225 million of A term loans and
$225 million of B term loans and provided Containers and Plastics with a
commitment of $225 million for working capital loans), which were used to
finance the acquisition of AN Can, repay in full amounts owing under the
Company's previous credit agreement and the Secured Notes and repurchase $61.7
million principal amount at maturity of Discount Debentures, (iii) the Private
Offering and the use of the proceeds therefrom and (iv) the incurrence of $125
million of additional B term loans in July 1996 and $17.4 million of working
capital loans in June 1996 under the Silgan Credit Agreement and the use of such
proceeds to redeem a portion of the Discount Debentures, as if such events had
occurred as of January 1, 1995.
The selected unaudited pro forma consolidated financial information for
the six months ended June 30, 1996 and for the fiscal year ended December 31,
1995 assume the Refinancing occurred at the beginning of the periods presented.
The amount necessary to purchase the Holdings Class B Stock held by Mellon
increased over time. Because the Refinancing did not occur at the beginning of
the periods presented and because the Discount Debentures accreted in value, the
aggregate principal amount of the Discount Debentures outstanding after the
Refinancing will be greater than the aggregate principal amount used to
calculate interest expense in the pro forma consolidated financial information.
Currently, there is approximately $59.0 million aggregate principal amount of
Discount Debentures that remain outstanding. As a result, actual interest
expense of the Company will be greater than the interest expense reflected in
the pro forma consolidated financial information.
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<PAGE>
The unaudited pro forma financial information does not purport to
represent what the Company's financial position or results of operations would
actually have been if such events had in fact occurred as of such dates or at
the beginning of the periods presented, or to project the Company's financial
position or results of operations for any future date or period. The unaudited
pro forma adjustments are based upon available information and upon certain
assumptions that Holdings believes are reasonable.
-43-
<PAGE>
The selected historical and pro forma consolidated financial
information of Holdings were derived from, and should be read in conjunction
with, "Management's Discussion and Analysis of Financial Condition and Results
of Operations," the unaudited pro forma condensed statements of operations and
the historical financial statements and pro forma financial information of
Holdings, including the notes thereto, that appear elsewhere in this Prospectus.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Six Months ended June 30,
-----------------------------------
Pro Forma
1996(a)(b) 1996 1995
---- ------ -----
(Dollars in thousands)
(Unaudited)
Operating Data:
<S> <C> <C> <C>
Net sales....................................................... $606,922 $606,922 $404,990
Cost of goods sold.............................................. 521,683 521,683 346,144
------- ------- -------
Gross profit.................................................... 85,239 85,239 58,846
Selling, general and administrative expenses.................... 27,210 27,210 17,729
------- ------- -------
Income from operations.......................................... 58,029 58,029 41,117
Interest expense and other related financing costs.............. 41,795 45,861 34,797
------- ------- -------
Income before income taxes...................................... 16,234 12,168 6,320
Income tax provision............................................ 1,900 2,500 4,200
------- ------- -------
Net income (c).................................................. 14,334 9,668 2,120
Preferred stock dividend requirement............................ 3,367 -- --
------- ------- -------
Net income applicable to common
stockholders............................................... $ 10,967 $ 9,668 $ 2,120
======== ======== ========
Ratio of earnings to fixed charges and preferred
stock dividends(d)......................................... 1.27 1.25 1.17
Balance Sheet Data (at end of period):
Fixed assets.................................................... $482,723 $482,723 $255,453
Total assets.................................................... 1,004,184 1,004,606 552,176
Total long-term debt............................................ 732,298 745,550 525,884
Cumulative exchangeable redeemable preferred
stock of Holdings ($50 million liquidation value).......... 50,000 -- --
Deficiency in stockholders' equity.............................. (209,814) (170,136) (155,878)
Other Data:
EBDITA(e)....................................................... $ 89,588 $ 89,588 $ 58,838
EBDITA as a percentage of net sales............................. 14.8% 14.8% 14.5%
Capital expenditures............................................ 29,031 29,031 19,671
Depreciation and amortization(f)................................ 29,664 29,664 16,915
(footnotes follow)
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
Year Ended December 31,
---------------------------------------------------------------------------------
Pro Forma
1995(a)(b)(g) 1995(h) 1994(i) 1993(i) 1992 1991(j)
------------- ------- ------- ------- ---- -------
(Dollars in thousands)
Operating Data:
<S> <C> <C> <C> <C> <C> <C>
Net sales.............................. $1,404,382 $1,101,905 $861,374 $645,468 $630,039 $678,211
Cost of goods sold..................... 1,239,529 970,491 748,290 571,174 554,972 605,185
--------- --------- ------- ------- ------- -------
Gross profit........................... 164,853 131,414 113,084 74,294 75,067 73,026
Selling, general and administrative
expenses.......................... 57,360 46,848 37,997 32,495 32,809 33,733
Reduction in carrying value of assets(k) 14,745 14,745 16,729 -- -- --
--------- --------- ------- ------- ------- -------
Income from operations................. 92,748 69,821 58,358 41,799 42,258 39,293
Interest expense and other related
financing costs................... 76,764 80,710 65,789 54,265 57,091 55,996
Minority interest expense.............. -- -- -- -- 2,745 3,889
--------- --------- ------- ------- ------- -------
Income (loss) before income taxes...... 15,984 (10,889) (7,431) (12,466) (17,578) (20,592)
Income tax provision................... 2,000 5,100 5,600 1,900 2,200 --
--------- --------- ------- ------- ------- -------
Loss before extraordinary charges and
cumulative effect of changes in
accounting principles............. 13,984 (15,989) (13,031) (14,366) (19,778) (20,592)
--------- --------- ------- ------- ------- -------
Extraordinary charges relating to early
extinguishment of debt(c)........ -- (5,817) -- (1,341) (23,597) --
Cumulative effect of changes in
accounting principles(l).......... -- -- -- (6,276) -- --
--------- --------- ------- ------- ------- -------
Net income (loss)...................... 13,984 (21,806) (13,031) (21,983) (43,375) (20,592)
Preferred stock dividend requirement... 6,962 -- -- -- -- --
--------- --------- ------- ------- ------- -------
Net income (loss) applicable to common
stockholders...................... $ 7,022 $ (21,806) $(13,031) $(21,983) $(43,375) $(20,592)
========== ========== ======== ======== ======== ========
Deficiency of earnings available to cover
fixed charges and preferred
stock dividends(d)................ $ -- $ 10,889 $ 7,431 $ 12,466 $ 17,578 $ 20,592
Ratio of earnings to fixed charges and
preferred stock dividends(d)...... 1.10 -- -- -- -- --
Balance Sheet Data (at end of period):
Fixed assets........................... -- $487,301 $251,810 $290,395 $223,879 $230,501
Total assets........................... -- 900,046 504,292 497,633 389,035 390,693
Total long-term debt................... -- 750,873 510,763 505,718 383,232 315,461
Redeemable preferred stock of Silgan
(minority interest of Holdings)... -- -- -- -- -- 27,878
Deficiency in stockholders' equity..... -- (179,804) (157,998) (144,967) (137,984) (94,609)
Other Data:
EBDITA(e).............................. $ 168,647 $ 132,428 $114,489 $ 76,095 $ 74,012 $ 72,141
EBDITA as a percentage of net sales.... 12.0% 12.0% 13.3% 11.8% 11.7% 10.6%
Capital expenditures................... $ 54,890 $ 51,897 $ 29,184 $ 42,480 $ 23,447 $ 21,834
Depreciation and amortization(f)....... $ 57,932 $ 45,388 $ 37,187 $ 33,818 $ 31,754 $ 32,848
Number of employees (at end of
period)(m)........................ 5,110 5,110 4,000 3,330 3,340 3,560
(footnotes follow)
</TABLE>
-45-
<PAGE>
Notes to Selected Historical and Pro Forma Financial Information
(a) For a detailed presentation of the pro forma results of operations of
the Company for the six months ended June 30, 1996 and the year ended
December 31, 1995, see the unaudited pro forma condensed statements of
operations, including the notes thereto, included elsewhere in this
Prospectus. For purposes of the pro forma financial information for the
year ended December 31, 1995, balance sheet data is not included.
(b) Historical interest expense is reconciled to pro forma interest expense
for the six months ended June 30, 1996 and for the year ended December
31, 1995 as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 1996 December 31, 1995
------------- -----------------
(Dollars in thousands)
<S> <C> <C>
Historical interest expense............................................ $45,861 $80,710
Increase in interest expense to give effect to AN Can acquisition<F1>.. -- 8,384
Increase in interest expense related to bank borrowings used to fund
Discount Debenture repurchase/redemption<F1>....................... 6,103 16,832
Decrease in interest expense related to the repurchase/redemption of
a portion of the Discount Debentures<F2>........................... (10,132) (28,089)
Net change in amortization of deferred financing costs................. (37) (1,073)
------- -------
Pro forma interest expense............................................. $41,795 $76,764
======= =======
- ---------------------
<FN>
<F1> For purpose of the above computations, the assumed interest rate
for borrowings under the Silgan Credit Agreement is based upon
the three month LIBOR of 5.531% per annum as of August 29, 1996
plus a fixed spread of 2-1/2% per annum for the A term loans and
working capital loans and 3% per annum for the B term loans.
<F2> The adjustment in interest expense related to the Discount
Debentures has been calculated based upon the redemption of
$212.0 million principal amount of Discount Debentures as if
such redemption occurred at the beginning of the periods
presented with proceeds as follows (in millions):
Proceeds from August 1, 1995 bank financing....... $ 75.0
Additional B term loans........................... 125.0
Excess proceeds from the Private Offering......... 12.0
------
Total......................................... $212.0
======
</FN>
</TABLE>
(c) The pro forma consolidated operating data for the six months ended June
30, 1996 and for the year ended December 31, 1995 do not include an
extraordinary charge, net of tax, that the Company expects to incur in
the third quarter of 1996 of $1.7 million for the write-off of
unamortized deferred financing costs related to the early redemption of
the Discount Debentures. See "Capitalization." In addition, the pro
forma consolidated operating data for the year ended December 31, 1995
does not include the historical extraordinary charge, net of taxes,
incurred as a result of the early extinguishment of amounts owing under
the Company's debt facilities.
-46-
<PAGE>
(d) For purposes of computing the ratio of earnings to fixed charges and
preferred stock dividends and the deficiency of earnings available to
cover fixed charges and preferred stock dividends, earnings consist of
income (loss) before income taxes plus fixed charges, excluding
capitalized interest, and fixed charges consist of interest, whether
expensed or capitalized, minority interest expense, amortization of
debt expense and discount or premium relating to any indebtedness,
whether expensed or capitalized, and such portion of rental expense
that is representative of the interest factor and preferred stock
dividends.
(e) "EBDITA" means consolidated net income before extraordinary charges,
cumulative effect of changes in accounting principles and preferred
stock dividends plus, to the extent reflected in the income statement
for the period for which consolidated net income is to be determined,
without duplication, (i) consolidated interest expense (including
minority interest expense), (ii) income tax expense, (iii) depreciation
expense, (iv) amortization expense, (v) expenses relating to
postretirement health care costs which amounted to $1.5 million and
$0.4 million for the six months ended June 30, 1996 and 1995,
respectively, and $1.7 million, $0.7 million and $0.5 million for the
years ended December 31, 1995, 1994 and 1993, respectively, (vi)
charges relating to the vesting of benefits under SARs of $0.4 million
for each of the six months ended June 30, 1996 and 1995, and $0.8
million and $1.5 million in 1995 and 1994, respectively, and (vii) the
reduction in carrying value of assets of $14.7 million and $16.7
million in 1995 and 1994, respectively. EBDITA is being presented by
the Company as a supplement to the discussion of the Company's
operating income and cash flow from operations analysis because the
Company believes that certain persons may find it to be useful in
measuring the Company's performance and ability to service its debt.
EBDITA is not a substitute for GAAP operating and cash flow data.
(f) Depreciation and amortization excludes amortization of debt financing
costs.
(g) The unaudited pro forma financial information for the year ended
December 31, 1995 includes the historical results of the Company and AN
Can and gives effect to certain pro forma adjustments including
purchase accounting adjustments which are based on appraisals and
valuations, the financing of the acquisition of AN Can by the Company
and the refinancing of the Company's debt obligations as if these
events had occurred as of the beginning of 1995. During the second
quarter of 1996, the purchase price allocation for the AN Can
acquisition was adjusted for differences between the actual and
preliminary valuations for the asset appraisals and for projected
employee benefit costs as well as for a revision in estimated costs of
plant rationalizations, administrative workforce reductions and other
various matters, which in aggregate resulted in an adjustment to
increase goodwill by $20.7 million. Pro forma cost of goods sold
includes adjustments for (i) increased depreciation charges of $2.3
million based upon the fair values of property, plant and equipment and
applying an estimated useful life of 25 years for buildings and 5 to 11
years for machinery and equipment, (ii) increased amortization of $0.4
million for the excess of fair value of net assets acquired over a
40-year period and (iii) increased employee benefits costs for pension
and post-retirement medical of $0.2 million. Pro forma selling, general
and administrative expenses include adjustments for (i) increased
depreciation charges of $0.1 million and (ii) decreased administrative
support costs of $7.6 million realized as a result of integration of
the Company's and AN Can's sales, administrative and research
functions. The unaudited pro forma financial information for the year
ended December 31, 1995 does not give effect to adjustments for
decreased costs from manufacturing synergies resulting from the
integration of AN Can with Containers' existing can manufacturing
operations and anticipated benefits the Company may realize as a result
of its planned rationalization of plant operations.
(h) On August 1, 1995, the Company acquired from ANC substantially all of
the assets of ANC's Food Metal and Specialty business for a purchase
price of $362.0 million (including the purchase from ANC of its St.
Louis facility in May 1996 for $13.2 million). The acquisition was
accounted for as a purchase transaction and the results of operations
have been included with the Company's historical results from the
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<PAGE>
acquisition date. See Note 3 to the Consolidated Financial Statements
for the year ended December 31, 1995 included elsewhere in this
Prospectus.
(i) On December 21, 1993, the Company acquired from Del Monte substantially
all of the fixed assets and certain working capital of its container
manufacturing business. The acquisition was accounted for as a purchase
transaction and the results of operations have been included with the
Company's historical results from the acquisition date. See
"Business--Company History." See Note 3 to the Consolidated Financial
Statements for the year ended December 31, 1995 included elsewhere in
this Prospectus.
(j) On November 15, 1991, the Company sold its nonstrategic PET carbonated
beverage bottle business. For 1991, sales from the PET carbonated
beverage business were $33.4 million. See "Business--Company History."
(k) Based upon a review of its depreciable assets, the Company determined
that certain adjustments were necessary to properly reflect net
realizable values. In 1995, the Company recorded a write-down of $14.7
million for the excess of carrying value over estimated realizable
value of machinery and equipment at existing facilities which had
become underutilized due to excess capacity. In 1994, charges of $16.7
million were recorded which included $2.6 million to write-down the
excess carrying value over estimated realizable value of various plant
facilities held for sale and $14.1 million for technologically obsolete
and inoperable machinery and equipment.
(l) During 1993, the Company adopted SFAS No. 106, "Employers Accounting
for Postretirement Benefits Other than Pensions," SFAS No. 109,
"Accounting for Income Taxes" and SFAS No. 112, "Employers Accounting
for Postemployment Benefits." The Company did not elect to restate
prior years' financial statements for any of these pronouncements.
(m) The number of employees at December 31, 1995 includes approximately
1,400 employees who joined the Company on August 1, 1995 as a result of
the acquisition by Containers of AN Can. The number of employees at
December 31, 1993 excludes 650 employees who joined the Company on
December 21, 1993 as a result of the acquisition by Containers of DM
Can.
-48-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion includes certain forward-looking statements.
For a discussion of important factors that could cause actual results to differ
materially from the forward-looking statements, see "Risk Factors."
The Company has focused on growth through acquisitions followed by
investment in the acquired assets to gain production efficiencies and provide
internal growth. Since Silgan's inception in 1987, the metal food container
business, which had sales of $882 million in 1995, has realized compound annual
growth of 16% through both acquisitions of food can businesses and internal
growth. Since 1993, the Company has made two significant acquisitions. On August
1, 1995 the Company acquired AN Can and in December 1993 the Company acquired DM
Can. On a pro forma basis after giving effect to the acquisition of AN Can,
sales for the Company's metal container business would have been $1.2 billion in
1995. Since 1987, the Company, on a pro forma basis after giving effect to the
acquisition of AN Can, has realized compound annual sales growth in its metal
food container business in excess of 21%.
The Company believes that its investments have enabled it to achieve a
low cost position in the food can segment. To further enhance its low cost
position, the Company has realized cost reduction opportunities through plant
rationalizations and equipment investment as well as from improved production
scheduling and line reconfiguration. Since 1991, the Company has closed eight
smaller, higher cost metal container facilities, including five facilities that
were closed in 1995 as a result of the integration of the manufacturing
operations of DM Can. Because most of the facilities that were closed in 1995
were closed late in the year, the Company expects to realize the benefits from
the closings of such facilities in 1996. Management believes that the
acquisition of AN Can, which has seventeen manufacturing facilities, provides
the Company with further cost reduction opportunities not only through
production and manufacturing synergies which it will realize from the combined
operations but also through the integration of the selling, general and
administrative operations of AN Can into the Company's existing metal container
business. The Company anticipates it will fully realize the benefits of
integrating these selling and administrative functions and certain of the
manufacturing synergies by late 1996. On the other hand, benefits which may be
realized by rationalization of plant operations will not occur before 1997.
Because AN Can has higher labor costs than the Company's existing metal
container business and any benefits realized from plant rationalizations will
not occur until after 1996, the Company expects that the gross margin for its
metal container business in 1996 will decline modestly from its historical rate.
Although employee termination costs associated with plant
rationalizations and administrative workforce reductions and other plant exit
costs associated with the acquisition of AN Can have been accrued through
purchase accounting adjustments, the Company has incurred in 1995 and will be
incurring in 1996 other non-recurring costs which under current accounting
pronouncements will be charged against operating income. These costs, which
include redundant charges related to the integration of the administrative and
general functions as well as costs associated with plant rearrangement and
clean-up, were $3.2 million in 1995 and are expected to be approximately $4.0
million in 1996.
To enhance its competitive position, the Company believes that it has
maintained a stable customer base by entering into multi-year supply
arrangements with a majority of its metal food can customers. Such arrangements
generally provide for pricing changes in accordance with cost change formulas,
thereby reducing the Company's exposure to the volatility of raw material prices
but also limiting the Company's ability to increase prices. The arrangement to
supply substantially all of Del Monte's metal container requirements in the
United States under the DM Supply Agreement extends to
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<PAGE>
December 2003 and the arrangement to supply a majority of Nestle's domestic
metal container requirements under the Nestle Supply Agreements extends through
2001. Revenues from these two customers represented approximately 45% of net
sales by the Company's metal container business in 1995. The acquisition of AN
Can has enabled the Company to diversify its customer base and expand its
domestic geographic presence. Similar to the Company's existing metal container
business, AN Can has multi-year supply arrangements with many of its metal food
container customers. As a result, the Company estimates that approximately 80%
of its 1996 metal container sales will be subject to long term contracts.
Furthermore, on a pro forma basis after giving effect to the acquisition of AN
Can, for 1995 the Company's sales to Nestle and Del Monte would have declined to
33% of the Company's total metal container sales. The Company is negotiating the
extension of supply arrangements with many customers, including the supply
arrangements with Nestle that expire in 1997 representing approximately 6% of
the Company's sales in 1995 on a pro forma basis after giving effect to the
acquisition of AN Can. There can be no assurance that the Company will be
successful in its efforts to maintain this volume on the same terms and
conditions that currently exist. See "Risk Factors--Supply Agreements with
Customers."
A portion of Containers' sales is dependent upon the annual vegetable
and fruit pack, which may vary from year to year depending upon weather
conditions. The vegetable pack in 1994 was better than the below normal
vegetable pack in 1995, resulting in greater sales to vegetable pack customers
in 1994 as compared to 1995.
The plastic container business has grown from a sales base of $89
million in 1987 to $220 million in 1995. In 1989, the Company acquired four
plastic container manufacturers to improve its competitive position in the
plastic container segment. As a result of these acquisitions, the Company
implemented a consolidation and rationalization program during the period from
1991 through 1993, closing three manufacturing facilities and consolidating the
technical and administrative functions of its plastic container business. An
additional facility was closed in 1995. To gain further production efficiencies,
the Company has made significant capital investments in its plastic container
business over the past few years. In 1994, the Company began to realize the
benefits of the consolidation and rationalization program as well as the capital
investment program. Currently, the Company is aggressively pursuing
opportunities in custom-designed PET and HDPE containers for which the market
has been growing principally due to consumer preferences for plastic containers.
Management believes that PET custom containers are replacing glass containers
for products such as mouthwash, salad dressing, peanut butter and liquor, and
that Plastics is well positioned because of its technologically advanced
equipment to respond to opportunities for future growth in the rigid plastic
container market.
In order to improve its operating and financing flexibility, the
Company has been active in refinancing its higher cost indebtedness with lower
cost indebtedness. In conjunction with the acquisition of AN Can in 1995,
Silgan, Containers and Plastics entered into the Silgan Credit Agreement with
various banks to finance the acquisition of AN Can and the resulting increased
seasonal working capital needs of the Company's metal container business, to
refinance in full amounts owing under the Company's previous credit facility,
and to repay the Secured Notes. See "Description of Certain Silgan
Indebtedness--Description of Silgan Credit Agreement." Although the Company
lowered its interest rate spread under the Silgan Credit Agreement by 1/2%, the
Company's total interest expense will increase significantly from historical
amounts because the acquisition of AN Can was financed entirely through bank
borrowings. With borrowings of $200 million under the Silgan Credit Agreement,
as recently amended in May 1996 to include an additional $125 million of B term
loans, Holdings repurchased and redeemed an aggregate of $204.1 million
principal amount of Discount Debentures, which will result in $10.2 million of
annual cash interest savings and $18.3 million of current cash tax savings as a
result of the deduction by the Company of the accreted interest amount on the
retired Discount Debentures. See "--Capital Resources and Liquidity" below. In
addition, the Private Offering (i) enabled
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<PAGE>
Holdings to purchase the Holdings Class B Stock held by Mellon, as trustee for
First Plaza, at a lower cost than Holdings could have purchased such Holdings
Class B Stock in the future and (ii) provided further additional annual cash
interest expense savings of $1.6 million and current tax benefits of $1.2
million to the Company through the redemption of additional Discount Debentures.
The Company is actively considering refinancing all of the remaining $59.0
million principal amount of Discount Debentures through an equity financing.
Such equity financing will depend upon the market conditions existing at that
time.
Results of Operations-- Six Months
Summary historical results for the Company's two business segments,
metal and plastic containers, for the six months ended June 30, 1996 and 1995
and summary pro forma results for the Company for the six months ended June 30,
1995 (after giving effect to the acquisition of AN Can as of the beginning of
1995) are provided below.
The pro forma data includes the historical results of the Company and
AN Can and reflects the effect of purchase accounting adjustments based on
appraisals and valuations, the financing of the acquisition of AN Can, the
refinancing of certain of the Company's debt obligations, and certain other
adjustments, as if these events occurred as of the beginning of the period
presented. The unaudited pro forma combined financial data do not purport to
represent what the Company's financial position or results of operations would
actually have been had these transactions in fact occurred at the beginning of
the period indicated, or to project the Company's financial position or results
of operations for any future date or period. The pro forma combined financial
data do not give effect to adjustments for decreased costs from manufacturing
synergies resulting from the integration of AN Can with Containers' existing can
manufacturing operations and anticipated benefits the Company may realize as a
result of its planned rationalization of plant operations. The pro forma
information presented should be read in conjunction with the historical results
of operations of the Company for the periods ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------------------------------------------------
Historical Pro Forma
------------------------------------------------ ----------------------
1996 1995 1995
------ ------ -----
(Dollars in millions)
Net sales:
<S> <C> <C> <C>
Metal containers and other................ $500.3 $289.2 $534.2
Plastic containers........................ 106.7 115.8 115.8
----- ----- -----
Consolidated........................... $607.0 $405.0 $650.0
====== ====== ======
Operating profit:
Metal containers and other................ $ 49.8 $ 34.0 $ 54.5
Plastic containers........................ 8.9 7.7 7.7
Corporate expense......................... (0.7) (0.6) (0.6)
----- ----- -----
Consolidated........................... $ 58.0 $ 41.1 $ 61.6
====== ===== =====
</TABLE>
The discussion below should be read in conjunction with the selected
financial data, the historical statements of operations and the notes thereto
included elsewhere in this Prospectus.
Historical Six Months Ended June 30, 1996 Compared with Historical Six Months
Ended June 30, 1995
Consolidated net sales increased $202.0 million, or 49.9%, to $607.0
million for the six months ended June 30, 1996, as compared to net sales of
$405.0 million for the same six months in the prior year. This increase resulted
primarily from net sales generated by the former AN Can operations offset, in
part, by lower net sales of metal containers to the Company's existing customer
base and lower net sales of plastic containers.
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<PAGE>
Net sales for the metal container business (including net sales of its
specialty business of $42.3 million) were $500.3 million for the six months
ended June 30, 1996, an increase of $211.1 million from net sales of $289.2
million for the same period in 1995. Net sales of metal cans of $458.0 million
for the six months ended June 30, 1996 were $172.9 million greater than net
sales of metal cans of $285.1 million for the same period in 1995. This increase
resulted principally from net sales of metal cans generated by the former AN Can
operations of approximately $191.0 million during the first six months of 1996.
Net sales of metal containers to the Company's existing customers declined
during the first six months of 1996 as compared to the first six months of 1995
primarily as a result of lower unit volume. Most of this decline relates to the
Company's planned production and shipment of vegetable pack cans during the
fresh pack season in the third and fourth quarter of 1996 as compared to the
first and second quarter of 1995 . Similar to 1995, the 1996 Midwest vegetable
pack is expected to be below normal due to cool wet weather during the planting
season.
Sales of specialty items included in the metal container segment
increased $38.3 million to $42.3 million during the six months ended June 30,
1996 as compared to the same period in 1995, due to additional sales generated
in 1996 by the operations acquired from AN Can.
Net sales for the plastic container business of $106.7 million during
the six months ended June 30, 1996 decreased $9.1 million from net sales of
$115.8 million for the same period in 1995. This decline in net sales resulted
principally from the pass through of lower resin costs.
Cost of goods sold as a percentage of consolidated net sales was 86.0%
($521.7 million) for the six months ended June 30, 1996, an increase of 0.5
percentage points as compared to 85.5% ($346.1 million) for the same period in
1995. The increase in cost of goods sold as a percentage of net sales was
primarily attributable to the higher cost base of the former AN Can operations
and increased per unit manufacturing costs resulting from lower can production
volumes, offset, in part, by improved operating efficiencies due to can plant
consolidations and synergies realized from the AN Can acquisition as well as
improved manufacturing performance by the plastic container business. Lower can
production volumes resulted from a reduction in the amount of finished goods
inventory carried by the Company due to the scheduled production of cans closer
to the pack season. As a result, it is expected that production volumes will
increase in the second half of 1996, thereby reducing per unit manufacturing
costs and increasing manufacturing margins for that period as compared to the
same period in the prior year.
Selling, general and administrative expenses as a percentage of
consolidated net sales increased 0.1 percentage points to 4.5% ($27.2 million)
for the six months ended June 30, 1996, as compared to 4.4% ($17.7 million) for
the six months
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<PAGE>
ended June 30, 1995. This increase in selling, general and administrative
expenses as a percentage of net sales principally reflects redundant costs
associated with the integration of AN Can with the Company . As the Company
completes its integration of the administrative functions of AN Can with the
Company in 1996, it expects that these redundant costs will decline and that its
selling, general and administration costs as a percentage of sales will
decrease.
Income from operations as a percentage of consolidated net sales was
9.6% ($58.0 million) for the six months ended June 30, 1996, as compared with
10.2% ($41.1 million) for the same period in 1995. This decline in income from
operations as a percentage of consolidated net sales was primarily attributable
to the aforementioned decline in gross margin.
Income from operations as a percentage of net sales for the metal
container business was 10.0% ($49.8 million) for the six months ended June 30,
1996, as compared to 11.8% ($34.0 million) for the same period in the prior
year. This decrease in income from operations as a percentage of net sales for
the metal container business principally resulted from higher per unit
manufacturing costs incurred as a result of lower production volume and lower
margins realized on sales made from former AN Can facilities due to their higher
cost base.
Income from operations as a percentage of net sales for the plastic
container business was 8.3% ($8.9 million) for the six months ended June 30,
1996, as compared to 6.6% ($7.7 million) for the same period in 1995. The
operating performance of the plastic container business improved as a result of
production planning and scheduling efficiencies and benefits realized from
capital investment.
Interest expense increased $11.1 million to $45.9 million for the six
months ended June 30, 1996, principally as a result of increased borrowings to
finance the acquisition of AN Can in August 1995, offset, in part, by the
benefit realized from the redemption of a portion of the Discount Debentures
with proceeds from the borrowing of B term loans under the Silgan Credit
Agreement and by lower average bank borrowing rates. In the third quarter of
1996, the Company redeemed $125.0 million principal amount of Discount
Debentures with proceeds from the borrowing of B Term Loans under the Silgan
Credit Agreement, further lowering its average borrowing costs.
The provisions for income taxes for the six months ended June 30, 1996
and 1995 provide for federal, state and foreign taxes currently payable. The
decrease in the provision for income taxes of $1.7 million for the six months
ended June 30, 1996 as compared to the same period in the prior year reflects
the benefit of the current cash tax savings realized from the deduction of
accreted interest on the retired Discount Debentures.
As a result of the items discussed above, net income increased $7.6
million to $9.7 million for the six months ended June 30, 1996, as compared to
$2.1 million for the six months ended June 30, 1996.
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Historical Six Months Ended June 30, 1996 Compared with Pro Forma Six Months
Ended June 30, 1995
Consolidated net sales for the six months ended June 30, 1996 declined
$43.0 million as compared to pro forma consolidated net sales for the same
period in the prior year. This decline in net sales resulted primarily from a
decline in sales by the metal container business of $33.9 million , which was
principally attributable to the loss of an AN Can customer whose product line
was acquired by a company with self manufacturing capacity for that product, the
planned production and shipment of vegetable pack cans in the second half of
1996 as compared to the first half of 1995, and lower unit sales to a customer
who desired two suppliers (Silgan and AN Can had previously been the two
suppliers). Net sales of the plastic container business declined $9.1 million
principally due to the pass through of lower resin costs.
Income from operations as a percentage of consolidated net sales for
the six months ended June 30, 1996 was 9.6% ($58.0 million), as compared to pro
forma income from operations as a percentage of pro forma consolidated net sales
of 9.5% ($61.6 million) for the six months ended June 30, 1995. Management
believes that the decrease in income from operations for the six months ended
June 30, 1996 as compared to pro forma income from operations for the same
period in the prior year was attributable to increased per unit costs realized
on lower can production volumes and redundant costs associated with the
integration of AN Can with the Company, offset, in part, by the realization of
can manufacturing synergies resulting from the acquisition of AN Can and
improved operating performance of the plastic container business. Management
believes that the Company's operating performance in the second half of 1996
will exceed its operating performance during the same period in the prior year
due to the scheduled production of vegetable pack cans closer to the fresh pack
season.
Results of Operations--Year End
Summary historical results for the Company's two business segments,
metal and plastic containers, for the calendar years ended December 31, 1995,
1994 and 1993 and summary pro forma results for the Company and AN Can for the
calendar years ended December 31, 1995 and 1994 (after giving effect to the
acquisition of AN Can as of the beginning of such period) are provided below.
The pro forma data includes the historical results of the Company and
AN Can and reflects the effect of purchase accounting adjustments based on
preliminary appraisals and valuations, the financing of the acquisition of AN
Can, the refinancing of certain of the Company's debt obligations, and certain
other adjustments as if these events occurred as of the beginning of the periods
presented.
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<PAGE>
The unaudited pro forma combined financial data do not purport to represent what
the Company's financial position or results of operations would actually have
been had these transactions in fact occurred at the beginning of the periods
indicated, or to project the Company's financial position or results of
operations for any future date or period. The pro forma combined financial data
do not give effect to adjustments for decreased costs from manufacturing
synergies resulting from the integration of AN Can with Containers' existing can
manufacturing operations and anticipated benefits the Company may realize as a
result of its planned rationalization of plant operations. The pro forma
information presented should be read in conjunction with the historical results
of operations of the Company for the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------
Historical Pro Forma
------------------------------------------------ -------------------------------
1995 1994 1993 1995 1994
------ ------ ------ ------ -----
(Dollars in millions)
Net Sales:
<S> <C> <C> <C> <C> <C>
Metal containers and other $ 882.3 $657.1 $459.2 $1,184.8 $1,253.7
Plastic containers 219.6 204.3 186.3 219.6 204.3
------- ----- ----- ------- -------
Consolidated $1,101.9 $861.4 $645.5 $1,404.4 $1,458.0
======= ===== ===== ======= =======
Operating Profit:
Metal containers and other $ 72.9 $ 67.0 $ 42.3 $ 95.7 $ 107.6
Plastic containers 13.2 9.4 0.6 13.2 9.4
Reduction in asset value <F1> (14.7) (16.7) - (14.7) (23.8)
Write-down of goodwill <F2> - - - - (26.7)
Restructuring expense <F3> - - - - (10.1)
Corporate expense (1.6) (1.3) (1.1) (1.5) (1.4)
------- ----- ----- ------- -------
Consolidated $ 69.8 $ 58.4 $ 41.8 $ 92.7 $ 55.0
======== ======= ====== ======== =========
- --------------------
<FN>
<F1>
Included in the historical and pro forma income from operations of the
Company are charges incurred for the reduction of the carrying value of
certain underutilized equipment to net realizable value of $14.7
million in 1995 allocable to the metal container business, and of $16.7
million in 1994, of which $7.2 million was allocable to the metal
container business and $9.5 million to the plastic container business.
Additionally, pro forma income from operations for 1994 includes a
charge of $7.1 million for the write-down of certain technologically
obsolete equipment by AN Can.
<F2> Included in the historical financial information of AN Can as of
December 31, 1994 is a charge of $26.7 million for the write-down of
goodwill.
<F3> Included in the pro forma income from operations for 1994 is a charge
incurred by AN Can of $10.1 million for shut down costs necessary to
realign the assets of the business more closely with the existing
customer base.
</FN>
</TABLE>
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The discussion below should be read in conjunction with the selected
financial data, the historical statements of operations and the Notes thereto
included elsewhere in this Prospectus.
Historical Year Ended December 31, 1995 Compared with Historical Year Ended
December 31, 1994
Consolidated net sales increased $240.5 million, or 27.9%, to $1.1
billion for the year ended December 31, 1995, as compared to net sales of $861.4
million for the same period in 1994. This increase resulted from net sales of
$264.3 million generated by AN Can since its acquisition and a $15.3 million
increase in sales of plastic containers offset, in part, by a decline in sales
of metal containers to Silgan's existing customer base of $39.1 million.
Net sales for the metal container business (including its specialty
business) were $882.3 million for the year ended December 31, 1995, an increase
of $225.2 million from net sales of $657.1 million for the same period in 1994.
Excluding net sales of metal cans of $236.0 million generated by AN Can since
its acquisition, net sales of metal cans to the Company's customers were $609.5
million during the year ended December 31, 1995, as compared to $647.5 million
for the same period in 1994. Net sales to the Company's customers in 1995
decreased principally due to lower unit volume resulting from the below normal
1995 vegetable pack offset, in part, by slightly higher sales prices due to the
pass through of raw material cost increases.
Sales of specialty items included in the metal container segment
increased $27.2 million to $36.8 million during the year ended December 31, 1995
as compared to the same period in 1994, due to the acquisition of AN Can which
generated sales of $28.3 million of specialty items since its acquisition.
Net sales for the plastic container business of $219.6 million during
the year ended December 31, 1995 increased $15.3 million over net sales of
$204.3 million for the same period in 1994. This increase was attributable to
increased unit sales for new customer products and to higher average sales
prices due to the pass through of higher average resin costs.
Cost of goods sold as a percentage of consolidated net sales was 88.1%
($970.5 million) for the year ended December 31, 1995, an increase of 1.2
percentage points as compared to 86.9% ($748.3 million) for the same period in
1994. The increase in cost of goods sold as a percentage of net sales
principally resulted from increased per unit manufacturing costs resulting from
reduced can production volumes, lower margins realized on certain products due
to competitive market conditions and lower margins on sales made by AN Can,
offset, in part, by improved manufacturing operating efficiencies due to plant
consolidations and lower depreciation expense due to a change in the estimated
useful life of certain equipment.
Selling, general and administrative expenses as a percentage of
consolidated net sales declined 0.2 percentage points to 4.2% ($46.8 million)
for the year ended December 31, 1995 as compared to 4.4% ($38.0 million) for the
year ended December 31, 1994. The decrease in selling, general and
administrative expenses as a percentage of net sales resulted from the Company's
continued control of these expenses in respect of the Company's existing
business, offset partially by a temporarily higher level of expenses incurred
during the integration of AN Can. The Company expects that its selling, general
and administration costs as a percentage of sales will decline in 1997 after it
completes the integration of the administrative functions of its metal container
business.
Income from operations as a percentage of consolidated net sales was
6.3% ($69.8 million) for the year ended December 31, 1995, as compared with 6.8%
($58.4 million) for the same period in 1994. Included in income from operations
were charges for the write-off of certain underutilized assets of $14.7 million
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<PAGE>
and $16.7 million in 1995 and 1994, respectively. Without giving effect to these
charges, income from operations as a percentage of consolidated net sales would
have declined 1.0% in 1995, primarily as a result of the aforementioned decline
in gross margin.
Income from operations as a percentage of net sales for the metal
container business (without giving effect to charges of $14.7 million and $7.2
million in 1995 and 1994, respectively, to adjust the carrying value of certain
assets) was 8.3% ($72.9 million) for the year ended December 31, 1995, as
compared to 10.2% ($67.0 million) for the same period in the prior year. The
decrease in income from operations as a percentage of net sales principally
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<PAGE>
resulted from higher per unit manufacturing costs realized on lower production
volume, lower margins realized on certain products due to competitive market
conditions, inefficiencies caused by work stoppages at two of the Company's
California facilities, and lower margins realized on sales made by AN Can,
offset, in part, by operating efficiencies due to plant consolidations.
Income from operations as a percentage of net sales attributable to the
plastic container business (without giving effect to the charge of $9.5 million
in 1994 to adjust the carrying value of certain assets) was 6.0% ($13.2 million)
for the year ended December 31, 1995, as compared to 4.6% ($9.4 million) for the
same period in 1994. The operating performance of the plastic container business
improved as a result of production planning and scheduling efficiencies and
benefits realized from capital investment, offset, in part, by increased unit
production costs incurred as a result of an inventory reduction program.
Interest expense, including amortization of debt financing costs,
increased by approximately $14.9 million to $80.7 million for the year ended
December 31, 1995, principally as a result of increased borrowings to finance
the acquisition of AN Can and to fund higher working capital needs as a result
of the increased seasonality of the Company's metal container business, and
higher average interest rates. Accretion of interest on the Discount Debentures
in 1995 approximated the prior year's accretion due to the repurchase of $61.7
million face amount of Discount Debentures in the third quarter of 1995.
The provisions for income taxes for the years ended December 31, 1995
and 1994 were comprised of federal, state and foreign income taxes currently
payable. The decrease in the provision for income taxes in 1995 reflects a
decrease in federal income taxes currently payable due to the deductibility of
accrued interest on the Discount Debentures that were repurchased in 1995.
As a result of the items discussed above, net loss before the
extraordinary charge for the year ended December 31, 1995 was $16.0 million, as
compared to a net loss of $13.0 million for the year ended December 31, 1994.
As a result of the early extinguishment of amounts owed under its
secured debt facilities, the Company incurred an extraordinary charge of $5.8
million (net of tax of $2.6 million) in 1995.
Historical Year Ended December 31, 1994 Compared with Historical Year Ended
December 31, 1993
Consolidated net sales increased $215.9 million, or 33.4%, to $861.4
million for the year ended December 31, 1994, as compared to $645.5 million for
the same period in 1993. Approximately 81% of this increase related to sales to
Del Monte pursuant to the DM Supply Agreement entered into by the Company on
December 21, 1993 to supply substantially all of Del Monte's metal container
requirements for a period of ten years. The remainder of this increase resulted
principally from greater unit sales in both the metal container and plastic
container businesses.
Net sales for the metal container business (including paper containers)
were $657.1 million for the year ended December 31, 1994, an increase of $197.9
million (43.1%) over net sales for the metal container business of $459.2
million for the same period in 1993. Sales of metal containers increased $201.6
million primarily as a result of the DM Supply Agreement, which represented
$174.7 million of this increase, and an increase of $26.9 million in sales to
all other customers. Sales of metal containers increased principally from higher
unit volume and reflected continued growth in sales of pet food containers, as
well as greater sales to vegetable pack customers due to a larger than normal
pack in 1994. Sales of specialty items included in the metal container segment
declined $3.7 million to $9.6 million during 1994.
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Net sales for the plastic container business of $204.3 million during
the year ended December 31, 1994 increased $18.0 million, or 9.7%, over net
sales of plastic containers of $186.3 million for the same period in 1993. The
increase in net sales of plastic containers was attributable to increased unit
sales to new and existing customers, particularly PET customers, and to a lesser
extent, higher average sales prices due to the pass through of increased resin
costs.
Cost of goods sold as a percentage of consolidated net sales was 86.9%
($748.3 million) for the year ended December 31, 1994, a decrease of 1.6
percentage points as compared to 88.5% of consolidated net sales ($571.2
million) for the same period in 1993. The decrease in cost of goods sold as a
percentage of consolidated net sales principally resulted from synergistic
benefits resulting from the acquisition of DM Can, lower per unit manufacturing
costs realized on higher sales and production volumes and improved manufacturing
efficiencies in the plastic container business resulting from larger cost
reduction and productivity investments in 1993.
Selling, general and administrative expenses as a percentage of
consolidated net sales declined 0.6 percentage points to 4.4% of consolidated
net sales ($38.0 million) for the year ended December 31, 1994, as compared to
5.0% ($32.5 million) for the same period in 1993. The decrease as a percentage
of consolidated net sales resulted principally from a modest increase in
selling, general and administrative functions relative to the increased sales
associated with the acquisition of DM Can, offset in part by an increase of $1.3
million in benefits accrued under SARs.
Income from operations as a percentage of consolidated net sales
increased 0.3 percentage points to 6.8% ($58.4 million) for the year ended
December 31, 1994, compared with 6.5% ($41.8 million) for the same period in
1993. During 1994 the Company incurred a charge of $16.7 million to write-down
certain properties held for sale to their net realizable value and to reduce the
carrying value of certain technologically obsolete and inoperable equipment.
Without giving effect to this nonrecurring charge, income from operations in
1994 would have been 8.7% ($75.1 million), an increase of 2.2 percentage points
as compared to 1993, and was principally attributable to the aforementioned
improvement in gross margin.
Income from operations as a percentage of net sales for the metal
container business (without giving effect to the $7.2 million charge to
write-down the carrying value of certain assets) increased 1.0% to 10.2% ($67.0
million) during 1994 as compared to 1993, principally due to operating synergies
realized from the acquisition of DM Can and lower per unit manufacturing costs
incurred as a result of higher production volumes in 1994. Income from
operations as a percentage of net sales attributable to the plastic container
business (without giving effect to the $9.5 million charge to write-down the
carrying value of certain assets) in 1994 was 4.6% ($9.4 million), as compared
to 0.3% ($0.6 million) in 1993. The improved operating performance of the
plastic container business resulted from production efficiencies realized as a
result of rationalizations and capital investment made in prior periods, and
lower unit manufacturing costs.
Interest expense, including amortization of debt financing costs,
increased by approximately $11.5 million to $65.8 million for the year ended
December 31, 1994. This increase resulted from the incurrence of additional bank
borrowings to finance the acquisition of DM Can, higher average bank borrowing
rates, higher accretion of interest on the Discount Debentures and increased
charges for the amortization of debt financing costs.
The provisions for income taxes for the years ended December 31, 1994
and 1993 were comprised of federal, state and foreign income taxes currently
payable. The increase in the provision for income taxes in 1994 reflects an
increase in federal income taxes currently payable. During 1994, the
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Company fully utilized its alternative minimum tax net operating loss carryovers
and, therefore, was subject to tax at the rate of 20% on its alternative minimum
taxable income.
As a result of the items discussed above, the net loss for the year
ended December 31, 1994 was $13.0 million, $1.4 million less than the loss
before extraordinary charges and cumulative effect of changes in accounting
principles for the year ended December 31, 1993 of $14.4 million.
In conjunction with the acquisition of DM Can in 1993, the Company
incurred an extraordinary charge of $1.3 million for the early extinguishment of
debt. Also, during 1993 the Company adopted SFAS No. 106, SFAS No. 109 and SFAS
No. 112. The cumulative effect of these accounting changes, for years prior to
1993, was to decrease net income by $6.3 million. As a result of these charges,
the net loss for 1993 was $22.0 million.
Pro Forma Year Ended December 31, 1995 Compared with Pro Forma Year
Ended December 31, 1994
Consolidated net sales for the year ended December 31, 1995 declined
$53.6 million as compared to pro forma consolidated net sales for the prior
year. The decrease in net sales was primarily attributable to lower unit volume
resulting from the below normal 1995 vegetable pack.
Income from operations as a percentage of consolidated net sales
(before unusual charges) for the year ended December 31, 1995 was 7.6% ($107.4
million) as compared to pro forma income from operations as a percentage of
consolidated net sales (before unusual charges) for the year ended December 31,
1994 of 7.9% ($115.6 million). Management believes that the decrease in income
from operations was primarily attributable to lower demand in 1995 for vegetable
pack containers.
Capital Resources and Liquidity
The Company's liquidity requirements arise primarily from its
obligations under the indebtedness incurred in connection with its acquisitions
and the refinancing of such indebtedness, capital investment in new and existing
equipment and the funding of the Company's seasonal working capital needs.
Historically, the Company has met these liquidity requirements through cash flow
generated from operating activities and working capital borrowings.
On July 22, 1996, the Company completed the Private Offering. With net
proceeds of $47.8 million from the Private Offering, the Company purchased the
Holdings Class B Stock held by Mellon for $35.8 million and, on August 26, 1996,
redeemed $12.0 million principal amount of Discount Debentures.
On August 1, 1995, Silgan, Containers and Plastics entered into the
Silgan Credit Agreement (which originally provided Silgan with $225 million of A
term loans and $225 million of B term loans and provided Containers and Plastics
with a commitment of $225 million for working capital loans) to finance the
acquisition by Containers of AN Can, to refinance and repay in full all amounts
owing under the credit agreement, dated as of December 21, 1993 among Silgan and
certain of its subsidiaries, the lenders from time to time party thereto, Bank
of America National Trust and Savings Association ("Bank of America National
Trust"), as Co-Agent, and Bankers Trust, as Agent (the "Silgan 1993 Credit
Agreement"), and under the Secured Notes. With the proceeds received from the
Silgan Credit Agreement, the Company (i) repaid $117.1 million of term loans
under the Silgan 1993 Credit Agreement, (ii) repaid in full $50.0 million of its
Secured Notes, (iii) acquired from ANC substantially all of the fixed assets and
working capital of AN Can for $362.0 million (including the purchase from ANC of
its St. Louis facility in May 1996 for $13.2 million), and (iv) incurred debt
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<PAGE>
issuance costs of $19.3 million. With borrowings of $200 million under the
Silgan Credit Agreement (as amended in May 1996 to include an additional $125
million of B term loans), Holdings has repurchased and redeemed an aggregate of
$204.1 million principal amount of Discount Debentures since 1995.
The Silgan Credit Agreement provides the Company with improved
financial flexibility by (i) enabling Silgan to transfer funds to Holdings for
payment by Holdings of cash interest on the Discount Debentures and, as provided
in the Silgan Credit Agreement, cash dividends (or cash interest) on the
Preferred Stock (or, if issued, the Exchange Debentures), (ii) extending the
maturity of the Company's secured debt facilities until December 31, 2000, (iii)
lowering the interest rate spread on its floating rate borrowings by 1/2%, as
well as providing for further interest rate reductions in the event the Company
attains certain financial targets, and (iv) lowering the Company's average cost
of indebtedness by permitting Holdings to repurchase or redeem Discount
Debentures with $200 million of borrowings under the Silgan Credit Agreement.
The Company currently has outstanding approximately $59.0 million
principal amount of Discount Debentures and has redeemed or repurchased an
aggregate of approximately $216.0 million principal amount at maturity of
Discount Debentures since 1995. By refinancing a portion of the Discount
Debentures with borrowings under the Silgan Credit Agreement and proceeds from
the Private Offering, the Company has lowered its average cost of indebtedness,
will realize $11.8 million of annual cash interest savings, and will realize
$19.5 million of current cash tax savings as a result of the deduction by the
Company of the accreted interest on the retired Discount Debentures. The Company
is actively considering refinancing all of the remaining $59.0 million principal
amount of Discount Debentures through an equity financing. Such equity financing
will depend upon the market conditions existing at that time.
For the first six months of 1996, net borrowings of working capital
loans of $141.5 million , proceeds of $1.5 million from the sale of assets and a
decrease in cash balances of $0.2 million were used to fund cash used by
operations of $82.7 million for the Company's seasonal working capital needs,
capital expenditures of $42.1 million (including the purchase of ANC's St. Louis
facility for $13.2 million), the redemption of $17.4 million of Discount
Debentures, and the repayment of $0.9 million of term loans under the Silgan
Credit Agreement. The Company's EBDITA for the six months ended June 30, 1996
increased by $30.7 million to $89.5 million in comparison to the same period in
1995. The increase in EBDITA principally reflected the generation of additional
cash earnings from the former AN Can operations.
For the six month ended June 30, 1996, the operating cash flow of the
Company declined from the same period in the prior year primarily as a result of
the increased working capital needed, mainly for inventory, to support the
former AN Can operations. Although management has undertaken a program to carry
less finished goods inventory by scheduling some of its production closer to the
vegetable pack, it is still necessary to build a significant portion of its
inventory prior to the vegetable pack. The decline in trade accounts payable
from year end results from traditional year end payment terms .
Management believes that the average working capital needs of the
combined operations of the Company and AN Can for 1996 as compared to the pro
forma combined operations in the prior year will decline predominately as a
result of carrying a lower amount of finished goods inventory due to
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scheduling production closer to the summer seasonal peak and the change in
vendor payment terms referred to above.
During 1995, cash generated from operations of $209.6 million
(including cash of $112.0 million generated by AN Can since August 1, 1995),
proceeds of $3.5 million realized from the sale of assets and a decrease of $0.6
million in cash balances were used to repay $142.8 million of working capital
borrowings used to fund the acquisition of AN Can, fund capital expenditures of
$51.9 million, repay $9.7 million of term loans and $5.5 million of working
capital loans, and make payments to former shareholders of $3.8 million in full
settlement of outstanding litigation. The Company's EBDITA for the year ended
December 31, 1995 increased by $17.9 million to $132.4 million as compared to
1994. The increase in EBDITA reflected the generation of additional cash
earnings from AN Can since its acquisition on August 1, 1995, offset by a
decline in the cash earnings of the Company's existing business principally as a
result of lower unit volume due to the below normal 1995 vegetable pack.
For the year ended December 31, 1995, the operating cash flow of the
Company increased significantly from the prior year due to the generation of
cash by AN Can since its acquisition on August 1, 1995 and the adoption by
Silgan of similar year-end vendor payment terms to those of AN Can. At December
31, 1995, the trade receivable balance of AN Can was $44.2 million ($90.2
million on August 1, 1995), the inventory balance was $98.9 million ($137.9
million on August 1, 1995), and the trade payables balance was $58.2 million
($64.2 million on August 1, 1995).
During 1994, cash generated from operations of $47.3 million along with
working capital borrowings of $10.4 million were used to fund capital
expenditures of $27.9 million (net of proceeds of $1.3 million), make mandatory
debt repayments of $20.5 million, pay $6.9 million to former shareholders of
Silgan in partial settlement of outstanding litigation and increase cash
balances by $2.4 million.
For 1993, the Company used cash generated from operations of $48.1
million and available cash balances of $2.7 million to fund capital expenditures
of $42.5 million, repay working capital loans of $7.2 million (in addition to
working capital loans which were repaid with proceeds from the Silgan 1993
Credit Agreement), and pay $1.1 million of term loans. During the year, the
Company increased its annual amount of capital spending in order to reduce costs
and to add incremental production capacity. The increase in inventory at
December 31, 1993 as compared to the prior year principally resulted from the
inventory acquired as part of the acquisition of DM Can.
Because the Company sells metal containers used in vegetable and fruit
processing, its sales are seasonal. As is common in the packaging industry, the
Company must access working capital to build inventory and then carry accounts
receivable for some customers beyond the end of the summer and fall packing
season. Seasonal accounts are generally settled by year end. The acquisition of
AN Can increased the Company's seasonal metal containers business, and as a
result the Company increased the amount of working capital loans available to it
under its credit facility to $225.0 million. Due to the Company's seasonal
requirements, the Company expects to incur short term indebtedness to finance
its working capital requirements. Approximately $175.0 million of the working
capital revolver under the Silgan Credit Agreement, including letters of credit,
was utilized at its peak in July 1996.
As of June 30, 1996, the outstanding principal amount of working
capital loans was $148.6 million and, subject to a borrowing base limitation and
taking into account outstanding letters of credit, the unused portion of working
capital commitments at such date was
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$69.0 million.
In addition to its operating cash needs, the Company's cash
requirements over the next several years consist primarily of (i) annual capital
expenditures of $50.0 to $60.0 million, (ii) scheduled principal amortization
payments of term loans under the Silgan Credit Agreement of $28.5 million, $38.5
million, $53.4 million, $53.4 million and $126.1 million over the next five
years, respectively, (iii) expenditures of approximately $30.0 million over the
next three years associated with plant rationalizations and administrative
workforce reductions, other plant exit costs and employee relocation costs of AN
Can, (iv) the Company's interest requirements, including interest on working
capital loans, the principal amount of which will vary depending upon seasonal
requirements, and the bank term loans, most of which bear fluctuating rates of
interest, the 11-3/4% Notes and semi-annual cash interest payments of
approximately $4.0 million (based on $59.0 million principal amount of Discount
Debentures outstanding) on the Discount Debentures commencing in December 1996,
(v) payments of approximately $3.0 million for state tax liabilities in 1996 and
approximately $16.0 million for federal and state tax liabilities in 1997,
increasing annually thereafter (assuming the redemption of the remainder of the
Discount Debentures at maturity in 2002), and (vi) quarterly payments of cash
dividends (or semi-annual payments of cash interest) of up to approximately $2.8
million on the Preferred Stock (or the Exchange Debentures) commencing on
October 15, 2000 (assuming that the Company has not paid cash dividends (or cash
interest) on the Preferred Stock (or the Exchange Debentures) prior to such
date). See "Risk Factors--Refinancing Risk."
Since Holdings' only asset is its investment in Silgan, its ability to
pay interest on the Discount Debentures and dividends on the Preferred Stock
(and cash interest on the Exchange Debentures, if issued) may depend upon its
receipt of funds paid by dividend or otherwise loaned, advanced or transferred
by Silgan to Holdings. While Silgan has no legal obligation to make such funds
available, it is expected that Silgan will do so if it then has sufficient funds
available for such purpose. If sufficient funds to pay such interest and
dividends are not generated by the operations of Silgan's subsidiaries, Silgan
or Holdings may seek to borrow or otherwise finance the amount of such payments
or refinance the Discount Debentures or the Preferred Stock. The Silgan Credit
Agreement, the Discount Debentures Indenture and the 11-3/4% Notes Indenture
limit Holdings' ability to pay cash dividends on the Preferred Stock (and cash
interest on the Exchange Debentures) and Silgan's ability to provide funds to
Holdings for such purpose. See "Risk Factors--Ability of Holdings to Pay Cash
Dividends and Cash Interest" and "--Ability of Silgan to Provide Financial
Support to Holdings."
The Discount Debentures represent AHYDOS within the meaning of Section
163(i) of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the tax deduction that would otherwise be available to Holdings for
accreted interest on the Discount Debentures during their noncash interest
period has been and will continue to be deferred until the retirement of the
Discount Debentures. During 1995, Holdings repurchased $61.7 million principal
amount of Discount Debentures, providing Holdings with an allowable deduction of
approximately $18.0 million for the amount of interest accreted on such Discount
Debentures. In 1996, Holdings has redeemed $154.4 million principal amount of
the Discount Debentures, providing Holdings with an allowable deduction of
approximately $58.0 million for the amount of interest accreted on such amount
of indebtedness. Currently, Holdings has approximately $59.0 million principal
amount of Discount Debentures outstanding. Subject to alternative minimum tax
("AMT"), Holdings will realize further tax benefits in the event that it redeems
any of the remaining Discount Debentures.
In 1993, Holdings became subject to AMT and, due to the utilization of
its AMT net operating loss carryforwards, incurred an AMT liability at a rate of
2%. In 1994, Holdings fully utilized its AMT
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loss carryforwards. Accordingly, in 1995 Holdings incurred, and thereafter
Holdings will incur, an AMT liability at a rate of 20% (or the applicable rate
then in effect). As a result of the allowable deduction of accreted interest on
the Discount Debentures redeemed in 1996, the Company expects that it will incur
no AMT liability in 1996. To the extent that AMT is paid, it is allowed (subject
to certain limitations) as an indefinite credit carryover against Holdings'
regular tax liability in the future when and if Holdings' regular tax liability
exceeds the AMT liability.
Management believes that cash generated by operations and funds from
working capital borrowings under the Silgan Credit Agreement will be sufficient
to meet the Company's expected operating needs, planned capital expenditures,
debt service and preferred stock dividend requirements for the foreseeable
future.
The Silgan Credit Agreement and the 11-3/4% Notes Indenture, the
Discount Debentures Indenture, the Preferred Stock and the Exchange Debentures,
if issued, each contain restrictive covenants that, among other things, limit
the Company's ability to incur debt, sell assets and engage in certain
transactions. Management does not expect these limitations to have a material
effect on the Company's business or results of operations. The Company is in
compliance with all financial and operating covenants contained in such
financing agreements and believes that it will continue to be in compliance
during 1996 with all such covenants.
Effect of Interest Rate Fluctuations and Inflation
Historically, inflation has not had a material effect on the Company,
other than to increase its cost of borrowing. In general, the Company has been
able to increase the sales prices of its products to reflect any increases in
the prices of raw materials.
Because the Company has indebtedness which bears interest at floating
rates, the Company's financial results will be sensitive to changes in
prevailing market rates of interest. As of June 30, 1996, the Company had $921.3
million of indebtedness outstanding, of which $490.4 million bears interest at
floating rates. To mitigate the effect of interest rate fluctuations, the
Company entered into interest rate swap agreements during the first quarter of
1996 whereby floating rate interest was exchanged for fixed rates of interest
ranging from 8.1% to 8.6%. The notional principal amounts of these agreements
totaled $100 million and mature in the year 1999. Depending upon market
conditions, the Company may enter into additional interest rate swap agreements
or other interest rate hedge agreements (with counterparties that, in the
Company's judgment, have sufficient creditworthiness) during 1996 to hedge its
exposure against interest rate volatility.
New Accounting Pronouncements
Long-Lived Asset Impairment. The Company adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," in the first quarter of 1996. Under SFAS No. 121, impairment
losses will be recognized when events or changes in circumstances indicate that
the undiscounted cash flows generated by assets are less than the carrying value
of such assets. Impairment losses are then measured by comparing the fair value
of assets to their carrying amount. There were no impairment losses recognized
during the first half of 1996 as a result of the adoption of SFAS No. 121. See
Note 5 to the Consolidated Financial Statements of the Company included
elsewhere in this Prospectus.
Stock-Based Compensation. In October 1995, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 123, "Accounting for Stock-Based
Compensation", effective for the 1996 fiscal year. Under SFAS No. 123,
compensation expense for all stock-based compensation plans would be recognized
based on the fair value of the options at the date of grant using an option
pricing model. As permitted under SFAS No. 123, the Company may either adopt the
new pronouncement or follow the current accounting methods as prescribed under
Accounting Principles Board ("APB") No. 25. The Company continues to recognize
compensation expense in accordance with APB No. 25. In addition, the Company
will be required to include in its 1996 year end financial statements pro forma
information regarding compensation expense recognizable under SFAS No. 123. See
Note 15 to the Consolidated Financial Statements of the Company included
elsewhere in this Prospectus.
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BUSINESS
General
The Company is a major manufacturer of a broad range of (i) steel and
aluminum containers for human and pet food and (ii) custom designed plastic
containers for health, personal care, food, beverage, pharmaceutical and
household chemical products in North America. Silgan has grown rapidly since its
inception in 1987 primarily as a result of strategic acquisitions, but also
through internally generated growth. In 1995, the Company had net sales of
approximately $1.1 billion and, on a pro forma basis after giving effect to the
acquisition of substantially all of the assets of AN Can, would have had net
sales of approximately $1.4 billion. The Company operates through two operating
companies, Containers and Plastics. Management estimates that Containers is
currently the sixth largest can producer and the largest manufacturer of metal
food containers in North America. In 1995, Containers sold approximately 28% of
all metal food containers used in the United States, and on a pro forma basis
after giving effect to the acquisition of AN Can, would have sold approximately
36% of all metal food containers sold in the United States. Plastics is one of
the leading manufacturers of custom designed HDPE and PET containers sold in
North America for health and personal care products.
Holdings is a Delaware corporation organized in April 1989, that, in
June 1989, through certain mergers acquired all of the outstanding common stock
of Silgan. Holdings' principal asset is all of the outstanding capital stock of
Silgan. Prior to June 30, 1989, Holdings did not engage in any business. Silgan
is a Delaware corporation formed in August 1987 as a holding company to acquire
interests in various packaging manufacturers. See "--Company History" below. The
principal executive offices of Holdings are located at 4 Landmark Square,
Stamford, Connecticut 06901, telephone number (203) 975-7110.
Metal Container Business
In 1995, Containers had net sales of approximately $882.3 million
(representing 80% of the Company's total net sales) and, on a pro forma basis
after giving effect to the acquisition of AN Can, would have had net sales of
approximately $1.2 billion (representing 84% of the Company's total pro forma
net sales). On a pro forma basis, after giving effect to the acquisition of AN
Can, Containers has realized compound annual unit sales growth in excess of 16%
since 1987, despite the relative maturity of the U.S. food can industry. Types
of metal containers manufactured by Containers include those for vegetables,
fruit, meat, tomato based products, coffee, soup, seafood, evaporated milk,
infant formula and pet food. Containers has the Nestle Supply Agreements with
Nestle pursuant to which Containers supplies a majority of Nestle's metal
container requirements, and the DM Supply Agreement with Del Monte pursuant to
which Containers supplies substantially all of Del Monte's metal container
requirements. In addition to Nestle and Del Monte, Containers has multi-year
supply arrangements with other customers. The Company estimates that
approximately 80% of Containers' sales in 1996 will be pursuant to such supply
agreements and arrangements. See "--Sales and Marketing" below. Containers also
manufacturers and sells certain specialty packaging items, including metal caps
and closures, plastic bowls and paper containers primarily used by processors
and packagers in the food industry. In 1995, on a pro forma basis after giving
effect to the acquisition of AN Can, the Company would have had net sales of
specialty items of approximately $83.6 million.
Containers' strategy has been growth through acquisition followed by
the integration and rationalization of the acquired businesses with Containers'
operations, realization of cost synergies as a result of such acquisitions, and
investment in the acquired assets, all aimed at achieving and maintaining a low
cost position. Since the acquisition in 1987 of Nestle Can, Containers has spent
approximately $298
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million for the acquisition of additional can manufacturing facilities and
equipment and has invested approximately $131 million in its acquired
manufacturing facilities. Containers acquired DM Can from Del Monte in December
1993 and AN Can from ANC in August 1995, enabling the Company to diversify its
customer base and geographic presence in North America. See "--Company History"
below. Containers has achieved a low cost position, primarily through low
production costs and capital investments that have generated manufacturing and
production efficiencies, and by exploiting the favorable geographic location of
its plants. To further enhance its low cost position, Containers has realized
cost reduction opportunities through plant rationalizations and cost synergies
resulting from its acquisitions. Since 1991, Containers has closed eight
smaller, higher cost metal container facilities, including five facilities that
were closed in 1995 as a result of the integration of DM Can. The closure of the
five facilities in 1995 resulted in a reduction in indirect costs of
approximately $7.0 million. The Company believes that the acquisition of AN Can
will enable it to realize further cost savings from plant rationalizations, from
production and manufacturing synergies from the combined operations and from the
integration of the selling and administrative operations of AN Can into
Containers. As a result of Containers' ability to integrate its acquired
businesses and realize cost savings and synergies from combining the acquired
businesses with Containers' operations, Containers has been able to successfully
make acquisitions that have allowed it to more than triple its overall share of
the food can segment in terms of unit sales, from a share of approximately 10%
in 1987 to a share of approximately 36% in 1995, on a pro forma basis after
giving effect to the acquisition of AN Can.
Plastic Container Business
In 1995, Plastics had net sales of approximately $219.6 million
(representing 16% of the Company's pro forma net sales). HDPE containers
manufactured by Plastics include personal care containers for shampoos,
conditioners, hand creams, lotions, cosmetics and toiletries, household chemical
containers for scouring cleaners, cleaning agents and lawn and garden chemicals
and pharmaceutical containers for tablets, laxatives and eye cleaning solutions.
Plastics manufactures PET custom containers for mouthwash, liquid soap, skin
care lotions, gastrointestinal and respiratory products, salad dressings,
condiments, instant coffees, premium water and liquor. Many of the containers
manufactured by Plastics are recyclable. See "--Products" below.
Plastics has grown primarily by strategic acquisition. From a sales
base of $89 million in 1987, Plastics' sales have grown at a compound annual
rate of 12%. See "--Company History" below. While many of Plastics' larger
competitors that manufacture extrusion blow-molded plastic containers employ
technology oriented to large bottles and long production runs, Plastics has
focused on mid-sized, extrusion blow-molded plastic containers requiring special
decoration and shorter production runs. Plastics emphasizes value-added design,
fabrication and decoration of custom containers. Plastics is aggressively
pursuing opportunities in custom designed PET and HDPE containers for which the
market has been growing principally due to consumer preferences for plastic
containers. Management believes that PET custom containers are replacing glass
containers for products such as mouthwash, salad dressing, peanut butter and
liquor, and that Plastics is well positioned because of its technologically
advanced equipment to respond to opportunities for future growth in the rigid
plastic container market.
Since 1993, Plastics' earnings before depreciation, interest, taxes and
amortization have increased 56% to $27.5 million in 1995. Plastics has achieved
this increase through a consolidation and rationalization program for its
facilities, significant capital investments to improve its manufacturing and
production efficiencies, increased unit sales volume, and lower selling, general
and administrative expenses. Management of Plastics intends to continue to focus
on expanding its market share and on improving its operating margins by pursuing
further cost reduction opportunities.
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Products
Metal Container Business
The Company is engaged in the manufacture and sale of steel and
aluminum containers that are used primarily by processors and packagers for
human and pet food. Types of containers manufactured include those for
vegetables, fruit, pet food, meat, tomato based products, coffee, soup, seafood,
evaporated milk and infant formula. The Company does not produce cans for use in
the beer or soft drink industries.
Plastic Container Business
The Company is also engaged in the manufacture and sale of plastic
containers primarily used for health, personal care, food, beverage (other than
carbonated soft drinks), pharmaceutical and household chemical products. Plastic
containers are produced by converting thermoplastic materials into containers
ranging in size from 1/2 to 96 ounces. Emphasis is on value-added design,
fabrication and decoration of the containers. The Company designs and
manufactures a wide range of containers for health and personal care products
such as shampoos, conditioners, hand creams, lotions, cosmetics and toiletries,
liquid soap, gastrointestinal and respiratory products, and mouthwash. Because
these products are characterized by short product life and a demand for creative
packaging, the containers manufactured for these products generally have more
sophisticated designs and decorations. Food and beverage containers are designed
and manufactured (generally to unique specifications for a specific customer) to
contain products such as salad dressing, condiments, instant coffee, premium
water and liquor. Household chemical containers are designed and manufactured to
contain polishes, specialty cleaning agents, lawn and garden chemicals and
liquid household products. Pharmaceutical containers are designed and
manufactured (either in a generic or in a custom-made form) to contain tablets,
solutions and similar products for the ethical and over-the-counter markets.
Manufacturing and Production
As is the practice in the industry, most of the Company's can and
plastic container customers provide it with annual estimates of products and
quantities pursuant to which periodic commitments are given. Such estimates
enable the Company to effectively manage production and control working capital
requirements. At December 31, 1995, Containers had approximately 80% of its
projected 1996 sales under multi-year contracts. Plastics has purchase orders or
contracts for containers with the majority of its customers. In general, these
purchase orders and contracts are for containers made from proprietary molds and
are for a duration of 2 to 5 years. Both Containers and Plastics schedule their
production to meet their customers' requirements. Because the production time
for the Company's products is short, the backlog of customer orders in relation
to sales is not significant.
Metal Container Business
The Company uses three basic processes to produce cans. The traditional
three-piece method requires three pieces of flat metal to form a cylindrical
body with a welded side seam, a bottom and a top. The Company uses a welding
process for the side seam of three-piece cans to achieve a superior seal. High
integrity of the side seam is further assured by the use of sophisticated
electronic weld monitors and organic coatings that are thermally cured by
induction and convection processes. The other two methods of producing cans
start by forming a shallow cup that is then formed into the desired height using
either the draw and iron process or the draw and redraw process. Using the draw
and redraw process, the Company manufactures steel and aluminum two-piece cans,
the height of which does not exceed the
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diameter. For cans the height of which is greater than the diameter, the Company
manufactures steel two-piece cans by using a drawing and ironing process.
Quality and stackability of such cans are comparable to that of the shallow
two-piece cans described above. Can bodies and ends are manufactured from thin,
high-strength aluminum alloys and steels by utilizing proprietary tool and die
designs and selected can making equipment. The Company's manufacturing
operations include cutting, coating, lithographing, fabricating, assembling and
packaging finished cans.
Plastic Container Business
The Company utilizes two basic processes to produce plastic bottles. In
the extrusion blow molding process, pellets of plastic resin are heated and
extruded into a tube of plastic. A two-piece metal mold is then closed around
the plastic tube and high pressure air is blown into it causing a bottle to form
in the mold's shape. In the injection blow molding process, pellets of plastic
resin are heated and injected into a mold, forming a plastic preform. The
plastic preform is then blown into a bottle-shaped metal mold, creating a
plastic bottle.
The Company believes that its proprietary equipment for the production
of HDPE containers is particularly well-suited for the use of post-consumer
recycled ("PCR") resins because of the relatively low capital costs required to
convert its equipment to utilize multi-layer container construction.
The Company's decorating methods for its plastic products include (1)
in-mold labeling which applies a paper or plastic film label to the bottle
during the blowing process and (2) post-mold decoration. Post-mold decoration
includes (i) silk screen decoration which enables the applications of images in
multiple colors to the bottle, (ii) pressure sensitive decoration which uses a
plastic film or paper label applied by pressure, (iii) heat transfer decoration
which uses a plastic film or plastic coated paper label applied by heat, and
(iv) hot stamping decoration which transfers images from a die using metallic
foils. The Company has state-of-the-art decorating equipment, including,
management believes, one of the largest sophisticated decorating facilities in
the country, which allows the Company to custom-design new products with short
lead times.
Raw Materials
The Company does not believe that it is materially dependent upon any
single supplier for any of its raw materials and, based upon the existing
arrangements with suppliers, its current and anticipated requirements and market
conditions, the Company believes that it has made adequate provisions for
acquiring raw materials. Although increases in the prices of raw materials have
generally been passed along to the Company's customers, the inability to do so
in the future could have a significant impact on the Company's operating
margins.
Metal Container Business
The Company uses tin plated and chromium plated steel, aluminum, copper
wire, organic coatings, lining compound and inks in the manufacture and
decoration of its metal can products. The Company's material requirements are
supplied through purchase orders with suppliers with whom the Company, through
its predecessors, has long-term relationships. If its suppliers fail to deliver
under their arrangements, the Company would be forced to purchase raw materials
on the open market, and no assurances can be given that it would be able to make
such purchases at comparable prices or terms. The Company believes that it will
be able to purchase sufficient quantities of steel and aluminum can sheet for
the foreseeable future.
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Plastic Container Business
The raw materials used by the Company for the manufacture of plastic
containers are primarily resins in pellet form such as HDPE-PCR and virgin HDPE
and PET and, to a lesser extent, low density polyethylene, extrudable
polyethylene terephthalate, polyethylene terephthalate glycol, polypropylene,
polyvinyl chloride and medium density polyethylene. The Company's resin
requirements are acquired through multi-year arrangements for specific
quantities of resins with several major suppliers of resins. The price the
Company pays for resin raw materials is not fixed and is subject to market
pricing. The Company believes that it will be able to purchase sufficient
quantities of resins for the foreseeable future.
Sales and Marketing
The Company markets its products in most areas of North America
primarily by a direct sales force and through a large network of distributors.
Because of the high cost of transporting empty containers, the Company generally
sells to customers within a 300 mile radius of its manufacturing plants.
See also "--Competition" below.
In 1995, 1994 and 1993, the Company's metal container business
accounted for approximately 80%, 76% and 71%, respectively, of the Company's
total sales, and the Company's plastic container business accounted for
approximately 20%, 24% and 29%, respectively, of the Company's total sales. On a
pro forma basis after giving effect to the acquisition of AN Can, metal and
plastic containers in 1995 would have accounted for approximately 84% and 16% of
the Company's total sales, respectively. In 1995, 1994 and 1993, approximately
21%, 26% and 34%, respectively, of the Company's sales were to Nestle and in
1995 and 1994 approximately 15% and 21%, respectively, of the Company's sales
were to Del Monte. On a pro forma basis after giving effect to the acquisition
of AN Can, in 1995 approximately 17% and 11% of the Company's sales would have
been to Nestle and Del Monte, respectively. No other customer accounted for more
than 10% of the Company's total sales during such years.
Metal Container Business
Management believes that the Company is currently the sixth largest can
producer and the largest food can producer in North America. In 1995, Containers
sold approximately 28% of all metal food containers in the United States.
Containers has entered into multi-year supply arrangements with many of its
customers, including Nestle and Del Monte. The Company estimates that
approximately 80% of its metal container sales in 1996 will be pursuant to such
arrangements.
In 1987, the Company, through Containers, and Nestle entered into the
Nestle Supply Agreements pursuant to which Containers has agreed to supply
Nestle with, and Nestle has agreed to purchase from Containers, substantially
all of the can requirements of the former Carnation operations of Nestle for a
period of ten years, subject to certain conditions. In 1995, sales of metal cans
by the Company to Nestle were $236.0 million.
The Nestle Supply Agreements provide for certain prices and specify
that such prices will be increased or decreased based upon cost change formulas
set forth therein. The Nestle Supply Agreements contain provisions that require
Containers to maintain certain levels of product quality, service and delivery
in order to retain the Nestle business. In the event of a breach of a particular
Nestle Supply Agreement, Nestle may terminate such Nestle Supply Agreement but
the other Nestle Supply Agreements would remain in effect.
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In 1993, the term of certain of the Nestle Supply Agreements
(representing approximately 70% of the Company's 1995 unit sales to Nestle) was
extended through 2001. Under these Nestle Supply Agreements, Nestle has the
right to receive competitive bids under narrowly limited circumstances, and
Containers has the right to match any such bids. In the event that Containers
chooses not to match a competitive bid, Nestle may purchase cans from the
competitive bidder at the competitive bid price for the term of the bid. The
Company cannot predict the effect, if any, of such bids upon its financial
condition or results of operations. The Company is currently engaged in
discussions with Nestle regarding the extension beyond 2001 of the term for the
can requirements under these Nestle Supply Agreements in return for certain
price concessions by the Company. On a pro forma basis after giving effect to
the acquisition of AN Can, such can requirements would have represented
approximately 11% of the Company's 1995 sales.
The term of the other Nestle Supply Agreements expires in August 1997.
The Company has also commenced discussions with Nestle with respect to the
continuation beyond 1997 of the other Nestle Supply Agreements, which would have
represented approximately 6% of the Company's sales in 1995 on a pro forma basis
after giving effect to the acquisition of AN Can. Although the Company intends
to make every effort to extend these Nestle Supply Agreements on reasonable
terms and conditions, there can be no assurance that these Nestle Supply
Agreements will be extended or that they will be extended on terms favorable to
the Company.
On December 21, 1993, Containers and Del Monte entered into the DM
Supply Agreement. Under the DM Supply Agreement, Del Monte has agreed to
purchase from Containers, and Containers has agreed to sell to Del Monte, 100%
of Del Monte's annual requirements for metal containers to be used for the
packaging of food and beverages in the United States and not less than 65% of
Del Monte's annual requirements of metal containers for the packaging of food
and beverages at Del Monte's Irapuato, Mexico facility, subject to certain
limited exceptions. In 1995, sales of metal containers by the Company to Del
Monte were $159.4 million.
The DM Supply Agreement provides for certain prices for all metal
containers supplied by Containers to Del Monte thereunder and specifies that
such prices will be increased or decreased based upon specified cost change
formulas.
Under the DM Supply Agreement, beginning in December 1998, Del Monte
may, under certain circumstances, receive proposals with terms more favorable
than those under the DM Supply Agreement from independent commercial can
manufacturers for the supply of containers of a type and quality similar to the
metal containers that Containers furnishes to Del Monte, which proposals shall
be for the remainder of the term of the DM Supply Agreement and for 100% of the
annual volume of containers at one or more of Del Monte's canneries. Containers
has the right to retain the business subject to the terms and conditions of such
competitive proposal.
The sale of metal containers to vegetable and fruit processors is
seasonal and monthly revenues increase during the months of June through
October. As is common in the packaging industry, the Company must build
inventory and then carry accounts receivable for some seasonal customers beyond
the end of the season. The acquisition of AN Can increased the Company's
seasonal metal container business. Consistent with industry practice, such
customers may return unused containers. Historically, such returns have been
minimal.
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Plastic Container Business
The Company is one of the leading manufacturers of custom designed HDPE
and PET containers sold in North America. The Company markets its plastic
containers in most areas of North America through a direct sales force and
through a large network of distributors. More than 70% of the Company's plastic
containers are sold for health and personal care products, such as hair care,
oral care, pharmaceutical and other health care applications. The Company's
customers in these product segments include the Helene Curtis division of
Unilever, Procter & Gamble Co., Avon Products, Inc., Andrew Jergens Inc.,
Chesebrough-Ponds USA Co., Dial Corp., Warner-Lambert Company and Pfizer Inc.
The Company also manufactures plastic containers for food and beverage products,
such as salad dressings, condiments, instant coffee and premium water and
liquor. Customers in these product segments include Procter & Gamble Co., Kraft
Foods Inc. and General Mills, Inc.
As part of its marketing strategy, the Company has arrangements to sell
some of its plastic products to distributors, which in turn sell such products
primarily to small-size regional customers. Plastic containers sold to
distributors are manufactured by using generic molds with decoration, color and
neck finishes added to meet the distributors' individual requirements. The
distributors' warehouses and their sales personnel enable the Company to market
and inventory a wide range of such products to a variety of customers.
Plastics has written purchase orders or contracts for containers with
the majority of its customers. In general, these purchase orders and contracts
are for containers made from proprietary molds and are for a duration of 2 to 5
years.
Competition
The packaging industry is highly competitive. The Company competes in
this industry with other packaging manufacturers as well as fillers, food
processors and packers who manufacture containers for their own use and for sale
to others. The Company attempts to compete effectively through the quality of
its products, pricing and its ability to meet customer requirements for
delivery, performance and technical assistance. The Company also pursues market
niches such as the manufacture of easy-open ends and special feature cans, which
may differentiate the Company's products from its competitors' products.
Because of the high cost of transporting empty containers, the Company
generally sells to customers within a 300 mile radius of its manufacturing
plants. Strategically located existing plants give the Company an advantage over
competitors from other areas, and the Company would be disadvantaged by the loss
or relocation of a major customer. As of June 30, 1996, the Company operated 46
manufacturing facilities, geographically dispersed throughout the United States
and Canada, that serve the distribution needs of its customers.
Metal Container Business
Management believes that the metal food containers segment is mature.
Some self-manufacturers have sold or closed can manufacturing operations and
entered into long-term supply agreements with the new owners or with commercial
can manufacturers. Of the commercial metal can manufacturers, Crown Cork and
Seal Company, Inc. and Ball Corporation are the Company's most significant
national competitors. As an alternative to purchasing cans from commercial can
manufacturers, customers have the ability to invest in equipment to
self-manufacture their cans.
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<PAGE>
Although metal containers face continued competition from plastic,
paper and composite containers, management believes that metal containers are
superior to plastic and paper containers in applications where the contents are
processed at high temperatures, where the contents are packaged in large or
institutional quantities (14 to 64 oz.) or where long-term storage of the
product is desirable. Such applications include canned vegetables, fruits, meats
and pet foods. These sectors are the principal areas for which the Company
manufactures its products.
Plastic Container Business
Plastics competes with a number of large national producers of health,
personal care, food, beverage, pharmaceutical and household chemical plastic
container products, including Owens-Brockway Plastics Products, a division of
Owens-Illinois, Inc., Constar Plastics Inc., a subsidiary of Crown Cork and Seal
Company, Inc., Johnson Controls Inc., Continental Plastics Inc. and Plastipak
Packaging Inc. In order to compete effectively in the constantly changing market
for plastic bottles, the Company must remain current with, and to some extent
anticipate innovations in, resin composition and applications and changes in the
manufacturing of plastic bottles.
Employees
As of December 31, 1995, the Company employed approximately 940
salaried and 4,170 hourly employees on a full-time basis, including
approximately 1,400 employees who joined the Company on August 1, 1995 as a
result of the acquisition of AN Can. Approximately 63% of the Company's hourly
plant employees are represented by a variety of unions.
The Company's labor contracts expire at various times between 1996 and
2008. Contracts covering approximately 7% of the Company's hourly employees
presently expire during 1996. The Company expects no significant changes in its
relations with these unions. Management believes that its relationship with its
employees is good.
Regulation
The Company is subject to federal, state and local environmental laws
and regulations. In general, these laws and regulations limit the discharge of
pollutants into the air and water and establish standards for the treatment,
storage, and disposal of solid and hazardous waste. The Company believes that
all of its facilities are either in compliance in all material respects with all
presently applicable environmental laws and regulations or are operating in
accordance with appropriate variances, delayed compliance orders or similar
arrangements.
In addition to costs associated with regulatory compliance, the Company
may be held liable for alleged environmental damage associated with the past
disposal of hazardous substances. Generators of hazardous substances disposed of
at sites at which environmental problems are alleged to exist, as well as the
owners of those sites and certain other classes of persons, are subject to
claims under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA") regardless of fault or the legality of the
original disposal. Liability under CERCLA and under many similar state statutes
is joint and several, and, therefore, any responsible party may be held liable
for the entire cleanup cost at a particular site. Other state statutes may
impose proportionate rather than joint and several liability. The federal
Environmental Protection Agency or a state agency may also issue orders
requiring responsible parties to undertake removal or remedial actions at
certain sites. Pursuant to the agreement relating to the acquisition in 1987 of
Nestle Can, the Company has assumed liability for the past waste disposal
practices of Nestle Can. In 1989, the Company received notice that it is one of
many
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<PAGE>
potentially responsible parties (or similarly designated parties) for cleanup of
hazardous waste at a site to which it (or its predecessor Nestle Can) is alleged
to have shipped such waste and at which the Company's share of cleanup costs
could exceed $100,000. See "--Legal Proceedings" below.
Pursuant to the agreement relating to the acquisition in 1987 from
Monsanto Company ("Monsanto") of substantially all of the business and related
fixed assets and inventory of Monsanto's plastic containers business ("Monsanto
Plastic Containers"), Monsanto has agreed to indemnify the Company for
substantially all of the costs attributable to the past waste disposal practices
of Monsanto Plastic Containers. In connection with the acquisition of DM Can,
Del Monte has agreed to indemnify the Company for a period of three years for
substantially all of the costs attributable to any noncompliance by DM Can with
any environmental law prior to the closing, including all of the costs
attributable to the past waste disposal practices of DM Can. In connection with
the acquisition of AN Can, subject to certain limitations, ANC has agreed to
indemnify the Company for a period of three years for the costs attributable to
any noncompliance by AN Can with any environmental law prior to the closing,
including costs attributable to the past waste disposal practices of AN Can.
The Company is subject to the Occupational Safety and Health Act and
other laws regulating noise exposure levels and other safety and health concerns
in the production areas of its plants.
Management does not believe that any of the matters described above
individually or in the aggregate will have a material effect on the Company's
capital expenditures, earnings, financial position or competitive position.
Research and Technology
Metal Container Business
The Company's research, product development and product engineering
efforts relating to its metal containers are currently conducted at its research
centers at Oconomowoc, Wisconsin; Neenah, Wisconsin and at other plant
locations. The Company is building a state-of-the-art research facility in
Oconomowoc, Wisconsin in order to consolidate its two main research centers into
one facility.
Plastic Container Business
The Company's research, product development and product engineering
efforts with respect to its plastic containers are currently performed by its
manufacturing and engineering personnel located at its Norcross, Georgia
facility. In addition to its own research and development staff, the Company
participates in arrangements with three non-U.S. plastic container manufacturers
that call for an exchange of technology among these manufacturers. Pursuant to
these arrangements, the Company licenses its blow molding technology to such
manufacturers.
Company History
Silgan was organized in August 1987 as a holding company to acquire
interests in various packaging manufacturers. On August 31, 1987, Silgan,
through Containers, purchased from Nestle the business and related assets and
working capital of Nestle Can for approximately $151 million in cash and the
assumption of substantially all of the liabilities of Nestle Can. Also on August
31, 1987, Silgan, through Plastics, purchased from Monsanto substantially all
the business and related fixed assets and inventory of Monsanto Plastic
Containers for approximately $43 million in cash and the assumption of certain
liabilities of Monsanto Plastic Containers. To finance these acquisitions and to
pay related fees
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<PAGE>
and expenses, Silgan issued common stock, preferred stock and senior
subordinated notes and borrowed amounts under its credit agreement.
During 1988, Containers acquired from The Dial Corporation its metal
container manufacturing division known as the Fort Madison Can Company, and from
Nestle its carton manufacturing division known as the Seaboard Carton Division.
During 1989, Plastics acquired Aim Packaging, Inc. ("Aim") and Fortune
Plastics, Inc. ("Fortune") in the United States, and Express Plastic Containers
Limited ("Express") in Canada, to improve its competitive position in the HDPE
container segment.
Holdings was organized in April 1989 as a holding company to acquire
all of the outstanding common stock of Silgan. On June 30, 1989, Silgan
Acquisition, Inc. ("Acquisition"), a wholly owned subsidiary of Holdings, merged
with and into Silgan, and Silgan became a wholly owned subsidiary of Holdings
(the "1989 Mergers").
In 1989, the Company acquired the business and related assets of Amoco
Container Company. In November 1991, Plastics sold its nonstrategic PET
carbonated beverage bottle business, exiting that commodity business.
In 1992, Holdings and Silgan completed a refinancing pursuant to a plan
to improve their financial flexibility. Such refinancing included the public
offering in June 1992 by Silgan of $135 million principal amount of 11-3/4%
Notes and the public offering in June 1992 by Holdings of the Discount
Debentures for an aggregate amount of proceeds of $165.4 million. Additionally,
in June 1992 Aim, Fortune and certain other subsidiaries of Plastics were merged
into Plastics.
On December 21, 1993, Containers acquired from Del Monte substantially
all of the fixed assets and certain working capital of DM Can for a purchase
price of approximately $73 million and the assumption of certain limited
liabilities. To finance the acquisition, (i) Silgan, Containers and Plastics
(collectively, the "Borrowers") entered into the Silgan 1993 Credit Agreement
with the lenders from time to time party thereto, Bank of America National
Trust, as Co-Agent, and Bankers Trust, as Agent, and (ii) Holdings issued and
sold to Mellon, as trustee for First Plaza, 250,000 shares of Holdings Class B
Stock, for a purchase price of $60.00 per share and an aggregate purchase price
of $15 million. Additionally, Silgan, Containers and Plastics borrowed term and
working capital loans under the Silgan 1993 Credit Agreement to refinance and
repay in full all amounts owing under their previous credit agreement.
On August 1, 1995, Containers acquired from ANC substantially all of
the assets of AN Can for a purchase price of approximately $362.0 million and
the assumption of specific limited liabilities (including the purchase from ANC
of its St. Louis facility in May 1996 for $13.2 million). To finance the
acquisition, the Borrowers entered into the Silgan Credit Agreement with the
Banks, Bankers Trust, as Administrative Agent and Co-Arranger, and Bank of
America, as Documentation Agent and Co-Arranger. The Company used funds borrowed
under the Silgan Credit Agreement to finance in full the purchase price for its
acquisition of AN Can and to refinance and repay in full all amounts owing under
the Silgan 1993 Credit Agreement and the Secured Notes. Additionally, in 1995
Holdings used borrowings under the Silgan Credit Agreement to purchase $61.7
million principal amount of the Discount Debentures, which Discount Debentures
have been canceled, and in 1996 Holdings used borrowings under the Silgan Credit
Agreement, as amended in May 1996, to redeem an additional $142.4 million
principal amount of the Discount Debentures.
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<PAGE>
On July 22, 1996, the Company completed the Private Offering. With net
proceeds of $47.8 million from the Private Offering, the Company purchased the
Holdings Class B Stock held by Mellon for $35.8 million and, on August 26, 1996,
redeemed $12.0 million principal amount of Discount Debentures.
On October 9, 1996, Containers acquired all of the assets of Finger
Lakes Packaging, Inc. ("Finger Lakes"), the metal food container manufacturing
subsidiary of Curtice Burns Foods, Inc. ("Curtice Burns"). As part of the
transaction, Containers entered into a ten year supply agreement with Curtice
Burns to supply all of the metal food container requirements of Curtice Burns'
Comstock Michigan Fruit and Brooks Foods divisions. For its fiscal year ended
June 29, 1996, Finger Lakes had net sales of $48.8 million.
Properties
Holdings' and Silgan's principal executive offices are located at 4
Landmark Square, Stamford, Connecticut 06901. The administrative headquarters
and principal places of business for Containers and Plastics are located at
21800 Oxnard Street, Woodland Hills, California 91367 and 14515 N. Outer Forty,
Chesterfield, Missouri 63017, respectively. All of these offices are leased by
the Company.
The Company owns and leases properties for use in the ordinary course
of business. Such properties consist primarily of 33 metal container
manufacturing facilities, 11 plastic container manufacturing facilities and 4
specialty packaging manufacturing facilities. Twenty of these facilities are
owned and 28 are leased by the Company. The leases expire at various times
through 2020. Some of these leases provide renewal options.
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<PAGE>
Below is a list of the Company's operating facilities, including
attached warehouses, as of October 15, 1996 for its metal container business:
Approximate
Building Area
Location (square feet)
-------- -------------
City of Industry, CA...................... 50,000 (leased)
Kingsburgh, CA............................ 37,783 (leased)
Modesto, CA............................... 35,585 (leased)
Modesto, CA............................... 128,000 (leased)
Modesto, CA............................... 150,000 (leased)
Riverbank, CA............................. 167,000
San Leandro, CA........................... 200,000 (leased)
Stockton, CA.............................. 243,500
Norwalk, CT............................... 14,359 (leased)
Broadview, IL............................. 85,000
Hoopeston, IL............................. 323,000
Rochelle, IL.............................. 175,000
Waukegan, IL.............................. 40,000 (leased)
Woodstock, IL............................. 160,000 (leased)
Evansville, IN............................ 188,000
Hammond, IN............................... 160,000 (leased)
Laporte, IN............................... 144,000 (leased)
Fort Madison, IA.......................... 66,000
Ft. Dodge, IA............................. 49,500 (leased)
Benton Harbor, MI......................... 20,246 (leased)
Savage, MN................................ 160,000
St. Paul, MN.............................. 470,000
West Point, MS............................ 25,000 (leased)
Mt. Vernon, MO............................ 100,000
Northtown, MO............................. 112,000 (leased)
St. Joseph, MO............................ 173,725
St. Louis, MO............................. 174,000 (leased)
Edison, NJ................................ 280,000
Lyons, NY................................. 145,000
Crystal City, TX.......................... 26,045 (leased)
Toppenish, WA ............................ 98,000
Vancouver, WA............................. 127,000 (leased)
Menomonee Falls, WI....................... 116,000
Menomonie, WI............................. 60,000 (leased)
Oconomowoc, WI............................ 105,200
Plover, WI................................ 58,000 (leased)
Waupun, WI................................ 212,000
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<PAGE>
Below is a list of the Company's operating facilities, including
attached warehouses, as of October 15, 1996 for its plastic container business:
Approximate
Building Area
Location (square feet)
-------- -------------
Anaheim, CA............................... 127,000 (leased)
Deep River, CT............................ 140,000
Monroe, GA................................ 117,000
Norcross, GA.............................. 59,000 (leased)
Ligonier, IN.............................. 477,000 (284,000) (leased)
Seymour, IN............................... 406,000
Franklin, KY.............................. 122,000 (leased)
Port Clinton, OH.......................... 336,000 (leased)
Langhorne, PA............................. 156,000 (leased)
Mississauga, Ontario...................... 80,000 (leased)
Mississauga, Ontario...................... 60,000 (leased)
The Company owns and leases certain other warehouse facilities that are
detached from its manufacturing facilities. All of the Company's facilities are
subject to liens in favor of the Banks.
The Company believes that its plants, warehouses and other facilities
are in good operating condition, adequately maintained, and suitable to meet its
present needs and future plans. The Company believes that it has sufficient
capacity to satisfy the demand for its products in the foreseeable future. To
the extent that the Company needs additional capacity, management believes that
the Company can convert certain facilities to continuous operation or make the
appropriate capital expenditures to increase capacity.
Legal Proceedings
On October 17, 1989, the State of California, on behalf of the
California Department of Health Services ("DHS"), filed a suit in the United
States District Court for the Northern District of California against the owners
and operators of a recycling facility operated by Summer del Caribe, Inc., Dale
Summer and Lynn Rodich. The complaint also named 16 can manufacturing companies,
including Containers, that had sent amounts of solder dross to the facility for
recycling as "Potentially Responsible Parties" ("PRPs") under the Federal
Superfund statute. Containers is one of the 15 defendant can companies which
agreed to participate as a group in response to the DHS suit (the "PRP Group").
In the PRP Group agreement, Containers agreed with the other can company
defendants that its apportioned share of cleanup costs would be 6.72% of the
total cost of cleanup. The PRP Group has undertaken a feasibility study for the
purpose of developing, designing and implementing a final remedy for the site.
The feasibility study was approved by the California Department of Toxic
Substances Control ("DTSC") in June 1994. On March 14, 1995, the court approved
a settlement agreement and consent decree which ordered the PRP Group to submit
a draft Remedial Action Plan to the DTSC for approval, which the PRP Group
submitted to the DTSC on September 5, 1995. On September 13, 1995, the DTSC
notified the PRP Group by letter that the Remedial Action Plan had been adopted
for the Summer del Caribe site. According to the Remedial Action Plan, the
overall cost of site cleanup is estimated to be in a range of $2,000,000 to
$3,000,000. Since cleanup is ongoing, a more precise estimate is unavailable at
this time. However, based on the estimate, the Company believes that Containers'
apportioned share of liability will range from approximately $135,000 to
$200,000.
Other than the action mentioned above, there are no other material
pending legal proceedings to which the Company is a party or to which any of its
properties are subject.
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<PAGE>
MANAGEMENT
Directors and Executive Officers of Holdings and Silgan
The current directors and executive officers of Holdings and Silgan, and their
respective ages, positions and principal occupations, five-year employment
history and other directorships held are furnished below:
Age at
June 30, Five-Year Employment
Name and Position 1996 History and Other Directorships Held
----------------- ------ ------------------------------------
R. Philip Silver . . . . . . . 53 Prior to forming S&H in 1987,
Chairman of the President of Continental Can
Board and Co-Chief Company from June 1983 to
Executive Officer of August 1986; consultant to
Holdings and Silgan packaging industry from August
since March 1994; 1986 to August 1987; Vice
formerly President Chairman of the Board and
of Holdings and Director of Sweetheart Holdings
Silgan; Director of Inc. and Sweetheart Cup Company,
Holdings since April Inc. from September 1989 to
1989 and of Silgan January 1991; Chairman of the
since August 1987; Board and Director of Sweetheart
Chairman of the Holdings Inc. and Sweetheart Cup
Board of Plastics Company, Inc. from January 1991
since March 1994; through August 1993; Director,
Vice President of Johnstown America Corporation.
Containers since
May 1995; Director
of Containers and
Plastics since
August 1987.
D. Greg Horrigan . . . . . . . 53 Prior to forming S&H in 1987,
President and Co- Executive Vice President and
Chief Executive Operating Officer of Continental
Officer of Holdings Can Company from 1984 to 1987;
and Silgan since Chairman of the Board and
March 1994; Director of Sweetheart Holdings
formerly Chairman Inc. and Sweetheart Cup Company,
of the Board of Inc. from September 1989 to
Holdings and January 1991; Vice Chairman of
Silgan; Director of the Board and Director of
Holdings since April Sweetheart Holdings Inc. and
1989 and of Silgan Sweetheart Cup Company, Inc.
since August 1987; from January 1991 through August
Chairman of the 1993.
Board of Containers
since August 1987;
Director of
Containers and
Plastics since
August 1987.
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<PAGE>
Age at
June 30, Five-Year Employment
Name and Position 1996 History and Other Directorships Held
----------------- ------ ------------------------------------
Robert H. Niehaus. . . . . . . 40 Managing Director of Morgan
Director of Stanley since 1990; joined Morgan
Holdings since April Stanley in 1982. Vice Chairman
1989; Director of and Director of MSLEF II, Inc.
Silgan since August since January 1990; Vice Chairman
1987; Director of and Director of the managing
Containers and general partner of the general
Plastics since partner of Morgan Stanley Capital
August 1987. Partners III, L.P. ("MSCP III")
since January 1994. Director of
American Italian Pasta Company,
Fort Howard Corporation,
Randall's Food Markets, Inc. and
Waterford Crystal Ltd., and
Chairman of Waterford
Wedgewood UK plc.
Leigh J. Abramson. . . . . . . 28 Vice President of MSLEF II, Inc.
Director of and of the general partner of the
Holdings since general partner of MSCP III since
September 1996; 1995; Associate of Morgan Stanley
Director of Silgan, since 1994. Employed by Morgan
Containers and Stanley since 1990, first in the
Plastics since Corporate Finance Department
September 1996. and, since 1992, in the Merchant
Banking Division.
Harley Rankin, Jr. . . . . . . 56 Prior to joining the Company,
Executive Vice Senior Vice President and Chief
President and Chief Financial Officer of Armtek
Financial Officer of Corporation; prior to Armtek
Holdings since April Corporation, Vice President and
1989; Treasurer of Chief Financial Officer of
Holdings since Continental Can Company from
January 1992; November 1984 to August 1986.
Executive Vice Vice President, Chief Financial
President and Chief Officer and Treasurer of
Financial Officer of Sweetheart Holdings Inc. and Vice
Silgan since January President of Sweetheart Cup
1989; Treasurer of Company, Inc. from September 1985
Silgan since January to August 1993.
1992; Vice
President of
Containers and
Plastics since
January 1989;
Treasurer of Plastics
from January 1994
to December 1994.
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<PAGE>
Age at
June 30, Five-Year Employment
Name and Position 1996 History and Other Directorships Held
----------------- ------ ------------------------------------
Harold J. Rodriguez, Jr. . . . 41 Employed by Ernst & Young from
Vice President of 1978 to 1987, last serving as
Holdings and Silgan Senior Manager specializing in
since March 1994; taxation. Controller, Assistant
Vice President of Secretary and Assistant Treasurer
Containers and of Sweetheart Holdings Inc. and
Plastics since March Assistant Secretary and Assistant
1994; Controller Treasurer of Sweetheart Cup
and Assistant Company, Inc. from September
Treasurer of 1989 to August 1993.
Holdings and Silgan
since March 1990;
Assistant Controller
and Assistant
Treasurer of
Holdings from April
1989 to March
1990; Assistant
Controller and
Assistant Treasurer
of Silgan from
October 1987 to
March 1990.
Glenn A. Paulson . . . . . . . 52 Employed by ANC from
Vice President of January 1990 to July 1995, last
Holdings and Silgan serving as Senior Vice President
since January 1996; and General Manager, Food
employed by Metal and Specialty, North
Containers to America; prior to ANC,
manage the ANC President of the beverage
transition from packaging operations of
August 1995 to Continental Can Company.
December 1995.
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<PAGE>
Management of Metal Container Business
In addition to the persons listed under "--Directors and Executive Officers of
Holdings and Silgan" above, the following are the principal executive officers
of Containers:
Age at
June 30, Five-Year Employment
Name and Position 1996 History and Other Directorships
----------------- ------ -------------------------------
Held
----
James D. Beam. . . . . . . . . . . 53 Vice President - Marketing &
President and a Sales of Containers from
non-voting Director of September 1987 to July 1990;
Containers since July Vice President and General
1990. Manager of Continental Can
Company, Western Food Can
Division, from March 1986 to
September 1987.
Gerald T. Wojdon . . . . . . . . . 60 General Manager of
Vice President - Manufacturing of the Can
Operations and Division of The Carnation
Assistant Secretary of Company from August 1982 to
Containers since August 1987.
September 1987.
Gary M. Hughes . . . . . . . . . . 54 Vice President, Sales and
Vice President - Sales Marketing of the Beverage
& Marketing of Division of Continental Can
Containers since July Company from February 1988 to
1990. July 1990; prior to February
1988, was employed by
Continental Can in various
regional sales positions.
Dennis Nerstad . . . . . . . . . . 58 Vice President of Containers
Vice President - from December 1993 to June
Production Services of 1994. Vice President -
Containers since July Distribution and Container
1994. Manufacturing of Del Monte
from August 1989 to December
1993; Director of Container
Manufacturing of Del Monte
from November 1983 to July
1989; prior to 1983, employed
by Del Monte in various
regional and plant positions.
Joseph A. Heaney . . . . . . . . . 43 Controller, Food Metal and
Vice President - Specialty Division of ANC from
Finance of Containers September 1990 to October
since October 1995. 1995. From August 1977 to
August 1990, employed by
ANC and American Can
Company in various divisional,
regional and plant
finance/accounting positions.
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<PAGE>
Management of Plastic Container Business
In addition to the persons listed under "--Directors and Executive Officers of
Holdings and Silgan" above, the following are the principal executive officers
of Plastics:
Age at
June 30, Five-Year Employment
Name and Position 1996 History and Positions
----------------- -------- ---------------------
Russell F. Gervais . . . . . . . . . 52 President and Chief
President and non-voting Executive Officer of Aim
Director of Plastics since Packaging, Inc. from
December 1992; Vice March 1984 to September
President - Sales & 1989.
Marketing of Plastics
from September 1989
until December 1992.
Howard H. Cole . . . . . . . . . . . 50 Manager of Personnel of
Vice President and Monsanto Engineered
Assistant Secretary of Products Division of the
Plastics since September Monsanto Company from
1987. April 1986 to September
1987.
Charles Minarik. . . . . . . . . . . 58 President of Wheaton
Vice President - Industries Plastics Group
Operations and from February 1991 to
Commercial Development August 1992; Vice
of Plastics since May President - Marketing of
1993. Constar International,
Inc. from March 1983 to
February 1991.
Alan H. Koblin . . . . . . . . . . 44 Vice President of
Vice President - Sales Churchill Industries from
& Marketing of 1990 to 1992.
Plastics since 1994,
Director of Sales &
Marketing of Plastics
from 1992 to 1994.
Colleen J. Jones . . . . . . . . . 36 Audit Manager, Arthur
Vice President - Young & Company from
Finance and Chief July 1982 to July 1989.
Financial Officer of
Plastics since
December 1994,
Assistant Secretary of
Plastics since
November 1993,
Corporate Controller of
Plastics from October
1993 to December
1994, Manager -
Finance of Plastics
from July 1989 to
October 1993.
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<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners of Holdings' Capital Stock
The following table sets forth, as of September 30, 1996, certain
information with respect to the beneficial ownership by certain persons and
entities of outstanding shares of common stock of Holdings:
<TABLE>
<CAPTION>
Number of Shares of Each
Class of Holdings Percentage Ownership of
Common Stock Owned Holdings Common Stock
------------------ ------------------------------------------------
Class A Class B Class C Class A Class B Class C Consolidated <F1>
------- ------- ------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Philip Silver <F2>................. 208,750 -- -- 50% -- -- 25%
D. Greg Horrigan <F2>................. 208,750 -- -- 50% -- -- 25%
Robert H. Niehaus<F3>................. -- -- -- -- -- -- --
Leigh J. Abramson<F3>................. -- -- -- -- -- -- --
Harley Rankin, Jr. <F4> .............. -- -- 12,400<F5> -- -- 18.08% --
James D. Beam <F6>.................... -- -- -- -- -- -- --
Russell F. Gervais <F7>............... -- -- -- -- -- -- --
The Morgan Stanley Leveraged
Equity Fund II, L.P. <F8>......... -- 417,500 -- -- 100% -- 50%
All officers and directors as a
group............................. 417,500 -- 18,600<F5> 100% -- 27.11%<F9> 50%
- -------------------
<FN>
<F1> This column reflects the percentage ownership of voting common stock
that would exist if Holdings Class A Common Stock, par value $.01 per
share (the "Holdings Class A Stock"), and Holdings Class B Stock were
treated as a single class. Holdings Class C Common Stock, par value
$.01 per share (the "Holdings Class C Stock"), generally does not have
voting rights and is not included in the percentage ownership reflected
in this column.
<F2> Director of Holdings and Silgan. Messrs. Silver and Horrigan are
parties to a voting agreement pursuant to which they have agreed to use
their best efforts to vote their shares as a block. The address for
such person is 4 Landmark Square, Stamford, CT 06901.
<F3> Director of Holdings and Silgan. The address for such person is c/o
Morgan Stanley & Co. Incorporated, 1221 Avenue of the Americas, New
York, NY 10020.
<F4> The address for such person is 4 Landmark Square, Stamford, CT 06901.
<F5> Reflects shares that may be acquired through the exercise of vested
stock options granted pursuant to the Holdings Plan.
<F6> Options to purchase shares of common stock of Containers and tandem
SARs have been granted to such person pursuant to the Containers Plan.
Pursuant to the Containers Plan, such options may be converted into
stock options of Holdings (and the Containers' common stock issuable
upon exercise of such options may be converted into common stock of
Holdings) in the event of a public offering of any of Holdings' common
stock or a change of control of Holdings. The address for such person
is 21800 Oxnard Street, Woodland Hills, CA 91367.
<F7> Options to purchase shares of common stock of Plastics and tandem SARs
have been granted to such person pursuant to the Plastics Plan.
Pursuant to the Plastics Plan, such options may be converted into stock
options of Holdings in the event of a public offering of any of
Holdings' common stock or a change of control of Holdings. The address
for such person is 14515 N. Outer Forty, Chesterfield, MO 63017.
<F8> The address for The Morgan Stanley Leveraged Equity Fund II, L.P., is
1221 Avenue of the Americas, New York, NY 10020.
<F9> Bankers Trust New York Corporation ("BTNY") beneficially owns 50,000
shares of Holdings Class C Stock.
</FN>
</TABLE>
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CERTAIN TRANSACTIONS
Management Agreements
Holdings, Silgan, Containers and Plastics each entered into an amended
and restated management services agreement dated as of December 21, 1993
(collectively, the "Management Agreements") with S&H to replace in its entirety
its existing management services agreement, as amended, with S&H. Pursuant to
the Management Agreements, S&H provides Holdings, Silgan, Containers and
Plastics and their respective subsidiaries with general management and
administrative services (the "Services"). The Management Agreements provide for
payments to S&H (i) on a monthly basis, of $5,000 plus an amount equal to 2.475%
of consolidated earnings before depreciation, interest and taxes of Holdings and
its subsidiaries ("Holdings EBDIT"), for such calendar month until Holdings
EBDIT for the calendar year shall have reached an amount set forth in the
Management Agreements for such calendar year (the "Scheduled Amount") and 1.65%
of Holdings EBDIT for such calendar month to the extent that Holdings EBDIT for
the calendar year shall have exceeded the Scheduled Amount but shall not have
been greater than an amount (the "Maximum Amount") set forth in the Management
Agreements and (ii) on a quarterly basis, of an amount equal to 2.475% of
Holdings EBDIT for such calendar quarter until Holdings EBDIT for the calendar
year shall have reached the Scheduled Amount and 1.65% of Holdings EBDIT for
such calendar quarter to the extent that Holdings EBDIT for the calendar year
shall have exceeded the Scheduled Amount but shall not have been greater than
the Maximum Amount (the "Quarterly Management Fee"). The Scheduled Amount was
$77.5 million for the calendar year 1995 and increases by $6.0 million for each
year thereafter. The Maximum Amount is $95.758 million for the calendar year
1995, $98.101 million for the calendar year 1996, $100.504 million for the
calendar year 1997, $102.964 million for the calendar year 1998 and $105.488
million for the calendar year 1999. The Management Agreements provide that upon
receipt by Silgan of a notice from Bankers Trust that certain events of default
under the Silgan Credit Agreement have occurred, the Quarterly Management Fee
shall continue to accrue, but shall not be paid to S&H until the fulfillment of
certain conditions, as set forth in the Management Agreements.
The Management Agreements continue in effect until the earliest of: (i)
the completion of a public offering of Holdings' common stock; (ii) June 30,
1999; (iii) at the option of each of the respective companies, the failure or
refusal of S&H to perform its obligations under the Management Agreements, if
such failure continues unremedied for more than 60 days after written notice of
its existence shall have been given; (iv) at the option of MSLEF II (a) if S&H
or Holdings is declared insolvent or bankrupt or a voluntary bankruptcy petition
is filed by either of them, (b) upon the occurrence of any of the following
events with respect to S&H or Holdings if not cured, dismissed or stayed within
45 days: the filing of an involuntary petition in bankruptcy, the appointment of
a trustee or receiver or the institution of a proceeding seeking a
reorganization, arrangement, liquidation or dissolution, (c) if S&H or Holdings
voluntarily seeks a reorganization or arrangement or makes an assignment for the
benefit of creditors or (d) upon the death or permanent disability of both of
Messrs. Silver and Horrigan; and (v) the occurrence of a Change of Control (as
defined in the Restated Certificate of Incorporation of Holdings).
In addition to the management fees described above, the Management
Agreements provide for the payment to S&H on the closing date of the IPO of an
amount, if any, equal to the sum of the present values, calculated for each year
or portion thereof, of (i) the amount of the annual management fee for such year
or portion thereof that otherwise would have been payable to S&H for each such
year or portion thereof for the period beginning as of the time of the IPO and
ending on June 30, 1999 (the "Remaining Term") pursuant to the provisions
described in the preceding paragraph but for the occurrence of the IPO, minus
(ii) the amount payable to S&H for the Remaining Term at the rate of $2.0
million per year. The Management Agreements further provide that the amounts
described in clause (i)
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of the first sentence of this paragraph will be calculated based upon S&H's good
faith projections of Holdings EBDIT for each such year (or portion thereof)
during the Remaining Term (the "Estimated Fees"), which projections shall be
made on a basis consistent with S&H's past projections. The difference between
the amount of Estimated Fees for any particular year and $2.0 million shall be
discounted to present value at the time of the IPO using a discount rate of
eight percent (8%) per annum, compounded annually.
Additionally, the Management Agreements provide that Holdings, Silgan,
Containers, Plastics and their respective subsidiaries shall reimburse S&H, on a
monthly basis, for all out-of-pocket expenses paid by S&H in providing the
Services, including fees and expenses to consultants, subcontractors and other
third parties, in connection with such Services. All fees and expenses paid to
S&H under each of the Management Agreements are credited against amounts paid to
S&H under the other Management Agreements. Under the terms of the Management
Agreements, Holdings, Silgan, Containers and Plastics have agreed, subject to
certain exceptions, to indemnify S&H and its affiliates, officers, directors,
employees, subcontractors, consultants or controlling persons against any
losses, damages, costs and expenses they may sustain arising in connection with
the Management Agreements.
The Management Agreements also provide that S&H may select a
consultant, subcontractor or agent to provide the Services. S&H has retained
Morgan Stanley to render financial advisory services to S&H. In connection with
such retention, S&H has agreed to pay Morgan Stanley a fee equal to 9.1% of the
fees paid to S&H under the Management Agreements.
The Silgan Credit Agreement does not permit the payment of fees under
the Management Agreements above amounts provided for therein.
For the years ended December 31, 1995, 1994 and 1993, pursuant to the
arrangements described above, S&H earned aggregate fees, including reimbursable
expenses and fees payable to Morgan Stanley, of $5.4 million, $5.0 million and
$4.4 million, respectively, from Holdings, Silgan, Containers and Plastics, and
during 1995, 1994 and 1993 Morgan Stanley earned fees of $409,000, $383,000 and
$337,000, respectively.
Other
In connection with the 1989 Mergers, subject to the provisions of
Delaware law, Silgan agreed to indemnify each director, officer, employee,
fiduciary and agent of Silgan, Containers, Plastics and its subsidiaries and
their respective affiliates against costs, expenses, judgments, fines, losses,
claims, damages and settlements (except for any settlement effected without
Silgan's written consent) in connection with any claims, actions, suits,
proceedings or investigations arising out of or related to the 1989 Mergers or
their financing, including certain liabilities arising under the federal
securities laws.
Simultaneously with the consummation of the 1989 Mergers, a tax
allocation agreement was entered into by Holdings, Silgan, Plastics and
Containers that permits Silgan and its subsidiaries to use the tax benefits
provided by the debt of Holdings and permits funds to be provided to Holdings
from Silgan and its subsidiaries in an amount equal to the federal and state tax
liabilities of Holdings, as the parent of the consolidated group consisting of
Holdings, Silgan and its subsidiaries. Such tax allocation agreement has been
amended and restated from time to time to include new members of the
consolidated group.
In connection with the refinancings of the Company's bank credit
agreement in 1995 and 1993, the banks thereunder (including Bankers Trust)
received certain fees amounting to $17.2 million and $8.1
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million in 1995 and 1993, respectively. In connection with a recent amendment to
the Silgan Credit Agreement in May 1996, the banks thereunder (including Bankers
Trust) received certain fees amounting to $1.6 million. In connection with the
Private Offering, the Placement Agent received certain fees amounting to $1.8
million. See "Securities Ownership of Certain Beneficial Owners and Management"
for a description of the ownership by MSLEF II, an affiliate of the Placement
Agent, of certain securities of Holdings.
G. William Sisley, Secretary of Holdings and Silgan, is a partner in
the law firm of Winthrop, Stimson, Putnam & Roberts. Winthrop, Stimson, Putnam &
Roberts provides legal services to Holdings, Silgan and their subsidiaries.
DESCRIPTION OF NEW PREFERRED STOCK
The New Preferred Stock will be issued pursuant to the Certificate of
Designation. The summary contained herein of certain provisions of the New
Preferred Stock does not purport to be complete and is qualified in its entirety
by reference to the provisions of the Certificate of Designation, which is filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. The definitions of certain terms used in the Certificate of Designation
and in the following summary are set forth under "--Certain Definitions" below.
General
Holdings is authorized to issue 1,000,000 shares of preferred stock,
$.01 par value per share. The Certificate of Incorporation of Holdings
authorizes the Board of Directors to issue classes of preferred stock from time
to time in one or more series, with such designations, voting powers,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions as may be determined by the Board of
Directors. Pursuant to the Certificate of Designation, up to 90,000 shares of
Preferred Stock with a liquidation preference of $1,000 are authorized for
issuance, which consist of the 50,000 shares of Old Preferred Stock issued in
the Private Offering plus additional shares of Preferred Stock which may be used
to pay dividends on the Preferred Stock if Holdings elects to pay dividends in
additional shares of Preferred Stock. The New Preferred Stock will be
exchangeable, at the option of Holdings, into the Exchange Debentures, at any
time. See "--Exchange" below. The New Preferred Stock, when issued by Holdings
pursuant to the Exchange Offer or to pay dividends on the Preferred Stock, will
be fully paid and nonassessable, and the holders thereof will not have any
subscription or preemptive rights related thereto. Fleet National Bank will be
transfer agent and registrar for the New Preferred Stock (the "Transfer Agent"
and "Registrar").
Ranking
The Preferred Stock will, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of Holdings, rank
(i) senior to all classes of common stock of Holdings and to each other class of
capital stock or series of preferred stock established after the date of this
Prospectus by the Board of Directors, the terms of which do not expressly
provide that it ranks senior to or on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of Holdings (collectively referred to, together with all classes of
common stock of Holdings, as the "Junior Securities"); (ii) subject to certain
conditions, on a parity with any class of capital stock or series of preferred
stock issued by Holdings established after the date of this Prospectus by the
Board of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of Holdings (collectively referred to as "Parity Securities"); and (iii) subject
to certain conditions, junior to each class of capital stock or series of
preferred stock issued
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by Holdings established after the date of this Prospectus by the Board of
Directors, the terms of which expressly provide that such class or series will
rank senior to the Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution of Holdings
(collectively referred to as "Senior Securities"). The Preferred Stock will be
subject to the issuance of series of Junior Securities, Parity Securities and
Senior Securities, provided that Holdings may not issue any new class of Parity
Securities or Senior Securities without the approval of the holders of at least
a majority of the shares of Preferred Stock then outstanding, voting or
consenting, as the case may be, separately as one class, except that, without
the approval of holders of the Preferred Stock, Holdings may issue shares of
Parity Securities in exchange for, or the proceeds of which are used to redeem
or repurchase, any or all shares of Preferred Stock then outstanding or
indebtedness of Holdings, provided that, in the case of Parity Securities issued
in exchange for, or the proceeds of which are used to redeem or repurchase, less
than all shares of Preferred Stock then outstanding, (a) the aggregate
liquidation preference of such Parity Securities shall not exceed the aggregate
liquidation preference of, premium and accrued and unpaid dividends on, and
expenses in connection with the refinancing of, the Preferred Stock so
exchanged, redeemed or repurchased, (b) such Parity Securities shall not be
Redeemable Stock and (c) such Parity Securities shall not be entitled to the
payment of cash dividends prior to July 15, 2000.
Dividends
Holders of New Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors, out of funds legally available
therefor, dividends on the New Preferred Stock at a rate per annum equal to
13-1/4% of the liquidation preference per share of New Preferred Stock, payable
quarterly. However, if by one year after the Closing Date the New Preferred
Stock has not been exchanged for Exchange Debentures, the dividend rate on the
New Preferred Stock will increase by 0.5% per annum to 13-3/4% per annum of the
liquidation preference per share of New Preferred Stock until such exchange
occurs. All dividends will be cumulative, whether or not earned or declared, on
a daily basis from the date of issuance of the New Preferred Stock and will be
payable quarterly in arrears on January 15, April 15, July 15 and October 15 of
each year commencing on October 15, 1996. On and before July 15, 2000, Holdings
may pay dividends, at its option, in cash or in additional fully paid and
nonassessable shares of New Preferred Stock having an aggregate liquidation
preference equal to the amount of such dividends. After July 15, 2000, dividends
may be paid only in cash. However, the Discount Debentures Indenture restricts
the payment of cash dividends by Holdings, and future agreements may provide the
same. In addition, Silgan is limited in its ability to provide cash to Holdings.
See "Risk Factors--Ability of Holdings to Pay Cash Dividends and Cash Interest"
and "Description of Certain Holdings Indebtedness." If any dividend (or portion
thereof) payable on any dividend payment date after July 15, 2000 is not
declared or paid in full in cash on such dividend payment date, the amount of
such dividend that is payable and that is not paid in cash on such date will
increase at the rate of 0.5% per annum (1.0% per annum if the conditions
described in the second sentence of this paragraph are not satisfied) from such
dividend payment date until declared and paid in full.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities for any period unless full
cumulative dividends shall have been or contemporaneously shall be declared and
paid in full or declared and, if payable in cash, a sum in cash shall be set
apart for such payment on the New Preferred Stock. If full dividends are not so
paid, the New Preferred Stock shall share dividends pro rata with the Parity
Securities. No dividends may be paid or set apart for such payment on Junior
Securities (except dividends on Junior Securities in additional shares of Junior
Securities) and no Junior Securities or Parity Securities may be repurchased,
redeemed or otherwise retired nor may funds be set apart for payment with
respect thereto (except under certain limited circumstances to permit the
redemption of Junior Securities owned by certain employees of Holdings or its
subsidiaries) if full cumulative dividends shall not have been paid on the New
Preferred Stock.
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Optional Redemption
The New Preferred Stock may be redeemed (subject to contractual and
other restrictions with respect thereto and to the legal availability of funds
therefor) at any time on or after July 15, 2000, at Holdings' option, in whole
or in part, upon not less than 30 nor more than 60 days' prior written notice
mailed by first-class mail to each holder's last address as it appears in the
Security Register, at the redemption prices (expressed as a percentage of the
liquidation preference thereof) set forth below, plus an amount in cash equal to
all accumulated and unpaid dividends (including an amount in cash equal to a
prorated dividend for the period from the dividend payment date immediately
prior to the redemption date to the redemption date), if redeemed during the
12-month period beginning July 15 of each of the years set forth below.
Year Percentage
---- ----------
2000.............................................. 109.938%
2001.............................................. 106.625%
2002.............................................. 103.313%
2003 and thereafter .............................. 100.000%
In addition, on or prior to July 15, 2000, Holdings or a Successor
Corporation may redeem all (but not less than all) outstanding shares of
Preferred Stock, at a redemption price equal to 110% of the liquidation
preference, plus an amount in cash equal to a prorated dividend for the period
from the dividend payment date immediately prior to the redemption date to the
redemption date (subject to the right of holders of Preferred Stock on relevant
record dates to receive dividends due on relevant dividend payment dates), with
the proceeds of any sale of its common stock, provided that such redemption
occurs within 180 days after consummation of such sale.
No optional redemption may be authorized or made unless prior thereto
full unpaid cumulative dividends shall have been paid or a sum set apart for
such payment on the Preferred Stock.
In the event of partial redemptions of Preferred Stock, the shares to
be redeemed will be determined pro rata or by lot, as determined by Holdings,
except that Holdings may redeem such shares held by any holder of fewer than 100
shares without regard to such pro rata redemption requirement. If any New
Preferred Stock is to be redeemed in part, the notice of redemption that related
to such New Preferred Stock shall state the portion of the liquidation
preference to be redeemed. New shares of New Preferred Stock having an aggregate
liquidation preference equal to the unredeemed portion will be issued in the
name of the holder thereof upon cancellation of the original share of New
Preferred Stock and, unless Holdings fails to pay the redemption price on the
redemption date, after the redemption date, dividends will cease to accrue on
the New Preferred Stock called for redemption. The Silgan Credit Agreement and
the Discount Debenture Indenture limit the optional redemption of the New
Preferred Stock. See "Description of Certain Holdings Indebtedness" and
"Description of Certain Silgan Indebtedness."
Mandatory Redemption
The New Preferred Stock will be subject to mandatory redemption
(subject to the legal availability of funds therefor) in whole on July 15, 2006
at a price equal to the liquidation preference thereof plus all accumulated and
unpaid dividends to the date of redemption.
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Change of Control
Upon the occurrence of a Change of Control, Holdings will be required
(subject to the legal availability of funds therefor), to make an offer (the
"Change of Control Offer") to each holder of New Preferred Stock to repurchase
all or any part of such holder's New Preferred Stock at a cash purchase price
equal to 101% of the liquidation preference thereof, plus accrued and unpaid
dividends (if any) to the date of purchase (the "Change of Control Payment").
The Change of Control Offer must be made within 30 days following a Change of
Control, must remain open for at least 30 and not more than 40 days and must
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
applicable securities laws and regulations. Notwithstanding the foregoing,
Holdings shall not make (or be required to make) a Change of Control Offer if
any Indebtedness outstanding upon the occurrence of a Change of Control is (or
may be) required to be repaid, redeemed or repurchased in full pursuant to the
terms thereof (or if any such Change of Control constitutes a default under such
Indebtedness) until such Indebtedness is repaid, redeemed or repurchased in
full, in which case the date on which all Indebtedness is so repaid, redeemed or
repurchased will, under the Certificate of Designation, be deemed to be the date
on which such Change of Control shall have occurred. In no event will Holdings
be required to commence a Change of Control Offer until all Indebtedness under
the Silgan Credit Agreement is paid in full or Holdings obtains the requisite
consent of the lenders thereunder.
None of the provisions in the Certificate of Designation relating to a
purchase upon a Change of Control are waivable by the Board of Directors.
Holdings could, in the future, enter into certain transactions, including
certain recapitalizations of Holdings, that would not constitute a Change of
Control, but would increase the amount of indebtedness outstanding at such time.
If a Change of Control were to occur, Holdings would be obligated to offer to
repurchase all Indebtedness prior to making an offer to repurchase shares of New
Preferred Stock, and there can be no assurance that Holdings would have
sufficient funds to pay the purchase price for all shares of New Preferred Stock
that Holdings would be required to purchase. In the event that Holdings were
required to purchase outstanding shares of New Preferred Stock pursuant to a
Change of Control Offer, Holdings expects that it would need to seek third-party
financing to the extent it does not have available funds to meet its purchase
obligations. However, there can be no assurance that Holdings would be able to
obtain such financing. In addition, Holdings' ability to purchase the New
Preferred Stock may be limited by other then-existing agreements and by
restrictions imposed by Delaware law.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or
winding-up of Holdings, holders of New Preferred Stock will be entitled to be
paid, out of the assets of Holdings available for distribution, $1,000 per
share, plus an amount in cash equal to accumulated and unpaid dividends thereon
to the date fixed for liquidation, dissolution or winding-up (including an
amount equal to a prorated dividend for the period from the last dividend
payment date to the date fixed for liquidation, dissolution or winding-up),
before any distribution is made on any Junior Securities, including, without
limitation, common stock of Holdings. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of Holdings, the amounts payable with
respect to the Preferred Stock and all other Parity Securities are not paid in
full, the holders of the Preferred Stock and the Parity Securities will share
equally and ratably in any distribution of assets of Holdings in proportion to
the full liquidation preference and accumulated and unpaid dividends to which
each is entitled. After payment of the full amount of the liquidation
preferences and accumulated and unpaid dividends to which they are entitled, the
holders of shares of New Preferred Stock will not be entitled to any further
participation in any distribution of assets of Holdings. However, neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
Holdings nor the consolidation or
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merger of Holdings with or into one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up of Holdings.
The Certificate of Designation does not contain any provision requiring
funds to be set aside to protect the liquidation preference of the New Preferred
Stock, although such liquidation preference will be substantially in excess of
the par value of such shares of New Preferred Stock. In addition, Holdings is
not aware of any provision of Delaware law or any controlling decision of the
courts of the State of Delaware (the state of incorporation of Holdings) that
requires a restriction upon the surplus of Holdings solely because the
liquidation preference of the New Preferred Stock will exceed its par value.
Consequently, there will be no restriction upon the surplus of Holdings solely
because the liquidation preference of the New Preferred Stock will exceed the
par value and there will be no remedies available to holders of the New
Preferred Stock before or after the payment of any dividend, other than in
connection with the liquidation of Holdings, solely by reason of the fact that
such dividend would reduce the surplus of Holdings to an amount less than the
difference between the liquidation preference of the New Preferred Stock and its
par value.
Voting Rights
The holders of New Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by law or as set forth
in the Certificate of Designation. The Certificate of Designation provides that
if (a) dividends on the Preferred Stock are in arrears and unpaid (and if, after
July 15, 2000 such dividends are not paid in cash) for four consecutive
quarterly periods, (b) Holdings fails to discharge any redemption obligation
with respect to the Preferred Stock, (c) Holdings fails to make an offer to
purchase (and complete such purchase) all of the outstanding shares of Preferred
Stock following a Change of Control, if such offer to purchase is required by
the provisions set forth above under the caption "--Change of Control," (d) a
breach or violation of the provisions described under the caption "--Certain
Covenants" occurs and such breach or violation continues for a period of 30
consecutive days or more after notice thereof to Holdings by holders of 25% or
more of the liquidation preference of the Preferred Stock then outstanding or
(e) there occurs with respect to any issue or issues of Indebtedness of Holdings
and/or any Significant Subsidiary having an outstanding principal amount of $20
million or more in the aggregate for all such issues of Holdings and/or any
Significant Subsidiary, whether such Indebtedness now exists or shall hereafter
be created, (i) an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated Maturity and
such Indebtedness has not been discharged in full or such acceleration has not
been rescinded or annulled within 30 days of such acceleration and/or (ii) the
failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default, then the number of directors
constituting the Board of Directors will be adjusted to permit the holders of
the majority of the then outstanding Preferred Stock, voting separately as a
class, to elect the number of directors described in the immediately succeeding
paragraph. Such voting rights will continue until such time as all dividends in
arrears on the Preferred Stock are paid in full (and, in the case of dividends
payable after July 15, 2000, paid in cash) and any failure, breach or default
referred to in clause (b), (c), (d) or (e) is remedied, at which time the term
of any directors elected pursuant to the provisions of this paragraph shall
terminate. Each such event described in clauses (a) through (e) above is
referred to herein as a "Voting Rights Triggering Event." Within 15 days of the
time Holdings becomes aware of the occurrence of any default referred to in
clause (d) or (e) above, Holdings shall give written notice thereof to holders
of the Preferred Stock.
The Certificate of Designation provides that, upon the occurrence of a
Voting Rights Triggering Event, the number of directors constituting the Board
of Directors will be increased by the number of directors that the holders of
Preferred Stock are entitled to elect. The number of directors that the holders
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of Preferred Stock are entitled to elect shall be equal to the greater of (i)
one and (ii) the whole number obtained (rounding down to the nearest whole
number) by (a) multiplying 1/6 by the number of directors in office immediately
prior to the occurrence of a Voting Rights Triggering Event and (b) adding one.
Whenever the right of the holders of Preferred Stock to elect directors shall
cease, the number of directors constituting the Board of Directors will be
restored to the number of directors constituting the Board of Directors prior to
the time or event that entitled the holders of Preferred Stock to elect
directors.
Any vacancy occurring in the office of a director elected by the
holders of Preferred Stock may be filled by the remaining directors elected by
such holders unless and until such vacancy shall be filled by such holders.
Holdings' Certificate of Incorporation provides that, prior to a Change
of Control (as defined in the Certificate of Incorporation) or prior to Holdings
effecting a Public Offering (as defined in the Certificate of Incorporation), in
order for the Board of Directors of Holdings to take any action, such action
must be approved by (i) a majority of the Board of Directors and (ii) at least
one director elected by the holders of Holdings Class A Stock and at least one
director elected by the holders of Holdings Class B Stock. There are currently
two directors that have been elected by the holders of the Holdings Class A
Stock and two directors that have been elected by the holders of the Holdings
Class B Stock. As described above, upon the occurrence of a Voting Rights
Triggering Event the holders of the Preferred Stock will have the right to elect
at least one director. However, because of the provisions of Holdings'
Certificate of Incorporation described in this paragraph, even if a majority of
the directors voted in favor of any action, the directors elected by either of
the Holdings Class A Stock or the Holdings Class B Stock could block such
action.
The Certificate of Designation also provides that, except as stated
above under "--Ranking," Holdings will not authorize any class of Senior
Securities or Parity Securities without the affirmative vote or consent of the
holders of at least a majority of the shares of Preferred Stock then
outstanding, voting or consenting, as the case may be, separately as one class.
The Certificate of Designation also provides that Holdings may not amend the
Certificate of Designation so as to affect adversely the specified rights,
preferences, privileges or voting rights of holders of shares of the Preferred
Stock, or authorize the issuance of any additional shares of Preferred Stock,
without the affirmative vote or consent of the holders of at least a majority of
the outstanding shares of Preferred Stock, voting or consenting, as the case may
be, separately as one class. The holders of at least a majority of the
outstanding shares of Preferred Stock, voting or consenting, as the case may be,
separately as one class, may also waive compliance with any provision of the
Certificate of Designation. The Certificate of Designation also provides that,
except as set forth above, (a) the creation, authorization or issuance of any
shares of Junior Securities, Parity Securities or Senior Securities or (b) the
increase or decrease in the amount of authorized capital stock of any class,
including any preferred stock, shall not require the consent of the holders of
Preferred Stock and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of the holders of shares of Preferred
Stock.
Under Delaware law, holders of preferred stock will be entitled to vote
as a class upon a proposed amendment to the certificate of incorporation,
whether or not entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the par value of the shares of such
class, or alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely.
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Certain Definitions
Set forth below is a summary of certain of the defined terms used in
the covenants and other provisions of the Certificate of Designation and
Exchange Debenture Indenture. Reference is made to the Certificate of
Designation and the Exchange Debenture Indenture for the full definitions of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"Adjusted Consolidated Net Income" is defined to mean, for any period,
the aggregate net income (or loss) of any Person and its consolidated
Subsidiaries for such period determined in conformity with GAAP; provided that
the following items shall be excluded in computing Adjusted Consolidated Net
Income (without duplication): (i) the net income (or loss) of such Person (other
than a Subsidiary of such Person) in which any other Person (other than such
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to such Person or
any of its Subsidiaries by such other Person during such period; (ii) solely for
the purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of the "Limitation on Restricted
Payments" covenant (and, in such case, except to the extent includible pursuant
to clause (i) above), the net income (or loss) of such Person accrued prior to
the date it becomes a Subsidiary of any other Person or is merged into or
consolidated with such other Person or any of its Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by such
other Person or any of its Subsidiaries; (iii) the net income (or loss) of any
Subsidiary of any Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such net income is not
at the time permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary; (iv) any gains or losses (on an
after-tax basis) attributable to Asset Sales; (v) any amounts paid or accrued as
dividends on preferred stock of such Person or preferred stock of any Subsidiary
of such Person; and (vi) all extraordinary gains and extraordinary losses;
provided that, solely for the purposes of calculating the Interest Coverage
Ratio (and in such case, except to the extent includible pursuant to clause (i)
above), "Adjusted Consolidated Net Income" of Holdings shall include the amount
of all cash dividends received by Holdings or any Subsidiary of Holdings from an
Unrestricted Subsidiary.
"Affiliate" is defined to mean, as applied to any Person, any other
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person, is
defined to mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise. For
purposes of this definition, neither the Bank Agent nor any Bank nor any
affiliate of any of them shall be deemed to be an Affiliate of Holdings or any
Subsidiary of Holdings.
"Asset Acquisition" is defined to mean (i) an investment by Holdings or
any of its Subsidiaries in any other Person pursuant to which such Person shall
become a Subsidiary of Holdings or any of its Subsidiaries or shall be merged
into or consolidated with Holdings or any of its Subsidiaries or (ii) an
acquisition by Holdings or any of its Subsidiaries of the property and assets of
any Person other than Holdings or any of its Subsidiaries that constitute
substantially all of an operating unit or business of such Person.
"Asset Disposition" is defined to mean the sale or other disposition by
Holdings or any of its Subsidiaries (other than to Holdings or another
Subsidiary of Holdings) of (i) all or substantially all of
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the Capital Stock of any Subsidiary of Holdings or (ii) all or substantially all
of the property and assets that constitute an operating unit or business of
Holdings or any of its Subsidiaries.
"Asset Sale" is defined to mean, with respect to any Person, any sale,
transfer or other disposition (including by way of merger, consolidation or
sale-leaseback transaction) in one transaction or a series of related
transactions by such Person or any of its Subsidiaries to any Person other than
Holdings or any of its Subsidiaries of (i) all or any of the Capital Stock of
any Subsidiary of such Person, (ii) all or substantially all of the property and
assets of an operating unit or business of such Person or any of its
Subsidiaries or (iii) any other property and assets of such Person or any of its
Subsidiaries outside the ordinary course of business of such Person or such
Subsidiary and, in each case, that is not governed by the "Consolidation, Merger
and Sale of Assets" covenant described below; provided that sales or other
dispositions of inventory, receivables and other current assets shall not be
included within the meaning of such term.
"Average Life" is defined to mean, at any date of determination with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the product of (a) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(b) the amount of such principal payment by (ii) the sum of all such principal
payments.
"Bank Agent" is defined to mean Bankers Trust Company, as co-arranger
and administrative agent for the Banks pursuant to the Silgan Credit Agreement,
and any successor or successors thereto.
"Banks" is defined to mean the lenders which are from time to time
parties to the Silgan Credit Agreement.
"Board of Directors" is defined to mean the Board of Directors of
Holdings (or any successor to Holdings) or any committee of such Board of
Directors.
"Business Day" is defined to mean any day except a Saturday or Sunday
or other day on which commercial banks in The City of New York, or in the city
of the Corporate Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" is defined to mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or nonvoting) of capital stock of such Person, including, without
limitation, all Common Stock and New Preferred Stock.
"Capitalized Lease" is defined to mean, as applied to any Person, any
lease of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and "Capitalized Lease Obligation" is defined to mean the rental obligations, as
aforesaid, under such lease.
"Change of Control" is defined to mean such time as (i) (a) a "person"
or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act), other than MSLEF II, Mr. Horrigan, Mr. Silver and their respective
Affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 40% of the total voting power of the then outstanding
Voting Stock of Holdings and (b) MSLEF II, Mr. Horrigan, Mr. Silver and their
respective Affiliates beneficially own, directly or indirectly, less than 25% of
the total voting power of the then outstanding Voting Stock of Holdings; (ii)
individuals who at the beginning of any period of two consecutive calendar years
constituted the Board of Directors (together with any new directors whose
election by the Board of
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Directors or whose nomination for election by Holdings' shareholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then still in office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office; or (iii) Holdings shall not
beneficially own, directly or indirectly, at least a majority of the issued and
outstanding Voting Stock of Silgan other than as a result of a Holdings Merger.
"Closing Date" is defined to mean the date on which the Old Preferred
Stock was originally issued under the Amended and Restated Certificate of
Incorporation of Holdings.
"Common Stock" is defined to mean, with respect to any Person, any and
all shares, interests, participations and other equivalents (however designated,
whether voting or nonvoting) of common stock of such Person including, without
limitation, all series and classes of such common stock.
"Consolidated EBITDA" is defined to mean, with respect to any Person
for any period, the sum of the amounts for such period of (i) Adjusted
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) income taxes
(other than income taxes (either positive or negative) attributable to
extraordinary and nonrecurring gains or losses or sales of assets), (iv)
depreciation expense, (v) amortization expense and (vi) all other noncash items
reducing Adjusted Consolidated Net Income, less all noncash items increasing
Adjusted Consolidated Net Income, all as determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP; provided that, if a
Person has any Subsidiary that is not a Wholly Owned Subsidiary of such Person,
Consolidated EBITDA of such Person shall be reduced by an amount equal to (a)
the Adjusted Consolidated Net Income of such Subsidiary multiplied by (b) the
quotient of (1) the number of shares of outstanding Common Stock of such
Subsidiary not owned on the last day of such period by such Person or any
Subsidiary of such Person divided by (2) the total number of shares of
outstanding Common Stock of such Subsidiary on the last day of such period.
"Consolidated Interest Expense" is defined to mean, with respect to any
Person for any period, the aggregate amount of interest in respect of
Indebtedness (including amortization of original issue discount on any
Indebtedness and the interest portion of any deferred payment obligation,
calculated in accordance with the interest method of accounting; all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing; and the net costs associated with
Interest Rate Agreements) and all but the principal component of rentals in
respect of Capitalized Lease obligations paid, accrued or scheduled to be paid
or accrued by such Person during such period; excluding, however, (i) any amount
of such interest of any Subsidiary of such Person if the net income (or loss) of
such Subsidiary is excluded in the calculation of Adjusted Consolidated Net
Income for such Person pursuant to clause (iii) of the definition thereof (but
only in the same proportion as the net income (or loss) of such Subsidiary is
excluded from the calculation of Adjusted Consolidated Net Income for such
Person pursuant to clause (iii) of the definition thereof), (ii) any premiums,
fees and expenses (and any amortization thereof) payable in connection with the
Refinancing and (iii) amortization of any other deferred financing costs, all as
determined on a consolidated basis in conformity with GAAP. For purposes of the
Certificate of Designation, Consolidated Interest Expense shall include all
amounts paid or accrued as dividends on Preferred Stock of any Person or any
Subsidiary of such Person.
"Consolidated Net Tangible Assets" is defined to mean the total amount
of assets of Holdings and its Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of Holdings and its consolidated Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names,
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trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recently available consolidated
balance sheet of Holdings and its consolidated Subsidiaries prepared in
conformity with GAAP.
"Consolidated Net Worth" is defined to mean, at any date of
determination, stockholders' equity as set forth on the most recently available
consolidated balance sheet of Holdings and its consolidated Subsidiaries (which
shall be as of a date not more than 60 days prior to the date of such
computation), less any amounts attributable to Redeemable Stock or any equity
security convertible into or exchangeable for Indebtedness, the cost of treasury
stock and the principal amount of any promissory notes receivable from the sale
of Capital Stock of Holdings or any of its Subsidiaries, each item to be
determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Currency Agreement" is defined to mean any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect Holdings or any of its Subsidiaries against fluctuations in currency
values to or under which Holdings or any of its Subsidiaries is a party or a
beneficiary on the date of the Exchange Debenture Indenture or becomes a party
or a beneficiary thereafter.
"GAAP" is defined to mean generally accepted accounting principles in
the United States of America as in effect as of the Closing Date applied on a
basis consistent with the principles, methods, procedures and practices employed
in the preparation of Holdings' audited financial statements, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in the Certificate of Designation or Exchange Debenture Indenture
shall be computed in conformity with GAAP, except that calculations made for
purposes of determining compliance with the terms of the covenants described
below and other provisions of the Certificate of Designation or Exchange
Debenture Indenture shall be made without giving effect to (i) the amortization
of any expenses incurred in connection with the Refinancing, and (ii) except as
otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"Guarantee" is defined to mean any obligation, contingent or otherwise,
of any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay or advance or supply funds for the purchase or
payment of such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreement to keep well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Holdings Merger" is defined to mean the merger or consolidation of
Holdings and Silgan or either of their successors.
"Incur" is defined to mean, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of,
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contingently or otherwise, such Indebtedness; provided that neither the accrual
of interest (whether such interest is payable in cash or kind) nor the accretion
of original issue discount shall be considered an Incurrence of Indebtedness.
"Indebtedness" is defined to mean, with respect to any Person at any
date of determination (without duplication), (i) all indebtedness of such Person
for borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (a) the fair market value of such asset at such date of
determination and (b) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person, (viii) all obligations of such Person in respect of
borrowed money under the Silgan Credit Agreement, the 11-3/4% Notes, the
Discount Debentures and any Guarantees thereof and (ix) to the extent not
otherwise included in this definition, all obligations of such Person under
Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations at such date; provided that the amount outstanding at any time of
any Indebtedness issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and, in clarification of this definition, any unused commitment under the Silgan
Credit Agreement or any other agreement relating to Indebtedness shall not be
treated as outstanding.
"Interest Coverage Ratio" is defined to mean, with respect to any
Person on any Transaction Date, the ratio of (i) the aggregate amount of
Consolidated EBITDA of such Person for the four fiscal quarters for which
financial information in respect thereof is available immediately prior to such
Transaction Date to (ii) the aggregate Consolidated Interest Expense of such
Person during such four fiscal quarters. In making the foregoing calculation,
(a) pro forma effect shall be given to (1) any Indebtedness Incurred subsequent
to the end of the four-fiscal-quarter period referred to in clause (i) and prior
to the Transaction Date (other than Indebtedness incurred under a revolving
credit or similar arrangement) to the extent of the commitment thereunder (or
under any predecessor revolving credit or similar arrangement on the last day of
such period), (2) any Indebtedness Incurred during such period to the extent
such Indebtedness is outstanding at the Transaction Date and (3) any
Indebtedness to be Incurred on the Transaction Date, in each case as if such
Indebtedness had been incurred on the first day of such four-fiscal-quarter
period and after giving effect to the application of the proceeds thereof; (b)
Consolidated Interest Expense attributable to interest on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing a
floating interest rate shall be computed as if the rate in effect on the date of
computation (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months) had been the applicable rate for the entire period; (c) there shall
be excluded from Consolidated Interest Expense any Consolidated Interest Expense
related to any amount of Indebtedness that was outstanding during such
four-fiscal-quarter period or thereafter but which is not outstanding or which
is to be repaid on the Transaction Date, except for Consolidated Interest
Expense accrued (as adjusted pursuant to clause (b)) during such
four-fiscal-quarter period under a revolving credit or similar arrangement to
the extent of the commitment thereunder (or under any successor revolving credit
or similar arrangement) on the
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Transaction Date; (d) pro forma effect shall be given to Asset Dispositions and
Asset Acquisitions that occur during such four-fiscal-quarter period or
thereafter and prior to the Transaction Date (including any Asset Acquisition to
be made with the Indebtedness Incurred pursuant to clause (i) above) as if they
had occurred on the first day of such four-fiscal-quarter period; (e) with
respect to any such four-fiscal-quarter period commencing prior to the
Refinancing, the Refinancing shall be deemed to have taken place on the first
day of such period; and (f) pro forma effect shall be given to asset
dispositions and asset acquisitions that have been made by any Person that has
become a Subsidiary of Holdings or has been merged with or into Holdings or any
Subsidiary of Holdings during the four-fiscal-quarter period referred to above
or subsequent to such period and prior to the Transaction Date and that would
have been Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Subsidiary of Holdings as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions
that occurred on the first day of such period.
"Interest Rate Agreement" is defined to mean any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement designed to protect Holdings or any of its Subsidiaries against
fluctuations in interest rates to or under which Holdings or any of its
Subsidiaries is a party or a beneficiary or becomes a Party or a beneficiary
thereafter.
"Investment" is defined to mean any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of any Person or its
Subsidiaries) or other extension of credit or capital contribution to (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others) or any purchase or acquisition of
Capital Stock, bonds, notes, debentures or other similar instruments issued by,
any other Person. For purposes of the definition of "Unrestricted Subsidiary"
and the "Limitation on Restricted Payments" covenant described below, (i)
"Investment" shall include the fair market value of the net assets of any
Subsidiary of Holdings at the time that such Subsidiary of Holdings is
designated an Unrestricted Subsidiary and shall exclude the fair market value of
the net assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Subsidiary of Holdings and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined by the
Board of Directors in good faith.
"Lien" is defined to mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
"Net Cash Proceeds" is defined to mean, with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to Holdings or any Subsidiary of
Holdings) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of counsel and investment
bankers) related to such Asset Sale, (ii) provisions for all taxes (whether or
not such taxes will actually be paid or are payable) as a result of such Asset
Sale computed without regard to the consolidated results of operations of
Holdings and its Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (a) is secured by a Lien on the property or assets
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sold or (b) is required to be paid as a result of such sale and (iv) appropriate
amounts to be provided by Holdings or any Subsidiary of Holdings as a reserve
against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity
with GAAP.
"Person" is defined to mean an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"preferred stock" is defined to mean, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of preferred or preference stock of
such Person, including, without limitation, the New Preferred Stock.
"Redeemable Stock" is defined to mean any class or series of Capital
Stock of any Person that by its terms or otherwise is (i) required to be
redeemed prior to the Stated Maturity of the Exchange Debentures or the
mandatory redemption date of the Preferred Stock, as the case may be, (ii)
redeemable at the option of the holder of such class or series of Capital Stock
at any time prior to the Stated Maturity of the Exchange Debentures or the
mandatory redemption date of the Preferred Stock, as the case may be, or (iii)
convertible into or exchangeable for Capital Stock referred to in clause (i) or
(ii) above or Indebtedness having a scheduled maturity prior to the Stated
Maturity of the Exchange Debentures or the mandatory redemption date of the
Preferred Stock, as the case may be; provided that any Capital Stock that would
not constitute Redeemable Stock but for provisions thereof giving holders
thereof the right to require Holdings to repurchase or redeem such Capital Stock
upon the occurrence of an "asset sale" or a "change of control" occurring prior
to the Stated Maturity of the Exchange Debentures or the mandatory redemption
date of the Preferred Stock, as the case may be, shall not constitute Redeemable
Stock if the "asset sale" or "change of control" provision applicable to such
Capital Stock is no more favorable to the holders of such Capital Stock than the
provisions contained in the applicable "Limitation on Asset Sales" and "Change
of Control" covenants and such Capital Stock specifically provides that Holdings
will not repurchase or redeem any such Capital Stock pursuant to such provisions
prior to Holdings' repurchase of Exchange Debentures or Preferred Stock required
to be repurchased by Holdings under the "Limitation on Asset Sales" and "Change
of Control" covenants.
"Restricted Subsidiary" is defined to mean any Subsidiary of Holdings
other than an Unrestricted Subsidiary.
"Shareholder Subordinated Notes" shall have the same meaning given such
term in the Silgan Credit Agreement (including the exhibits thereto) as in
effect on the Closing Date.
"Significant Subsidiary" is defined to mean, at any date of
determination, any Subsidiary of Holdings that, together with its Subsidiaries,
(i) for the most recent fiscal year of Holdings, accounted for more than 10% of
the consolidated revenues of Holdings or (ii) as of the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of Holdings, all as
set forth on the most recently available consolidated financial statements of
Holdings and its consolidated Subsidiaries for such fiscal year prepared in
conformity with GAAP.
"Silgan Credit Agreement" is defined to mean the Credit Agreement,
dated as of August 1, 1995, as amended, among Silgan, Containers, Plastics, the
Banks party thereto and the Bank Agent and Bank of America Illinois, as
co-arranger and as documentation agent, together with the related documents
thereof (including without limitation any Guarantees and security documents), in
each case as such
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agreements may be amended (including any amendment and restatement thereof),
supplemented, replaced or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing or otherwise restructuring
(including, but not limited to, the inclusion of additional borrowers thereunder
that are Subsidiaries of Silgan whose obligations are Guaranteed by Silgan
thereunder and who are included as additional borrowers thereunder) all or any
portion of the Indebtedness under such agreement or any successor agreement;
provided that, with respect to any agreement providing for the refinancing of
Indebtedness under the Silgan Credit Agreement, such agreement shall only be the
Silgan Credit Agreement under the Exchange Debenture Indenture if a notice to
that effect is delivered by Holdings or Silgan to the Trustee and there shall be
at any time only one debt instrument that is the Silgan Credit Agreement under
the Exchange Debenture Indenture.
"Silgan Indebtedness" is defined to mean any of the following
Indebtedness of Silgan and/or any of its Subsidiaries: (i) Indebtedness
outstanding at any time in an aggregate principal amount not to exceed the sum
of (a) the aggregate outstanding Indebtedness and unutilized commitments on the
Closing Date under the Silgan Credit Agreement plus (b) an aggregate amount not
to exceed $200 million outstanding at any time; (ii) Indebtedness issued in
exchange for or the net proceeds of which are used directly or indirectly to
refinance, redeem or repurchase all (but not less than all) of the outstanding
Preferred Stock or Exchange Debentures; (iii) $150 million outstanding at any
time of Capitalized Lease Obligations; (iv) Indebtedness in respect of letters
of credit (other than letters of credit issued pursuant to the Silgan Credit
Agreement) in an aggregate amount not to exceed $30 million outstanding at any
time; (v) Indebtedness in an aggregate amount not to exceed $50 million
outstanding at any time; provided that such Indebtedness (a) by its terms or by
the terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is expressly made subordinate in right of payment to the Exchange
Debentures at least to the extent that the Exchange Debentures are subordinated
to Senior Indebtedness (as defined under "Description of Exchange
Debentures--Subordination"), (b) does permit or require payments of interest in
cash prior to July 15, 2000, (c) does not mature prior to July 15, 2006, (d) the
Average Life of such Indebtedness (determined as of the date of Incurrence of
such Indebtedness) is greater than the remaining Average Life of the Preferred
Stock or Exchange Debentures, as the case may be, and (e) by its terms or by the
terms of any agreement or instrument pursuant to which such Indebtedness is
issued, provides that no payments of principal of such Indebtedness by way of
sinking fund, mandatory redemption or otherwise (including defeasance) may be
made by Silgan (including, without limitation, at the option of the holder
thereof other than an option given to a holder pursuant to an "asset sale" or
"change of control" provision that is no more favorable to the holders of such
Indebtedness than the provisions contained in the "Limitation on Asset Sales"
and "Change of Control" covenants and such Indebtedness specifically provides
that Silgan will not repurchase or redeem such Indebtedness pursuant to such
provisions prior to Silgan's repurchase of the Preferred Stock or Exchange
Debentures required to be repurchased by Silgan under the "Limitation on Asset
Sales" and "Change of Control" covenants) at any time prior to July 15, 2006;
and (vi) any Indebtedness of Silgan or any of its Subsidiaries that is permitted
to be Incurred under the 11-3/4% Notes Indenture as in effect on the date hereof
(other than under clauses (i), (ix) and (x) of the second paragraph of part (a)
of Section 4.03 of the 11-3/4% Notes Indenture (which clauses are similar to
clauses (i), (iv) and (v) above other than the dollar amounts)).
"Stated Maturity" is defined to mean, with respect to any debt security
or any installment of interest thereon, the date specified in such debt security
as the fixed date on which any principal of such debt security or any such
installment of interest is due and payable.
"Stock Based Plan" is defined to mean any stock option plan, stock
appreciation rights plan or other similar plan or agreement of Holdings or any
Subsidiary of Holdings relating to Capital Stock of Holdings or any Subsidiary
of Holdings established and in effect from time to time, including, without
limitation, the Amended and Restated Organization Agreement, dated as of
December 21, 1993 by and
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among Holdings, MSLEF II, BTNY, First Plaza and Messrs. R. Philip Silver and D.
Greg Horrigan, or any stock option plan, stock appreciation rights plan or other
similar plan or agreement for the benefit of employees of Holdings and its
Subsidiaries.
"Subordinated Obligations" is defined to mean any principal of,
premium, if any, or interest on the Exchange Debentures payable pursuant to the
terms of the Exchange Debentures or upon acceleration, including any amounts
received upon the exercise of rights of rescission or other rights of action
(including claims for damages) or otherwise, to the extent relating to the
purchase price of the Exchange Debentures or amounts corresponding to such
principal, premium, if any, or interest on the Exchange Debentures.
"Subsidiary" is defined to mean, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
outstanding Voting Stock is owned, directly or indirectly, by Holdings or by one
or more other Subsidiaries of Holdings, or by such Person and one or more other
Subsidiaries of such Person; provided that, except as the term "Subsidiary" is
used in the definition of "Unrestricted Subsidiary" described below, an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of Holdings.
"Trade Payables" is defined to mean, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Transaction Date" is defined to mean, with respect to the Incurrence
of any Indebtedness or the issuance of Redeemable Stock by Holdings or any of
its Subsidiaries, the date such Indebtedness is to be Incurred or such
Redeemable Stock is to be issued and, with respect to any Restricted Payment,
the date such Restricted Payment is to be made.
"Unrestricted Subsidiary" is defined to mean (i) any Subsidiary of
Holdings that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of Holdings (including any newly acquired or newly formed
Subsidiary of Holdings) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of,
Holdings or any other Subsidiary of Holdings that is not a Subsidiary of the
Subsidiary to be so designated; provided that either (a) the Subsidiary to be so
designated has total assets of $1,000 or less or (b) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
"Limitation on Restricted Payments" covenant below. The Board of Directors may
designate any Unrestricted Subsidiary to be a Subsidiary of Holdings; provided
that immediately after giving effect to such designation (1) Holdings could
Incur $1.00 of additional Indebtedness under the first paragraph in part (a) of
the "Limitation on Indebtedness" covenant and (2) no Event of Default, or event
or condition that through the giving of notice or the lapse of time or both
would become an Event of Default, shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing promptly with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officer's Certificate certifying that such designation
complied with the foregoing provisions.
"Voting Stock" is defined to mean, with respect to any Person, Capital
Stock of any class or kind ordinarily having the power to vote for the election
of directors of such Person.
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"Wholly Owned Subsidiary" is defined to mean (i) with respect to Silgan
and Holdings, Plastics and Containers, and (ii) with respect to any Person, any
Subsidiary of such Person if all of the Common Stock or other similar equity
ownership interests (but not including Preferred Stock) in such Subsidiary
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by such Person.
Certain Covenants
Limitation on Indebtedness
(a) Under the terms of the Certificate of Designation, Holdings shall
not, and shall not permit any Subsidiary (other than Silgan and its
Subsidiaries) to, Incur any Indebtedness (other than the Discount Debentures,
the Exchange Debentures and Indebtedness existing on the Closing Date) or issue
any Redeemable Stock unless, after giving effect to the Incurrence of such
Indebtedness or issuance of Redeemable Stock and the receipt and application of
the proceeds therefrom, the Interest Coverage Ratio of Holdings would be greater
than 1.75:1.
Notwithstanding the foregoing, Holdings and its Subsidiaries (other
than Silgan and its Subsidiaries) may Incur each and all of the following: (i)
Indebtedness in an aggregate principal amount not to exceed $100 million
outstanding at any time; (ii) Indebtedness to Holdings or any Restricted
Subsidiary; (iii) Indebtedness or Redeemable Stock issued in exchange for, or
the net proceeds of which are used to exchange, refinance or refund, outstanding
Indebtedness or Redeemable Stock, other than Indebtedness Incurred under clauses
(i) and (viii) and any refinancings thereof, in an amount (or, if such new
Indebtedness provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof, with an original
issue price) not to exceed the amount exchanged, refinanced or refunded (plus
premiums, accrued interest, fees and expenses); provided that Indebtedness or
Redeemable Stock the proceeds of which are used to exchange, refinance or refund
Redeemable Stock, determined as of the date of Incurrence of such new
Indebtedness or issuance of such Redeemable Stock, does not mature prior to the
Stated Maturity or have a mandatory redemption date prior to the Redeemable
Stock to be exchanged, refinanced or refunded, and the Average Life of such
Indebtedness or Redeemable Stock is at least equal to the remaining Average Life
of the Redeemable Stock to be exchanged, refinanced or refunded; (iv)
Indebtedness issued in exchange for, or the net proceeds of which are used to
exchange, refinance or refund, Silgan Indebtedness; provided that (A) the
principal amount (or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, the original issue price) of such new Indebtedness shall
not exceed the principal amount of Silgan Indebtedness exchanged, refinanced or
refunded (plus premiums, if any, accrued interest, fees and expenses) and (B)
the Average Life of such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, is at least equal to the remaining Average
Life of the Silgan Indebtedness being exchanged, refinanced or refunded; (v)
Indebtedness Incurred in connection with the purchase, redemption, acquisition,
cancellation or other retirement for value of shares of Capital Stock of
Holdings, Silgan or any other Restricted Subsidiary, options on any such shares
or related stock appreciation rights or similar securities held by officers or
employees or former officers or employees (or their estates or beneficiaries
under their estates) and which were issued pursuant to any Stock Based Plan,
upon death, disability, retirement or termination of employment or pursuant to
the terms of such Stock Based Plan or any other agreement under which such
shares of Capital Stock, options, related rights or similar securities were
issued; provided that (A) such Indebtedness (other than any Shareholder
Subordinated Notes, which must be pari passu with, or subordinated in right of
payment to, the Exchange Debentures), by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued, is
expressly made subordinate in right of payment to the Exchange Debentures at
least to the extent that the Exchange Debentures would
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be subordinated in right of payment to Senior Indebtedness, (B) such
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, provides that no payments of
principal of such Indebtedness by way of sinking fund, mandatory redemption or
otherwise (including defeasance) may be made by Holdings (including, without
limitation, at the option of the holder thereof, other than an option given to a
holder pursuant to an "asset sale" or a "change of control" provision that is no
more favorable to the holders of such Indebtedness than the provisions contained
in the "Limitation on Asset Sales" covenant and as stated above under "--Change
of Control," and such Indebtedness specifically provides that Holdings will not
repurchase or redeem such Indebtedness pursuant to such provisions prior to
Holdings' repurchase of the Preferred Stock required to be repurchased by
Holdings under the "Limitation on Asset Sales" and as stated above under
"--Change of Control") at any time prior to the mandatory redemption date of the
Preferred Stock and (C) the scheduled maturity of all principal of such
Indebtedness is beyond the mandatory redemption date of the Preferred Stock;
(vi) Guarantees of Indebtedness of Silgan and other Restricted Subsidiaries
under the Silgan Credit Agreement; (vii) Indebtedness (A) in respect of
performance bonds, bankers' acceptances and surety or appeal bonds provided in
the ordinary course of business, (B) under (or in respect of) Currency
Agreements and Interest Rate Agreements; provided that, in the case of Currency
Agreements that relate to other Indebtedness, such Currency Agreements do not
increase the Indebtedness of Holdings and its Subsidiaries outstanding at any
time other than as a result of fluctuations in foreign currency exchange rates
or by reason of fees, indemnities and compensation payable thereunder and (C)
arising from agreements providing for indemnification, adjustment of purchase
price or similar options, or from Guarantees or letters of credit, surety bonds
or performance bonds securing any obligations of Holdings or any of its
Subsidiaries pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Subsidiary of Holdings, other
than Guarantees of Indebtedness Incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary of Holdings for the purpose of
financing such acquisition; and (viii) unsecured Indebtedness of Holdings;
provided that such Indebtedness (A) determined as of the date of Incurrence of
such Indebtedness, does not mature prior to the mandatory redemption date of the
Preferred Stock, and the Average Life of such Indebtedness is greater than the
remaining Average Life of the Preferred Stock, (B) by its terms or by the terms
of any agreement or instrument pursuant to which such Indebtedness is issued,
provides that no payments of principal of such Indebtedness by way of sinking
fund, mandatory redemption or otherwise (including defeasance) may be made by
Holdings (including, without limitation, at the option of the holder thereof
other than an option given to a holder pursuant to an "asset sale" or a "change
of control" provision that is no more favorable to the holders of such
Indebtedness than the provisions contained in the "Limitation on Asset Sales"
covenant and as stated above under "--Change of Control" and such Indebtedness
specifically provides that Holdings will not repurchase or redeem such
Indebtedness pursuant to such provisions prior to Holdings' repurchase of the
Preferred Stock required to be repurchased by Holdings under the "Limitation on
Asset Sales" covenant and as stated above under "--Change of Control") at any
time prior to the mandatory redemption date of the Preferred Stock and (C) by
its terms or the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is not scheduled to pay interest in cash prior to the
first date on which dividends on the Preferred Stock are required to be paid in
cash.
(b) Holdings shall not permit Silgan or any Subsidiary of Silgan to
Incur any Indebtedness or issue any Redeemable Stock unless (i) after giving
effect to the Incurrence of such Indebtedness or issuance of Redeemable Stock
and the receipt and application of the proceeds therefrom, the Interest Coverage
Ratio of Silgan would be greater than 1.75:l or (ii) such Indebtedness so
Incurred by Silgan or such Subsidiary of Silgan constitutes Silgan Indebtedness;
provided, however, that any Indebtedness or Redeemable Stock so Incurred or
issued pursuant to clause (i) or (ii) above may not prohibit the payment of
dividends to Holdings (but any such Indebtedness may condition such payments on
the absence of any defaults or events of defaults thereunder and on compliance
with financial tests) in
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amounts sufficient to make mandatory interest and principal payments due on the
Exchange Debentures at the times and in the amount due and payable; and provided
further, however, that, in the event the Preferred Stock is changed or exchanged
into securities of a Successor Corporation, nothing in this part (b) shall
prohibit the Successor Corporation from assuming or otherwise becoming liable
for existing Indebtedness of Holdings or its Subsidiaries.
(c) Notwithstanding any other provision of this "Limitation on
Indebtedness" covenant, (i) the maximum amount of Indebtedness that Holdings,
Silgan or any of their respective Subsidiaries may Incur pursuant to this
"Limitation on Indebtedness" covenant shall not be deemed to be exceeded due
solely to the result of fluctuations in the exchange rates of currencies and
(ii) for purposes of calculating the amount of Indebtedness outstanding at any
time under clause (i) of the second paragraph in part (a) of this "Limitation on
Indebtedness" covenant, no amount of Indebtedness of Holdings, Silgan or any of
their respective Subsidiaries outstanding on the Closing Date shall be
considered to be outstanding.
(d) For purposes of determining any particular amount of Indebtedness
under this "Limitation on Indebtedness" covenant, Guarantees of, or obligations
with respect to letters of credit supporting, Indebtedness otherwise included in
the determination of such particular amount shall not be included. For purposes
of determining compliance with this "Limitation on Indebtedness" covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the above clauses, Holdings, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses and (ii)
the amount of Indebtedness issued at a price that is less than the principal
amount thereof shall be equal to the amount of the liability in respect thereof
determined in conformity with GAAP.
(e) Notwithstanding any of the foregoing, nothing in this "Limitation
on Indebtedness" covenant shall prohibit the occurrence of (i) a Holdings
Merger, (ii) the sale of all or substantially all of the property and assets of
Silgan or its successors to Holdings and the assumption by Holdings of all or
substantially all of the liabilities of Silgan or its successors, or (iii) the
change or exchange of the New Preferred Stock into preferred stock of Silgan
having the same rights and privileges as the New Preferred Stock. Immediately
upon the occurrence of an event specified in clause (i), (ii) or (iii) in this
part (e), (1) parts (a) and (e) (other than clause (i)) of this "Limitation on
Indebtedness" covenant shall be of no further force and effect and (2) all
references to Silgan in part (b) of this "Limitation on Indebtedness" covenant
shall refer to the Successor Corporation.
The Second Amended and Restated Guaranty, dated as of June 30, 1989, as
amended and restated as of June 18, 1992, as further amended and restated as of
December 21, 1993, as further amended and restated as of August 1, 1995, and as
further amended as of May 31, 1996, made by Holdings in favor of the Banks,
Bankers Trust, as Administrative Agent and as a Co-Arranger, and Bank of
America, as Documentation Agent and as a Co-Arranger (as subsequently further
amended, the "Holdings Guaranty"), prohibits Holdings from Incurring
Indebtedness other than a Guarantee under the Silgan Credit Agreement, the
Discount Debentures, the Shareholder Subordinated Notes, the Exchange Debentures
or refinancings of the Exchange Debentures or Discount Debentures.
Limitation on Restricted Payments
Under the terms of the Certificate of Designation, Holdings shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on its Junior Securities
(other than dividends or distributions payable solely in shares of its Junior
Securities or such Restricted Subsidiary's Capital Stock (other than Redeemable
Stock) of the same class held by such holders or in options, warrants or other
rights to acquire such shares of Junior Securities
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or Capital Stock) held by Persons other than Holdings or another Restricted
Subsidiary (other than in respect of the repurchase or redemption of the
Holdings Class B Stock with the proceeds of the Old Preferred Stock), (ii)
purchase, redeem, retire or otherwise acquire for value any Junior Securities
(other than in respect of the repurchase or redemption of the Holdings Class B
Stock with the proceeds of the Old Preferred Stock) or any shares of Capital
Stock of any Restricted Subsidiary or any Unrestricted Subsidiary (including
options, warrants or other rights to acquire such shares of Junior Securities or
Capital Stock) held by Persons other than Holdings or another Restricted
Subsidiary or (iii) make any investment in any Affiliate (other than Holdings or
a Restricted Subsidiary) or Unrestricted Subsidiary (such payments or any other
actions described in clauses (i) through (iii) being, collectively, "Restricted
Payments") if at the time of and after giving effect to the proposed Restricted
Payment: (A) a Voting Rights Triggering Event shall have occurred and be
continuing, (B) Holdings (in the case Holdings or its Restricted Subsidiaries
will make the Restricted Payment) could not Incur at least $1.00 of Indebtedness
under the first paragraph in part (a) of the "Limitation on Indebtedness"
covenant or Silgan (in the case Silgan or its Restricted Subsidiaries will make
the Restricted Payment) could not Incur at least $1.00 of Indebtedness under
clause (i) of part (b) of the "Limitation on Indebtedness" covenant, (C) the
aggregate amount expended for all Restricted Payments (the amount so expended,
if other than in cash, to be determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution)
after the Closing Date (other than any Restricted Payments described in clauses
(ii) or (iv) of the second paragraph of this "Limitation on Restricted Payments"
covenant) shall exceed the sum of (1) 50% of the aggregate amount of Adjusted
Consolidated Net Income (or, if Adjusted Consolidated Net Income is a loss,
minus 100% of such amount) of Holdings (determined by excluding income resulting
from the transfers of assets received by Holdings or a Restricted Subsidiary
from an Unrestricted Subsidiary) accrued on a cumulative basis during the period
(taken as one accounting period) beginning on the first day of the month
immediately following the Closing Date and ending on the last day of the last
fiscal quarter preceding the Transaction Date plus (2) the aggregate net cash
proceeds received by Holdings from the issuance and sale of Junior Securities of
Holdings (other than Redeemable Stock) to any Person other than a Subsidiary of
Holdings, including an issuance or sale permitted by the Certificate of
Designation for cash or other property upon the conversion of any Indebtedness
of Holdings subsequent to the Closing Date, or from the issuance of any options,
warrants or other rights to acquire Junior Securities of Holdings (in each case,
exclusive of any Redeemable Stock or any options, warrants or other rights that
are redeemable at the option of the holder, or are required to be redeemed,
prior to the mandatory redemption date of the Preferred Stock) plus (3) an
amount equal to the net reduction in Investments in Unrestricted Subsidiaries
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to Holdings or any
Restricted Subsidiary from Unrestricted Subsidiaries, or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed in the case of any
Unrestricted Subsidiary the amount of Investments previously made by Holdings or
any Restricted Subsidiary in such Unrestricted Subsidiary plus (4) $25 million,
or (D) all dividends in respect of the Preferred Stock shall not have been
declared and paid in full as provided in the Certificate of Designation.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at the date of declaration, such payment would comply with the foregoing
provision; (ii) the making of Investments in Unrestricted Subsidiaries in an
aggregate amount not to exceed $75 million outstanding at any time; (iii) the
declaration and payment of dividends on the Common Stock of Holdings or Silgan,
following an initial public offering of the common stock of Holdings or Silgan,
as the case may be, of up to 6% per annum of the net proceeds received by
Holdings or Silgan, as the case may be, in such initial public offering; (iv)
the repurchase, redemption, refinancing or other payment or prepayment of Junior
Securities with the proceeds of Indebtedness incurred under clause (i), (iii) or
(viii) of the second paragraph of part (a) of the "Limitation on
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Indebtedness" covenant; (v) the purchase, redemption, acquisition, cancellation
or other retirement for value of Junior Securities of Holdings, Silgan or any
other Restricted Subsidiary, options on any such shares or related stock
appreciation rights or similar securities held by officers or employees or
former officers or employees (or their estates or beneficiaries under their
estates) and which were issued pursuant to any Stock Based Plan, upon death,
disability, retirement or termination of employment or pursuant to the terms of
such Stock Based Plan or any other agreement under which such Junior Securities,
options, related rights or similar securities were issued; provided that the
aggregate cash consideration paid for such purchase, redemption, acquisition,
cancellation or other retirement for value of such shares of Junior Securities,
options, related rights or similar securities after the Closing Date does not
exceed $25 million and that any additional consideration in excess of such $25
million is in the form of Indebtedness that would be permitted to be Incurred
under clause (v) of the second paragraph in part (a) of the Limitation on
Indebtedness covenant; (vi) the repurchase of Junior Securities of Holdings or
Capital Stock of Silgan followed immediately by the reissuance thereof for
consideration in an amount at least equal to the consideration paid to acquire
such stock, or the redemption, repurchase or other acquisition for value of
Common Stock of Holdings or Capital Stock of any Subsidiary of Holdings in
exchange for, or with the proceeds of a substantially concurrent offering of,
other Common Stock or shares of the Capital Stock, as the case may be, of such
entity (other than Redeemable Stock); and (vii) payments or distributions
pursuant to or in connection with a consolidation, merger or transfer of assets
that complies with the provisions of the Exchange Debenture Indenture applicable
to mergers, consolidations and transfers of all or substantially all of the
property and assets of Holdings; provided that, in the case of clauses (ii),
(iii), (iv), (v) and (vii), no Voting Rights Triggering Event shall have
occurred and be continuing or shall occur as a consequence thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries
Holdings shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by
Holdings or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to
Holdings or any other Restricted Subsidiary, (iii) make loans or advances to
Holdings or any other Restricted Subsidiary or (iv) transfer, subject to certain
exceptions, any of its property or assets to Holdings or any other Restricted
Subsidiary.
This covenant shall not restrict or prohibit any encumbrances or
restrictions existing: (i) in the Silgan Credit Agreement, the Silgan Notes, the
Discount Debentures (including any agreement pursuant to which the Silgan Notes
or the Discount Debentures were issued), or any other agreements in effect on
the Closing Date, including extensions, refinancings, renewals or replacements
thereof, provided that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any material
respect to the holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced; (ii) under
or by reason of applicable law, rule or regulation (including, without
limitation, applicable currency control laws and applicable state corporate
statutes restricting the payment of dividends in certain circumstances); (iii)
with respect to any Person or the property or assets of such Person acquired by
Holdings or any Restricted Subsidiary and existing at the time of such
acquisition, which encumbrances or restrictions are not applicable to any Person
or the property or assets of any Person other than such Person or the property
or assets of such Person so acquired; (iv) in the case of clause (iv) of the
first paragraph of this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant, (A) that restrict in a customary
manner the subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (B) by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of Holdings or any Restricted
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Subsidiary not otherwise prohibited by the Certificate of Designation or (C)
arising or agreed to in the ordinary course of business and that do not,
individually or in the aggregate, detract from the value of the property or
assets of Holdings or any Restricted Subsidiary in any manner material to
Holdings or such Restricted Subsidiary; or (v) with respect to any Restricted
Subsidiary and imposed pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary. Nothing contained in this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant shall prevent Holdings or any Restricted Subsidiary from
restricting the sale or other disposition of property or assets of Holdings or
any of its Subsidiaries that secure Indebtedness of Holdings or any of its
Subsidiaries.
Limitation on Transactions with Shareholders and Affiliates
Holdings shall not, and shall not permit any Subsidiary of Holdings to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of Holdings (other than the
Bank Agent or any of its Affiliates) or any Subsidiary of Holdings or with any
Affiliate of Holdings or any Subsidiary of Holdings, except upon fair and
reasonable terms no less favorable to Holdings or such Subsidiary of Holdings
than could be obtained in a comparable arm's-length transaction with a Person
that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to: (i)
any transaction between Holdings and any Subsidiary of Holdings or between
Subsidiaries of Holdings; (ii) transactions (A) for which Holdings or any
Subsidiary of Holdings delivers to the Transfer Agent a written opinion of a
nationally recognized investment banking firm stating that the transaction is
fair to Holdings or such Subsidiary of Holdings from a financial point of view
or (B) approved by a majority of the disinterested members of the Board of
Directors; (iii) the payment of fees pursuant to the Management Agreements or
pursuant to any similar management contracts entered into by Holdings or any
Subsidiary of Holdings; (iv) the payment of reasonable and customary regular
fees to directors of Holdings or any Subsidiary of Holdings who are not
employees of Holdings or such Subsidiary of Holdings; (v) any payments or other
transactions pursuant to any tax-sharing agreement between Holdings and Silgan
or any other Person with which Holdings is required or permitted to file a
consolidated tax return or with which Holdings is or could be part of a
consolidated group for tax purposes; (vi) any Restricted Payments not prohibited
by the "Limitation on Restricted Payments" covenant; (vii) the payment of fees
to Morgan Stanley, S&H or their respective Affiliates for financial, advisory,
consulting or investment banking services that the Board of Directors deems to
be advisable or appropriate for Holdings or any Subsidiary of Holdings to obtain
(including the payment to Morgan Stanley of any underwriting discounts or
commissions or placement agency fees) in connection with the issuance and sale
of any securities by Holdings or any Subsidiary of Holdings; or (viii) any
transaction contemplated by any of the Stock Based Plans.
Notwithstanding any of the foregoing, nothing in this "Limitation on
Transactions with Shareholders and Affiliates" covenant shall prohibit the
occurrence of (i) a Holdings Merger, (ii) the sale of all or substantially all
of the property and assets of Silgan or its successors to Holdings and the
assumption by Holdings of all or substantially all of the liabilities of Silgan
or its successors, or (iii) the issuance by Silgan or its successors of
preferred stock in exchange for or in replacement of the New Preferred Stock
having the same rights and privileges as the New Preferred Stock. Immediately
upon the occurrence of an event specified in clause (i), (ii) or (iii) of the
preceding sentence, all references to Holdings in this "Limitation on
Transactions with Shareholders and Affiliates" covenant shall refer to the
Successor Corporation.
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Limitation on the Issuance of Capital Stock of Restricted Subsidiaries
Holdings shall not permit any Restricted Subsidiary to, directly or
indirectly, issue or sell any shares of its Capital Stock (including options,
warrants or other rights to purchase shares of such Capital Stock) except (i) to
Holdings or another Restricted Subsidiary that is a Wholly Owned Subsidiary of
Holdings, (ii) pursuant to options on such Capital Stock granted to officers and
directors of such Restricted Subsidiary, (iii) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary or (iv) in connection with an initial public
offering of the Common Stock of such Restricted Subsidiary; provided that,
within 12 months after the date the Net Cash Proceeds of an initial public
offering are received by such Restricted Subsidiary, such Restricted Subsidiary
shall (A) apply an amount equal to such Net Cash Proceeds to repay Indebtedness
or Senior Securities of Holdings or Indebtedness of a Restricted Subsidiary, in
each case owing to a Person other than Holdings or any of its Subsidiaries, (B)
apply an amount equal to such Net Cash Proceeds to the repurchase of
Indebtedness or Senior Securities pursuant to mandatory repurchase or repayment
provisions applicable to such Indebtedness or Senior Securities or (C) invest an
equal amount, or the amount not so applied pursuant to subclause (A) or (B) (or
enter into a definitive agreement committing to so invest within 12 months of
the date of such agreement), in property or assets that (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board Resolution) are of a nature or type or are used in a
business (or in a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, any Restricted Subsidiary and its
Subsidiaries existing on the date thereof.
Notwithstanding any of the foregoing, nothing in this "Limitation on
the Issuance of Capital Stock of Restricted Subsidiaries" covenant shall
prohibit the occurrence of (i) a Holdings Merger, (ii) the sale of all or
substantially all of the property and assets of Silgan or its successors to
Holdings, and the assumption by Holdings of all or substantially all of the
liabilities of Silgan or its successors, or (iii) the issuance by Silgan or its
successors of preferred stock having the same rights and privileges as the New
Preferred Stock in exchange or replacement for the New Preferred Stock.
Immediately upon the occurrence of an event specified in clause (i), (ii) or
(iii) of the preceding sentence, all references to Holdings in this "Limitation
on the Issuance of Capital Stock of Restricted Subsidiaries" covenant shall
refer to the Successor Corporation.
Limitation on Asset Sales
(a) In the event and to the extent that the Net Cash Proceeds received
by Holdings or any Restricted Subsidiary from one or more Asset Sales occurring
on or after the Closing Date in any period of 12 consecutive months (other than
Asset Sales by Holdings or any Restricted Subsidiary to Holdings or another
Restricted Subsidiary) exceed 15% of Consolidated Net Tangible Assets in any one
fiscal year (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of Holdings and its
Subsidiaries has been prepared), then Holdings shall, or shall cause such
Restricted Subsidiary to, (i) within 12 months after the date the Net Cash
Proceeds so received exceed 15% of Consolidated Net Tangible Assets in any one
fiscal year (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of Holdings and its
Subsidiaries has been prepared), (A) apply an amount equal to such excess Net
Cash Proceeds to repay Indebtedness or Senior Securities of Holdings or
Indebtedness of a Restricted Subsidiary, in each case owing to a Person other
than Holdings or any of its Subsidiaries or (B) invest an equal amount, or the
amount not so applied pursuant to subclause (A) (or enter into a definitive
agreement committing to so invest within 12 months of the date of such
agreement), in property or assets that (as determined in good faith by the Board
of Directors, whose determination shall be conclusive and evidenced by a Board
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Resolution) are of a nature or type or are used in a business (or in a company
having property and assets of a nature or type, or engaged in a business)
similar or related to the nature or type of the property and assets of, or the
business of, Holdings and its Subsidiaries existing on the date thereof and (ii)
apply such excess Net Cash Proceeds (to the extent not applied pursuant to
clause (i)) as provided in the following paragraphs of this "Limitation on Asset
Sales" covenant. The amount of such excess Net Cash Proceeds required to be
applied (or to be committed to be applied) during such 12-month period as set
forth in subclause (A) or (B) of the preceding sentence and not applied as so
required by the end of such period shall constitute "Excess Proceeds."
(b) If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as
defined below) totals at least $10 million, Holdings must, not later than the
fifteenth Business Day of such month, make an offer (an "Excess Proceeds Offer")
to purchase from the holders on a pro rata basis an aggregate liquidation value
of shares of Preferred Stock equal to the Excess Proceeds on such date, at a
redemption price equal to 101% of the liquidation preference thereof, plus
accrued and unpaid dividends to the date of redemption (the "Excess Proceeds
Payment"); provided, however, that no Excess Proceeds Offer shall be required to
be commenced with respect to the Preferred Stock until the Business Day
following the dates that payments are made pursuant to similar offers that are
made to holders of Indebtedness and need not be commenced if the Excess Proceeds
remaining after application to Indebtedness purchased in the offers made to the
holders of Indebtedness are less than $10 million; provided further, however,
that no Preferred Stock may be purchased under this "Limitation on Asset Sales"
covenant unless Holdings shall have purchased all Indebtedness tendered pursuant
to the offers applicable thereto and shall have obtained the consent required
under the Silgan Credit Agreement to make such an Excess Proceeds Offer.
(c) Holdings shall commence an Excess Proceeds Offer by mailing a
notice to the Transfer Agent and each holder stating: (i) that the Excess
Proceeds Offer is being made pursuant to this "Limitation on Asset Sales"
covenant and that all New Preferred Stock validly tendered will be accepted for
payment on a pro rata basis; (ii) the redemption price and the date of
redemption or purchase (which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed) (the "Excess
Proceeds Payment Date"); (iii) that any share of New Preferred Stock not
tendered will continue to accumulate and pay dividends pursuant to its terms;
(iv) that, unless Holdings defaults in the payment of the Excess Proceeds
Payment, any share of New Preferred Stock accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accumulate dividends or accrue interest
after the Excess Proceeds Payment Date; (v) that holders electing to have any
share of New Preferred Stock purchased pursuant to the Excess Proceeds Offer
will be required to surrender such New Preferred Stock, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of the
share of New Preferred Stock completed, to the Transfer Agent at the address
specified in the notice prior to the close of business on the Business Day
immediately preceding the Excess Proceeds Payment Date; (vi) that holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the third Business Day immediately preceding the
Excess Proceeds Payment Date, a telegram, telex, facsimile transmission or
letter, setting forth the name of such holder, the liquidation preference of the
shares of New Preferred Stock delivered for redemption and a statement that such
holder is withdrawing his election to have such New Preferred Stock redeemed;
and (vii) that holders whose New Preferred Stock is being redeemed or being
purchased only in part will be issued new shares of New Preferred Stock equal in
liquidation preference to the unredeemed New Preferred Stock surrendered.
(d) On the Excess Proceeds Payment Date, Holdings shall: (i) accept for
payment on a pro rata basis Preferred Stock or portions thereof tendered
pursuant to the Excess Proceeds Offer; (ii) deposit with the Transfer Agent
money sufficient to pay the redemption price of all Preferred Stock or portions
thereof so accepted; and (iii) deliver, or cause to be delivered, to the
Transfer Agent all Preferred Stock or
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portions thereof so accepted, together with an Officer's Certificate specifying
the shares of Preferred Stock or portions thereof accepted for payment by
Holdings. The Transfer Agent shall promptly mail to the holders of Preferred
Stock so accepted payment in an amount equal to the redemption price, and the
Trustee shall promptly authenticate and mail to such holders new shares of
Preferred Stock equal in liquidation preference to any unredeemed portion of the
Preferred Stock surrendered. Holdings will publicly announce the results of the
Excess Proceeds Offer as soon as practicable after the Excess Proceeds Payment
Date. For purposes of this "Limitation on Asset Sales" covenant, the Transfer
Agent shall act as the Paying Agent.
(e) Holdings will comply with 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 the event that such Excess Proceeds are received
by Holdings under this "Limitation on Asset Sales" covenant and Holdings is
required to redeem New Preferred Stock as described above.
(f) Notwithstanding the foregoing, nothing in this "Limitation on Asset
Sales" covenant shall prohibit the occurrence of (i) a Holdings Merger or (ii)
the sale of all or substantially all of the property and assets of Silgan or its
successors to Holdings and the assumption by Holdings of all or substantially
all of the liabilities of Silgan or its successors. Immediately upon the
occurrence of an event specified in clause (i) or (ii) of the preceding
sentence, all references to Holdings in this "Limitation on Asset Sales"
covenant shall refer to the Successor Corporation.
Consolidation, Merger and Sale of Assets
Holdings shall not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially as an entirety in one
transaction or a series of related transactions) to, any Person (other than a
Restricted Subsidiary that is a Wholly Owned Subsidiary of Holdings; provided
that, in connection with any merger of Holdings with any Restricted Subsidiary
that is a Wholly Owned Subsidiary of Holdings, no consideration (other than
common stock in the surviving Person or Holdings) shall be issued or distributed
to the stockholders of Holdings) or permit any Person to merge with or into
Holdings, unless: (i) Holdings shall be the continuing Person, or the Person (if
other than Holdings) formed by such consolidation or into which Holdings is
merged or that acquired or leased such property and assets of Holdings shall be
a corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and the New Preferred Stock shall be
converted or exchanged for and shall become shares of such successor company
having in respect of the successor company the same rights and privileges that
the New Preferred Stock had immediately prior to such transaction; (ii)
immediately after giving effect to such transaction, no Voting Rights Triggering
Event, and no event that after the giving of notice or lapse of time or both
would become a Voting Rights Triggering Event, shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis, the Interest Coverage Ratio of Holdings (or any Person becoming the
successor issuer of the New Preferred Stock) is at least 1:1; provided that, if
the Interest Coverage Ratio of Holdings before giving effect to such transaction
is within the range set forth in column (A) below, then the Interest Coverage
Ratio of Holdings (or any Person becoming the successor issuer of the New
Preferred Stock) shall be at least equal to the lesser of (1) the ratio
determined by multiplying the percentage set forth in column (B) below by the
Interest Coverage Ratio of Holdings prior to such transaction and (2) the ratio
set forth in column (C) below:
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(A) (B) (C)
--- --- ---
1.11:1 to 1.99:1........................ 90% 1.5:1
2.00:1 to 2.99:1........................ 80% 2.1:1
3.00:1 to 3.99:1........................ 70% 2.4:1
4.00:1 or more.......................... 60% 2.5:1
and provided further that, if the Interest Coverage Ratio of Holdings (or any
Person becoming the successor issuer of the New Preferred Stock) is 3:1 or more,
the calculation in the preceding proviso shall be inapplicable and such
transaction shall be deemed to have complied with the requirements of this
clause (iii); (iv) immediately after giving effect to such transaction on a pro
forma basis, Holdings (or any Person that becomes the successor issuer of the
New Preferred Stock) shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of Holdings immediately prior to such
transaction; and (v) Holdings delivers to the Registrar an Officer's Certificate
(attaching the arithmetic computations to demonstrate compliance with clauses
(iii) and (iv)) and an Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture comply with
this provision and that all conditions precedent provided for herein relating to
such transaction have been complied with; provided, however, that clause (iv) of
this "Consolidation, Merger and Sale of Assets" covenant does not apply to, and
the Interest Coverage Ratio required by clause (iii) of this "Consolidation,
Merger and Sale of Assets" covenant (A) shall be 1.75:1 with respect to, (1) a
Holdings Merger, (2) the sale of all or substantially all of the property and
assets of Silgan or its successors to Holdings, and the assumption by Holdings
of all or substantially all of the liabilities of Silgan or its successors or
(3) the issuance by Silgan or its successors of preferred stock complying with
clause (i) above and (B) does not apply if, in the good faith determination of
the Board of Directors, whose determination shall be evidenced by a Board
Resolution, the principal purpose of such transaction is to change the state of
incorporation of Holdings; and provided further, however, that any such
transaction shall not have as one of its purposes the evasion of the limitations
of this covenant.
Reports
So long as any shares of New Preferred Stock are outstanding, Holdings
shall file with the Commission and send to the holders of the New Preferred
Stock the annual reports, quarterly reports and the information, documents and
other reports required to be filed by Holdings with the Commission pursuant to
Section 13 or 15 of the Exchange Act, whether or not Holdings has or is required
to have a class of securities registered under the Exchange Act, at the time it
is or would be required to file the same with the Commission and, within 15 days
after Holdings is or would be required to file such reports, information or
documents with the Commission.
Exchange
Holdings may exchange all, but not less than all, of the outstanding
shares of Preferred Stock, including any shares of Preferred Stock issued as
payment for dividends, into Exchange Debentures at any time. In order to effect
such exchange, Holdings shall (a) if necessary to satisfy the condition set
forth in clause (B) in the following paragraph based upon the written advice of
counsel to Holdings, file a registration statement with the Commission relating
to the exchange, and (b) if a registration statement is filed with the
Commission pursuant to clause (a), use its best efforts to cause such
registration statement to be declared effective as soon as practicable by the
Commission unless the opinion referred to in clause (B) in the following
paragraph shall have been subsequently delivered.
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In order to effectuate such exchange, Holdings shall send a written
notice of exchange by mail to each holder of record of shares of Preferred
Stock, which notice shall state (i) that Holdings is exchanging the Preferred
Stock into Exchange Debentures pursuant to the Certificate of Designation and
(ii) the date fixed for exchange (the "Exchange Date"), which date shall not be
less than 15 days nor more than 60 days following the date on which such notice
is mailed (except as provided in the last sentence of this paragraph). On the
Exchange Date, if the conditions set forth in clauses (A) through (E) below are
satisfied Holdings shall issue Exchange Debentures in exchange for the Preferred
Stock as provided in the next paragraph, provided that on the Exchange Date: (A)
there shall be legally available funds sufficient therefor (including, without
limitation, legally available funds sufficient therefor under Delaware law); (B)
a registration statement relating to the Exchange Debentures shall have been
declared effective under the Securities Act prior to such exchange and shall
continue to be effective on the Exchange Date or Holdings shall have obtained a
written opinion of counsel that an exemption from the registration requirements
of the Securities Act is available for such exchange and that upon receipt of
such Exchange Debentures pursuant to such exchange made in accordance with such
exemption, each holder of an Exchange Debenture that is not an Affiliate of
Holdings will not be subject to any restrictions imposed by the Securities Act
upon the resale of such Exchange Debenture, and such exemption is relied upon by
Holdings for such exchange; (C) the Exchange Debenture Indenture and the trustee
thereunder shall have been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); (D) immediately after giving effect to such
exchange, no Default or Event of Default (each as defined in the Exchange
Debenture Indenture) would exist under the Exchange Debenture Indenture; and (E)
Holdings shall have delivered to the Trustee under the Exchange Debenture
Indenture a written opinion of counsel, dated the date of exchange, regarding
the satisfaction of the conditions set forth in clauses (A), (B) and (C). In the
event that (i) the issuance of the Exchange Debentures is not permitted on the
Exchange Date or (ii) any of the conditions set forth in clauses (A) through (E)
of the preceding sentence are not satisfied on the Exchange Date, Holdings shall
use its best efforts to satisfy such conditions and effect such exchange as soon
as practicable.
Upon any exchange pursuant to the preceding paragraph, the holders of
outstanding shares of New Preferred Stock will be entitled to receive a
principal amount of Exchange Debentures for shares of New Preferred Stock, the
liquidation preference of which, plus the amount of accumulated and unpaid
dividends (including a prorated dividend for the period from the immediately
preceding dividend payment date to the date of exchange) with respect to which,
equals such principal amount; provided that the Company at its option may pay
cash for any or all accrued and unpaid dividends in lieu of issuing Exchange
Debentures in respect of such dividends. The Exchange Debentures will be issued
in registered form, without coupons. Exchange Debentures issued in exchange for
New Preferred Stock will be in principal amounts of $1,000 and integral
multiples thereof to the extent practicable, and will also be issued in
principal amounts less than $1,000 so that each holder of New Preferred Stock
will receive certificates representing the entire principal amount of Exchange
Debentures to which its shares of New Preferred Stock entitle it, provided that
Holdings may, subject to the restrictions in the Discount Debentures, Holdings'
guarantee under the Silgan Credit Agreement and any of its other then-existing
Indebtedness, pay cash in lieu of issuing an Exchange Debenture in a principal
amount less than $1,000. On and after the date of exchange, dividends will cease
to accrue on the outstanding shares of New Preferred Stock, and all rights of
the holders of New Preferred Stock (except the right to receive the Exchange
Debentures, an amount in cash, to the extent applicable, equal to the accrued
and unpaid dividends to the Exchange Date, and, if Holdings so elects, cash in
lieu of any Exchange Debenture which is in an amount that is not an integral
multiple of $1,000) will terminate. The person entitled to receive the Exchange
Debentures issuable upon such exchange will be treated for all purposes as the
registered holder of such Exchange Debentures.
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Holdings will comply with the provisions of Rule 13e-4 promulgated
pursuant to the Exchange Act in connection with any exchange, to the extent
applicable.
New Preferred Stock Book Entry; Delivery and Form
So long as DTC or its nominee is the registered owner or holder of a
Global New Preferred Stock Certificate, DTC or such nominee, as the case may be,
will be considered the sole owner or holder of the New Preferred Stock
represented by such Global New Preferred Stock Certificate for all purposes
under the Certificate of Designation and the New Preferred Stock. No beneficial
owner of an interest in the Global New Preferred Stock Certificate will be able
to transfer that interest except in accordance with DTC's applicable procedures,
in addition to those provided for under the Certificate of Designation.
Payments made with respect to the Global New Preferred Stock
Certificate will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither Holdings nor the Placement Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global New
Preferred Stock Certificate or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Holdings expects that DTC or its nominee, upon receipt of any payments
made with respect to the Global New Preferred Stock Certificate, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the amount of such Global New Preferred Stock
Certificate as shown on the records of DTC or its nominee. Holdings also expects
that payments by participants to owners of beneficial interest in such Global
New Preferred Stock Certificate held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
The Company understands that DTC will take any action permitted to be
taken by a holder of New Preferred Stock (including the presentation of New
Preferred Stock for exchange, see "--Exchange" above) only at the direction of
one or more participants to whose account the DTC interests in the Global New
Preferred Stock is credited and only in respect of such portion of the aggregate
liquidation preference of New Preferred Stock as to which such participant or
participants has or have given such direction.
Holdings understands: DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code and a
"Clearing Agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interest in the Global New Preferred Stock Certificate
among participants of DTC, it is under no
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obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither Holdings nor the Placement
Agent will have any responsibility for the performance by DTC or its respective
participants or indirect participants of its respective obligations under the
rules and procedures governing their operations.
Certificated New Preferred Stock
If DTC is at any time unwilling or unable to continue as a depositary
for the Global New Preferred Stock and a successor depositary is not appointed
by Holdings within 90 days, Holdings will issue Certificated New Preferred Stock
in exchange for the Global New Preferred Stock Certificate.
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DESCRIPTION OF EXCHANGE DEBENTURES
The summary contained herein of certain provisions of the Exchange
Debentures does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Indenture in respect of the Exchange
Debentures (the "Exchange Debenture Indenture"), which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. The
definitions of certain terms used in the Exchange Debentures and the Exchange
Debenture Indenture and in the following summary are set forth above under
"Description of New Preferred Stock--Certain Definitions."
The Exchange Debentures
The Exchange Debentures, if issued, will be issued under the Exchange
Debenture Indenture between Holdings and Fleet National Bank, as trustee (the
"Trustee"). The terms of the Exchange Debentures include those stated in the
Exchange Debenture Indenture and those made part of the Exchange Debenture
Indenture by reference to the Trust Indenture Act. The Exchange Debentures will
be subject to all such terms, and prospective holders of the Exchange Debentures
are referred to the Exchange Debenture Indenture and the Trust Indenture Act for
a statement of such terms. The following summary of certain provisions of the
Exchange Debenture Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Trust Indenture Act and to
all of the provisions of the Exchange Debenture Indenture, including the
definitions of certain terms therein and those terms made a part of the Exchange
Debenture Indenture by reference to the Trust Indenture Act.
General
The Exchange Debentures will be subordinated, unsecured obligations of
Holdings, will be limited in aggregate principal amount to the aggregate
liquidation preference of the Preferred Stock (including any Preferred Stock
issued in payment of dividends), plus accrued and unpaid dividends, on the date
of exchange of the Preferred Stock into Exchange Debentures (plus any additional
Exchange Debentures issued in lieu of cash interest as described herein). The
Exchange Debentures will be issued in fully registered form only in
denominations of $1.00 and integral multiples thereof.
Principal of, premium, if any, and interest on the Exchange Debentures
will be payable, and the Exchange Debentures may be presented for registration
of transfer or exchange, at the office of the Paying Agent and Registrar. At
Holdings' option, interest, to the extent paid in cash, may be paid by check
mailed to the registered address of holders of the Exchange Debentures as shown
on the register for the Exchange Debentures. The Trustee will initially act as
Paying Agent and Registrar. Holdings may change any Paying Agent and Registrar
without prior notice to Holders of the Exchange Debentures. Holders of the
Exchange Debentures must surrender Exchange Debentures to the Paying Agent to
collect principal payments.
The Exchange Debentures will mature on July 15, 2006. Each Exchange
Debenture will bear interest at the same rate in effect with respect to the
Preferred Stock on the date the Exchange Debentures are issued from the Exchange
Debenture Issue Date or from the most recent interest payment date to which
interest has been paid or provided for. Interest will be payable semi-annually
in cash (or, on or prior to July 15, 2000, in additional Exchange Debentures, at
the option of Holdings) in arrears on each of January 15 and July 15 commencing
with the first such date after the Exchange Debenture Issue Date. Interest on
the Exchange Debentures will be computed on the basis of a 360-day year of 12
30-day months and the actual number of days elapsed.
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Because of Holdings' option through July 15, 2000 to pay interest on
the Exchange Debentures by issuing additional Exchange Debentures, any Exchange
Debentures issued prior to that date will be treated as issued with OID, unless
under special rules for interest holidays the amount of OID is treated as de
minimis. See "Certain United States Federal Income Tax Considerations."
Subordination
The Exchange Debentures will be subordinated indebtedness of Holdings,
subordinated in right of payment to all Senior Indebtedness, including pursuant
to the Silgan Credit Agreement and the Discount Debentures. In addition, since
all of the operations of Holdings are conducted through its subsidiaries, the
liabilities of its subsidiaries will be effectively senior to the Exchange
Debentures. After giving pro forma effect to the Refinancing as of June 30,
1996, Silgan and its subsidiaries would have had approximately $1,098.7 million
of indebtedness and other liabilities effectively senior to the Exchange
Debentures. See "Capitalization."
In the event that the Exchange Debentures become obligations of any
Successor Corporation, whether as a result of (i) a Holdings Merger, (ii) the
sale of all or substantially all of the property and assets of Silgan or its
successors to Holdings and the assumption by Holdings of all or substantially
all of the liabilities of Silgan or its successors, or (iii) the assumption by
Silgan or its successors of indebtedness represented by the Exchange Debentures,
the Exchange Debentures will be subordinated in right of payment to all Senior
Indebtedness of such Successor Corporation existing on the date of such
transaction or assumed or incurred thereafter. After giving pro forma effect to
the Refinancing as of June 30, 1996, if an event as described in clause (i),
(ii) or (iii) of the preceding sentence had occurred on such date or if Silgan
had assumed the Debentures at such date, there would have been approximately
$911.1 million of Indebtedness that would have constituted Senior Indebtedness
and approximately $1,157.7 million of Indebtedness and other liabilities
effectively senior to the Exchange Debentures. See "Risk Factors--Holding
Company Structure; Subordination."
To the extent any payment of Senior Indebtedness (whether by or on
behalf of Holdings, a Successor Corporation, 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, 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
Indebtedness or part thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not occurred. To the
extent the obligation to repay any Senior Indebtedness is declared to be
fraudulent, invalid or otherwise set aside under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then the obligations so
declared fraudulent, invalid or otherwise set aside (and all other amounts that
would come due with respect thereto had such obligations not been so affected)
shall be deemed to be reinstated and outstanding as Senior Indebtedness for all
purposes of the Exchange Debenture Indenture as if such declaration, invalidity
or setting aside had not occurred. Upon any payment or distribution of assets or
securities of Holdings or a Successor Corporation of any kind or character,
whether in cash, property or securities, upon any dissolution or winding-up or
total or partial liquidation or reorganization of Holdings or a Successor
Corporation, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness (including any interest accruing subsequent to an event of
bankruptcy, whether or not such interest is an allowed claim enforceable against
the debtor under the United States Bankruptcy Code) shall first be paid in full,
in cash or cash equivalents, before the holders or the Trustee on behalf of the
holders shall be entitled to receive any payment by or on behalf of Holdings or
a Successor Corporation on account of Subordinated
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Obligations, or any payment to acquire any of the Exchange Debentures for cash,
property or securities, or any distribution with respect to the Exchange
Debentures of any cash, property or securities. Before any payment may be made
by or on behalf of Holdings or a Successor Corporation of any Subordinated
Obligations upon any such dissolution, winding-up, liquidation or
reorganization, any payment or distribution of assets or securities of Holdings
or a Successor Corporation of any kind or character, whether in cash, property
or securities, to which the holders or the Trustee on behalf of the holders
would be entitled, but for the subordination provisions of the Exchange
Debenture Indenture, shall be made by Holdings or a Successor Corporation or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person making such payment or distribution, or by the holders or the Trustee if
received by them or it, directly to the holders of the Senior Indebtedness (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders) or their representatives, or to the trustee
or trustees under any indenture pursuant to which any such Senior Indebtedness
may have been issued, as their respective interests appear, to the extent
necessary to pay all such Senior Indebtedness 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 Indebtedness.
No direct or indirect payment by or on behalf of Holdings or a
Successor Corporation of Subordinated Obligations, whether pursuant to the terms
of the Exchange Debentures or upon acceleration or otherwise, shall be made if,
at the time of such payment, there exists a default in the payment of all or any
portion of the obligations on any Senior Indebtedness and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of such Senior Indebtedness. In addition, during the
continuance of any other event of default with respect to (i) the Silgan Credit
Agreement pursuant to which the maturity thereof may be accelerated and (a) upon
receipt by the Trustee of written notice from the Bank Agent or (b) if such
event of default under the Silgan Credit Agreement results from the acceleration
of the Exchange Debentures, from and after the date of such acceleration, no
payment of Subordinated Obligations may be made by or on behalf of Holdings or a
Successor Corporation upon or in respect of the Exchange Debentures for a period
(a "Payment Blockage Period") commencing on the earlier of the date of receipt
of such notice or the date of such acceleration and ending 159 days thereafter
(unless such Payment Blockage Period shall be terminated by written notice to
the Trustee from the Bank Agent or such event of default has been cured or
waived) or (ii) any other Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated, upon receipt by the Trustee of written
notice from the trustee or other representative for the holders of such other
Designated Senior Indebtedness (or the holders of at least majority in principal
amount of such other Designated Senior Indebtedness then outstanding), no
payment of Subordinated Obligations may be made by or on behalf of Holdings or a
Successor Corporation upon or in respect of the Exchange Debentures for a
Payment Blockage Period commencing on the date of receipt of such notice and
ending 119 days thereafter (unless, in each case, such Payment Blockage Period
shall be terminated by written notice to the Trustee from such trustee or other
representatives for such holders). Not more than one Payment Blockage Period may
be commenced with respect to the Exchange Debentures during any period of 360
consecutive days; provided that, subject to the limitation contained in the next
sentence, the commencement of a Payment Blockage Period by the representatives
for, or the holders of, Designated Senior Indebtedness other than under the
Silgan Credit Agreement or under clause (i)(b) of this paragraph shall not bar
the commencement of another Payment Blockage Period by the Bank Agent within
such period of 360 consecutive days. Notwithstanding anything in the Exchange
Debenture Indenture to the contrary, there must be 180 consecutive days in any
360-day period in which no Payment Blockage Period is in effect. No event of
default (other than an event of default pursuant to the financial maintenance
covenants under the Silgan Credit Agreement) that existed or was continuing (it
being acknowledged that any subsequent action that 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) on the date of the commencement of any Payment Blockage Period with
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respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis for the commencement of a second Payment
Blockage Period by the representatives for, or the holders of, such Designated
Senior Indebtedness, 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.
By reason of the subordination provisions described above, in the event
of liquidation or insolvency, creditors of Holdings or a Successor Corporation
who are not holders of Senior Indebtedness or of the Exchange Debentures may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than holders of the Exchange Debentures.
"Successor Corporation" is defined to mean (i) the surviving entity of
any Holdings Merger, (ii) Silgan, upon the assumption by Silgan of the
liabilities of Holdings represented by the Exchange Debentures or (iii) any
successor corporation to Silgan that becomes the successor obligor on the
Exchange Debentures, whether by merger, consolidation, sale of assets,
assumption of liabilities or otherwise.
"Senior Indebtedness" is defined to mean the following obligations of
Holdings or a Successor Corporation: (i) all Indebtedness and other monetary
obligations of Holdings or a Successor Corporation under (or in respect of) the
Silgan Credit Agreement, the Discount Debentures and, in the event of a Holdings
Merger or similar transaction, the Silgan Notes (including any agreement
pursuant to which the Silgan Notes or the Discount Debentures were issued), any
Interest Rate Agreement or any Currency Agreement, (ii) all other Indebtedness
of Holdings or a Successor Corporation (other than Indebtedness evidenced by the
Exchange Debentures), including principal and interest on such Indebtedness,
unless such Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is pari passu with, or
subordinated in right of payment to, the Exchange Debentures and (iii) all fees,
expenses and indemnities payable in connection with the Silgan Credit Agreement,
the 11-3/4% Notes (including any agreement pursuant to which the Silgan Notes
are issued) and, if applicable, Currency Agreements and Interest Rate
Agreements; provided that the term "Senior Indebtedness" shall not include (a)
any Indebtedness of Holdings or a Successor Corporation that, when Incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code, was without recourse to Holdings or a Successor Corporation,
(b) any Indebtedness of Holdings or a Successor Corporation to a Subsidiary of
Holdings or a Successor Corporation or to a joint venture in which Holdings or a
Successor Corporation has an interest, (c) any Indebtedness of Holdings or a
Successor Corporation (other than such Indebtedness already described in clause
(i) above) of the type described in clause (ii) above and not permitted by the
"Limitation on Indebtedness" covenant below, (d) any repurchase, redemption or
other obligation in respect of Redeemable Stock, (e) any Indebtedness to any
employee or officer of Holdings or a Successor Corporation or any of its
Subsidiaries, (f) any liability for federal, state, local or other taxes owed or
owing by Holdings or a Successor Corporation or (g) any Trade Payables. "Senior
Indebtedness" will also include interest accruing subsequent to events of
bankruptcy of Holdings or a Successor Corporation and its Subsidiaries at the
rate provided for in the document governing such Indebtedness, whether or not
such interest is an allowed claim enforceable against the debtor in a bankruptcy
case under federal bankruptcy law.
"Designated Senior Indebtedness" is defined to mean (i) Indebtedness
under the Silgan Credit Agreement, including refinancings thereof and (ii) any
other Indebtedness constituting Senior Indebtedness that, at any date of
determination, has an aggregate principal amount of at least $50 million and is
specifically designated by Holdings or the Successor Corporation in the
instrument creating or evidencing such Senior Indebtedness as "Designated Senior
Indebtedness."
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Optional Redemption
The Exchange Debentures will be redeemable at any time on or after July
15, 2000, at Holdings' option, in whole or in part, upon not less than 30 nor
more than 60 days' prior written notice mailed by first-class mail to each
holder's last address as it appears in the Security Register, at the redemption
prices (expressed as a percentage of the principal amount thereof) set forth
below, plus an amount in cash equal to all accumulated and unpaid interest
thereon to the redemption date, subject to the right of holders of record on the
relevant Regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the redemption date, if redeemed during the 12-month
period beginning July 15 of each of the years set forth below.
Year Percentage
---- ----------
2000........................................ 109.938%
2001........................................ 106.625%
2002........................................ 103.313%
2003 and thereafter ........................ 100.000%
In addition, on or prior to July 15, 2000, Holdings or a Successor
Corporation may redeem all (but not less than all) outstanding Exchange
Debentures, at a redemption price equal to 110% of the principal amount thereof,
plus accrued and unpaid interest to the redemption date, out of the net proceeds
of any sale of its common stock, provided that such redemption occurs within 180
days after consummation of such sale.
The Silgan Credit Agreement and the Discount Debentures Indenture limit
the optional redemption or prepayment of the Exchange Debentures.
Selection
In the case of any partial redemption, selection of the Debentures for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Exchange
Debentures are listed or, if the Exchange Debentures are not listed on a
national securities exchange, on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion shall deem to be fair and
appropriate; provided that no Exchange Debenture of $1.00 in original principal
amount or less shall be redeemed in part. If any Exchange Debenture is to be
redeemed in part only, the notice of redemption relating to such Exchange
Debenture shall state the portion of the principal amount thereof to be redeemed
in part only, the notice of redemption relating to such Exchange Debenture shall
state the portion of the principal amount thereof to be redeemed. A new Exchange
Debenture in principal amount equal to the unredeemed portion thereof will be
issued in the name of the holder thereof upon cancellation of the original
Exchange Debenture.
Covenants
Limitation on Indebtedness
(a) So long as any of the Exchange Debentures are outstanding, Holdings
shall not, and shall not permit any Subsidiary (other than Silgan and its
Subsidiaries) to, Incur any Indebtedness (other than the Exchange Debentures
(including any Exchange Debentures issued in payment of interest) and
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Indebtedness existing on the date the Exchange Debentures are issued) unless
after giving effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Interest Coverage Ratio of Holdings
would be greater than 1.75:1.
Notwithstanding the foregoing, Holdings and its Subsidiaries (other
than Silgan and its Subsidiaries) may Incur each and all of the following: (i)
Indebtedness in an aggregate principal amount not to exceed $100 million
outstanding at any time; (ii) Indebtedness to Holdings or any Restricted
Subsidiary; (iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to exchange, refinance or refund, outstanding Indebtedness, other
than Indebtedness Incurred under clauses (i) and (viii) and any refinancings
thereof, in an amount (or, if such new Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration thereof, with an original issue price) not to exceed the amount
exchanged, refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that Indebtedness the proceeds of which are used to
exchange, refinance or refund the Exchange Debentures or other Indebtedness that
is subordinated in right of payment to the Exchange Debentures shall only be
permitted under this clause (iii) if: (A) in case the Exchange Debentures are
exchanged, refinanced or refunded in part, such Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is expressly made pari passu with, or subordinate in right of payment
to, the remaining Exchange Debentures, (B) in case the Indebtedness to be
exchanged, refinanced or refunded is subordinated in right of payment to the
Exchange Debentures, such Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued, is
expressly made subordinate in right of payment to the Exchange Debentures at
least to the extent that the Indebtedness to be exchanged, refinanced or
refunded is subordinated in right of payment to the Exchange Debentures and (C)
in case the Exchange Debentures are exchanged, refinanced or refunded in part or
the Indebtedness to be exchanged, refinanced or refunded is subordinated in
right of payment to the Exchange Debentures, such Indebtedness determined as of
the date of Incurrence of such new Indebtedness, does not mature prior to the
Stated Maturity of the Indebtedness being refinanced, and the Average Life of
such Indebtedness is at least equal to the remaining Average Life of the
Indebtedness being refinanced; and provided further that in no event may
Indebtedness of Holdings that is pari passu with, or subordinated in right of
payment to, the Exchange Debentures be exchanged, refinanced or refunded by
means of Indebtedness of any Subsidiary of Holdings pursuant to this clause
(iii); (iv) Indebtedness issued in exchange for, or the net proceeds of which
are used to exchange, refinance or refund, Silgan Indebtedness; provided that
(A) the principal amount (or, if such Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration thereof, the original issue price) of such new Indebtedness shall
not exceed the principal amount of Silgan Indebtedness exchanged, refinanced or
refunded (plus premiums, if any, accrued interest, fees and expenses) and (B)
the Average Life of such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, is at least equal to the remaining Average
Life of the indebtedness being refinanced; (v) Indebtedness Incurred in
connection with the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of Holdings, Silgan or any other
Restricted Subsidiary, options on any such shares or related stock appreciation
rights or similar securities held by officers or employees or former officers or
employees (or their estates or beneficiaries under their estates) and which were
issued pursuant to any Stock Based Plan, upon death, disability, retirement,
termination of employment or pursuant to the terms of such Stock Based Plan or
any other agreement under which such shares of Capital Stock, options, related
rights or similar securities were issued; provided that (A) such Indebtedness
(other than any Shareholder Subordinated Notes, which must be pari passu with,
or subordinated in right of payment to, the Exchange Debentures), by its terms
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is expressly made subordinate in right of payment to the
Exchange Debentures at least to the extent that the Exchange Debentures are
subordinated in right of payment to Senior Indebtedness in the event of a
Holdings Merger, (B) such Indebtedness, by its terms or by the terms of
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any agreement or instrument pursuant to which such Indebtedness is issued,
provides that no payments of principal of such Indebtedness by way of sinking
fund, mandatory redemption or otherwise (including defeasance) may be made by
Holdings (including, without limitation, at the option of the holder thereof
other than an option given to a holder pursuant to an "asset sale" or a "change
of control" provision that is no more favorable to the holders of such
Indebtedness than the provisions contained in the "Limitation on Asset Sales"
and "Change of Control" covenants and such Indebtedness specifically provides
that Holdings will not repurchase or redeem such Indebtedness pursuant to such
provisions prior to Holdings' repurchase of the Exchange Debentures required to
be repurchased by Holdings under the "Limitation on Asset Sales" and "Change of
Control" covenants) at any time prior to the Stated Maturity of the Exchange
Debentures and (C) the scheduled maturity of all principal of such Indebtedness
is beyond the Stated Maturity of the Exchange Debentures; (vi) Guarantees of
Indebtedness of Silgan and other Restricted Subsidiaries under the Silgan Credit
Agreement; (vii) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided in the ordinary course of
business, (B) under (or in respect of) Currency Agreements and Interest Rate
Agreements; provided that in the case of Currency Agreements that relate to
other Indebtedness, such Currency Agreements do not increase the Indebtedness of
Holdings and its Subsidiaries outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar options,
or from Guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of Holdings or any of its Subsidiaries pursuant to such
agreements, in any case Incurred in connection with the disposition of any
business, assets or Subsidiary of Holdings, other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary of Holdings for the purpose of financing such
acquisition; and (viii) unsecured Indebtedness of Holdings; provided that such
Indebtedness, (A) by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is expressly made subordinate in
right of payment to the Exchange Debentures at least to the extent that the
Exchange Debentures are subordinated in right of payment to Senior Indebtedness
in the event of a Holdings Merger, (B) determined as of the date of Incurrence
of such Indebtedness, does not mature prior to the Stated Maturity of the
Exchange Debentures, and the Average Life of such Indebtedness is greater than
the remaining Average Life of the Exchange Debentures, (C) by its terms or by
the terms of any agreement or instrument pursuant to which such Indebtedness is
issued, provides that no payments of principal of such Indebtedness by way of
sinking fund, mandatory redemption or otherwise (including defeasance) may be
made by Holdings (including, without limitation, at the option of the holder
thereof other than an option given to a holder pursuant to an "asset sale" or a
"change of control" provision that is no more favorable to the holders of such
Indebtedness than the provisions contained in the "Limitation on Asset Sales"
and "Change of Control" covenants and such Indebtedness specifically provides
that Holdings will not repurchase or redeem such Indebtedness pursuant to such
provisions prior to Holdings' repurchase of the Exchange Debentures required to
be repurchased by Holdings under the "Limitation on Asset Sales" and "Change of
Control" covenants) at any time prior to the Stated Maturity of the Exchange
Debentures and (D) by its terms or the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is not scheduled to pay interest
in cash prior to the first date on which interest on the Exchange Debentures is
required to be paid in cash.
(b) So long as any of the Exchange Debentures are outstanding, Holdings
shall not permit Silgan or any Subsidiary of Silgan to Incur any Indebtedness
unless (i) after giving effect to the Incurrence of such Indebtedness and the
receipt and application of the proceeds therefrom, the Interest Coverage Ratio
of Silgan would be greater than 1.75:l or (ii) such Indebtedness so Incurred by
Silgan or such Subsidiary of Silgan constitutes Silgan Indebtedness; provided,
however, that any Indebtedness so Incurred pursuant to clause (i) or (ii) above
may not prohibit the payment of dividends to Holdings (but any such Indebtedness
may condition such payments on the absence of any defaults or events of default
thereunder
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and on compliance with financial tests) in amounts sufficient to make mandatory
interest and principal payments due on the Exchange Debentures at the times and
in the amount due and payable; and provided further, however, that in the event
the Exchange Debentures become obligations of a Successor Corporation, nothing
in this part (b) shall prohibit the Successor Corporation from assuming or
otherwise becoming liable for existing Indebtedness of Holdings or its
Subsidiaries.
(c) Notwithstanding any other provision of this "Limitation on
Indebtedness" covenant, (i) the maximum amount of Indebtedness that Holdings,
Silgan or any of their respective Subsidiaries may Incur pursuant to this
"Limitation on Indebtedness" covenant shall not be deemed to be exceeded due
solely to the result of fluctuations in the exchange rates of currencies, (ii)
solely for purposes of calculating the amount of Indebtedness outstanding at any
time under this "Limitation on Indebtedness" covenant, all Indebtedness of
Holdings, Silgan or any of their respective Subsidiaries outstanding on the date
the Exchange Debentures are issued shall be considered to be outstanding and
(iii) Holdings shall not Incur any Indebtedness that is expressly subordinated
to any other Indebtedness of Holdings unless such Indebtedness, by its terms or
the terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is also expressly made subordinate to the Exchange Debentures at least
to the extent that it is subordinated to such other Indebtedness.
(d) For purposes of determining any particular amount of Indebtedness
under this "Limitation on Indebtedness" covenant, Guarantees of, or obligations
with respect to letters of credit supporting, Indebtedness otherwise included in
the determination of such particular amount shall not be included. For purposes
of determining compliance with this "Limitation on Indebtedness" covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the above clauses, Holdings, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses and (ii)
the amount of Indebtedness issued at a price that is less than the principal
amount thereof shall be equal to the amount of the liability in respect thereof
determined in conformity with GAAP.
(e) Notwithstanding any of the foregoing, nothing in this "Limitation
on Indebtedness" covenant shall prohibit the occurrence of (i) a Holdings
Merger, (ii) the sale of all or substantially all of the property and assets of
Silgan or its successors to Holdings, and the assumption by Holdings of all or
substantially all of the liabilities of Silgan or its successors or (iii) the
assumption by Silgan or its successors of Indebtedness represented by the
Exchange Debentures. Immediately upon the occurrence of an event specified in
clause (i), (ii) or (iii) in this part (e), parts (a) and (e) (other than clause
(i)) of this "Limitation on Indebtedness" covenant shall be of no further force
and effect, and all references to Silgan in part (b) of this "Limitation on
Indebtedness" covenant shall refer to the Successor Corporation.
The Holdings Guaranty will prohibit Holdings from Incurring
Indebtedness other than a Guarantee under the Silgan Credit Agreement, the
Discount Debentures or the Shareholder Subordinated Notes, the Exchange
Debentures or refinancings of the Exchange Debentures or Discount Debentures.
Limitation on Restricted Payments
So long as any of the Exchange Debentures are outstanding, Holdings
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, (i) declare or pay any dividend or make any distribution on its
Capital Stock (other than dividends or distributions payable solely in shares of
its or such Restricted Subsidiary's Capital Stock (other than Redeemable Stock)
of the same class held by such holders or in options, warrants or other rights
to acquire such shares of Capital Stock) held by Persons other than Holdings or
another Restricted Subsidiary, (ii) purchase, redeem, retire or otherwise
acquire for value, any shares of Capital Stock of Holdings, any Restricted
Subsidiary or any Unrestricted
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Subsidiary (including options, warrants or other rights to acquire such shares
of Capital Stock) held by Persons other than Holdings or another Restricted
Subsidiary, (iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance or other acquisition or
retirement for value, of Indebtedness of Holdings that is subordinated in right
of payment to the Exchange Debentures or (iv) make any investment in any
Affiliate (other than Holdings or a Restricted Subsidiary) or Unrestricted
Subsidiary (such payments or any other actions described in clauses (i) through
(iv) being collectively "Restricted Payments") if at the time of and after
giving effect to the proposed Restricted Payment: (A) an Event of Default or
event that, after the giving of notice or lapse of time or both would become an
Event of Default, shall have occurred and be continuing, (B) Holdings (in the
case Holdings or its Restricted Subsidiaries will make the Restricted Payment)
could not Incur at least $1.00 of Indebtedness under the first paragraph in part
(a) of the "Limitation on Indebtedness" covenant or Silgan (in the case Silgan
or its Restricted Subsidiaries will make the Restricted Payment) could not Incur
at least $1.00 of Indebtedness under clause (i) of part (b) of the "Limitation
on Indebtedness" covenant or (C) the aggregate amount expended for all
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution) after the Closing Date (other
than any Restricted Payments described in clauses (ii) and (iii) of the second
paragraph of this "Limitation on Restricted Payments" covenant) shall exceed the
sum of (1) 50% of the aggregate amount of Adjusted Consolidated Net Income (or,
if Adjusted Consolidated Net Income is a loss, minus 100% of such amount) of
Holdings (determined by excluding income resulting from the transfers of assets
received by Holdings or a Restricted Subsidiary from an Unrestricted Subsidiary)
accrued on a cumulative basis during the period (taken as one accounting period)
beginning on the first day of the month immediately following the Closing Date
and ending on the last day of the last fiscal quarter preceding the Transaction
Date plus (2) the aggregate net proceeds received by Holdings from the issuance
and sale of Capital Stock of Holdings (other than Redeemable Stock) to any
Person other than a Subsidiary of Holdings, including an issuance or sale
permitted by the Exchange Debenture Indenture for cash or other property upon
the conversion of any Indebtedness of Holdings subsequent to the Closing Date,
or from the issuance of any options, warrants or other rights to acquire Capital
Stock of Holdings (in each case, exclusive of any Redeemable Stock or any
options, warrants or other rights that are redeemable at the option of the
holder, or are required to be redeemed, prior to the Stated Maturity of the
Exchange Debentures) plus (3) an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other transfers of
assets, in each case to Holdings or any Restricted Subsidiary from Unrestricted
Subsidiaries, or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed in the case of any Unrestricted Subsidiary the
amount of Investments previously made by Holdings or any Restricted Subsidiary
in such Unrestricted Subsidiary plus (4) $25 million.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at the date of declaration, such payment would comply with the foregoing
provision; (ii) the making of Investments in Unrestricted Subsidiaries in an
aggregate amount not to exceed $75 million outstanding at any time; (iii) the
redemption, repurchase, defeasance or other acquisition or retirement for value
of Indebtedness that is subordinated in right of payment to the Exchange
Debentures, including premium, if any, and accrued and unpaid interest, with the
proceeds of Indebtedness Incurred under clauses (iii) or (viii) of the second
paragraph in part (a) of the "Limitation on Indebtedness" covenant; (iv) the
declaration and payment of dividends on the Common Stock of Holdings or Silgan,
following an initial public offering of the Common Stock of Holdings or Silgan,
as the case may be, of up to 6% per annum of the net proceeds received by
Holdings or Silgan, as the case may be, in such initial public offering; (v) the
purchase, redemption, acquisition, cancellation or other retirement for value of
shares of Capital Stock of Holdings, Silgan or any other Restricted Subsidiary,
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options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees (or
their estates or beneficiaries under their estates) and which were issued
pursuant to any Stock Based Plan, upon death, disability, retirement or
termination of employment or pursuant to the terms of such Stock Based Plan or
any other agreement under which such Capital Stock, options, related rights or
similar securities were issued; provided that the aggregate cash consideration
paid for such purchase, redemption, acquisition, cancellation or other
retirement for value of such shares of Capital Stock, options, related rights or
similar securities after the Closing Date does not exceed $25 million and that
any additional consideration in excess of such $25 million is in the form of
Indebtedness that would be permitted to be Incurred under clause (v) of the
second paragraph in part (a) of the "Limitation on Indebtedness" covenant; (vi)
the repurchase of Capital Stock of Holdings or any Subsidiary of Holdings
followed immediately by the reissuance thereof for consideration in an amount at
least equal to the consideration paid to acquire such stock, or the redemption,
repurchase or other acquisition for value of Capital Stock of Holdings or any
Subsidiary of Holdings in exchange for, or with the proceeds of a substantially
concurrent offering of, Capital Stock, as the case may be, of such entity (other
than Redeemable Stock); and (vii) payments or distributions pursuant to or in
connection with a consolidation, merger or transfer of assets that complies with
the provisions of the Exchange Debenture Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the property and
assets of Holdings; provided that, in the case of clauses (ii), (iv), (v) and
(vii), no Event of Default shall have occurred and be continuing or shall occur
as a consequence thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries
So long as any of the Exchange Debentures are outstanding, Holdings
will not, and will not permit any Restricted Subsidiary to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Restricted Subsidiary to (i) pay
dividends or make any other distributions permitted by applicable law on any
Capital Stock of such Restricted Subsidiary owned by Holdings or any other
Restricted Subsidiary, (ii) pay any Indebtedness owed to Holdings or any other
Restricted Subsidiary, (iii) make loans or advances to Holdings or any other
Restricted Subsidiary or (iv) transfer, subject to certain exceptions, any of
its property or assets to Holdings or any other Restricted Subsidiary.
This covenant shall not restrict or prohibit any encumbrances or
restrictions existing: (i) in the Silgan Credit Agreement, the Silgan Notes, the
Discount Debentures (including any agreement pursuant to which the Silgan Notes
or the Discount Debentures were issued) or any other agreements in effect on the
Closing Date, including extensions, refinancings, renewals or replacements
thereof, provided that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any material
respect to the holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced; (ii) under
or by reason of applicable law, rule or regulation (including, without
limitation, applicable currency control laws and applicable state corporate
statutes restricting the payment of dividends in certain circumstances); (iii)
with respect to any Person or the property or assets of such Person acquired by
Holdings or any Restricted Subsidiary and existing at the time of such
acquisition, which encumbrances or restrictions are not applicable to any Person
or the property or assets of any Person other than such Person or the property
or assets of such Person so acquired; (iv) in the case of clause (iv) of the
first paragraph of this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant, (A) that restrict in a customary
manner the subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (B) by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of Holdings or any Restricted Subsidiary
not otherwise prohibited by the Exchange Debenture Indenture or (C) arising or
agreed to in the ordinary course of business and that do not, individually or in
the aggregate, detract from the value
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of the property or assets of Holdings or any Restricted Subsidiary in any manner
material to Holdings or such Restricted Subsidiary; or (v) with respect to any
Restricted Subsidiary and imposed pursuant to an agreement that has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock of, or property and assets of, such Restricted Subsidiary. Nothing
contained in this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant shall prevent Holdings or any
Restricted Subsidiary from restricting the sale or other disposition of property
or assets of Holdings or any of its Subsidiaries that secure Indebtedness of
Holdings or any of its Subsidiaries.
Limitation on Transactions with Shareholders and Affiliates
So long as any of the Exchange Debentures are outstanding, Holdings
will not, and will not permit any Subsidiary of Holdings to, directly or
indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of Holdings (other than the Bank Agent
or any of its Affiliates) or any Subsidiary of Holdings or with any Affiliate of
Holdings or any Subsidiary of Holdings, except upon fair and reasonable terms no
less favorable to Holdings or such Subsidiary of Holdings than could be obtained
in a comparable arm's-length transaction with a Person that is not such a holder
or an Affiliate.
The foregoing limitation does not limit, and shall not apply to: (i)
any transaction between Holdings and any Subsidiary of Holdings or between
Subsidiaries of Holdings; (ii) transactions (A) for which Holdings or any
Subsidiary of Holdings delivers to the Trustee a written opinion of a nationally
recognized investment banking firm stating that the transaction is fair to
Holdings or such Subsidiary of Holdings from a financial point of view or (B)
approved by a majority of the disinterested members of the Board of Directors;
(iii) the payment of fees pursuant to the Management Agreements or pursuant to
any similar management contracts entered into by Holdings or any Subsidiary of
Holdings; (iv) the payment of reasonable and customary regular fees to directors
of Holdings or any Subsidiary of Holdings who are not employees of Holdings or
such Subsidiary of Holdings; (v) any payments or other transactions pursuant to
any tax-sharing agreement between Holdings and Silgan or any other Person with
which Holdings is required or permitted to file a consolidated tax return or
with which Holdings is or could be part of a consolidated group for tax
purposes; (vi) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant; (vii) the payment of fees to Morgan Stanley, S&H
or their respective Affiliates for financial, advisory, consulting or investment
banking services that the Board of Directors deems to be advisable or
appropriate for Holdings or any Subsidiary of Holdings to obtain (including the
payment to Morgan Stanley of any underwriting discounts or commissions or
placement agency fees) in connection with the issuance and sale of any
securities by Holdings or any Subsidiary of Holdings; or (viii) any transaction
contemplated by any of the Stock Based Plans.
Notwithstanding any of the foregoing, nothing in this "Limitation on
Transactions with Shareholders and Affiliates" covenant shall prohibit the
occurrence of (i) a Holdings Merger, (ii) the sale of all or substantially all
of the property and assets of Silgan or its successors to Holdings and the
assumption by Holdings of all or substantially all of the liabilities of Silgan
or its successors or (iii) the issuance by Silgan or its successors of
securities in exchange for or in replacement of the New Preferred Stock.
Immediately upon the occurrence of an event specified in clause (i), (ii) or
(iii) of the preceding sentence, all references to Holdings in this "Limitation
on Transactions with Shareholders and Affiliates" covenant shall refer to the
Successor Corporation.
Limitation on the Issuance of Capital Stock of Restricted Subsidiaries
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So long as any of the Exchange Debentures are outstanding, Holdings will not
permit any Restricted Subsidiary to, directly or indirectly, issue or sell any
shares of its Capital Stock (including options, warrants or other rights to
purchase shares of such Capital Stock) except (i) to Holdings or another
Restricted Subsidiary that is a Wholly Owned Subsidiary of Holdings, (ii)
pursuant to options on such Capital Stock granted to officers and directors of
such Restricted Subsidiary, (iii) if, immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary or (iv) in connection with an initial public offering of
the Common Stock of such Restricted Subsidiary; provided that, within 12 months
after the date the Net Cash Proceeds of such initial public offering are
received by such Restricted Subsidiary, such Restricted Subsidiary shall (A)
apply an amount equal to such Net Cash Proceeds to repay Senior Indebtedness of
Holdings or Indebtedness of a Restricted Subsidiary, in each case owing to a
Person other than Holdings or any of its Subsidiaries, (B) apply an amount equal
to such Net Cash Proceeds to the repurchase of Senior Indebtedness pursuant to
mandatory repurchase or repayment provisions applicable to such Senior
Indebtedness or (C) invest an equal amount, or the amount not so applied
pursuant to subclause (A) or (B) (or enter into a definitive agreement
committing to so invest within 12 months of the date of such agreement), in
property or assets that (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution) are
of a nature or type or are used in a business (or in a company having property
and assets of a nature or type, or engaged in a business) similar or related to
the nature or type of the property and assets of, or the business of, any
Restricted Subsidiary and its Subsidiaries existing on the date thereof.
Notwithstanding any of the foregoing, nothing in this "Limitation on
the Issuance of Capital Stock of Restricted Subsidiaries" covenant shall
prohibit the occurrence of (i) a Holdings Merger, (ii) the sale of all or
substantially all of the property and assets of Silgan or its successors to
Holdings and the assumption by Holdings of all or substantially all of the
liabilities of Silgan or its successors or (iii) the assumption by Silgan or its
successors of Indebtedness represented by the Exchange Debentures. Immediately
upon the occurrence of an event specified in clause (i), (ii) or (iii) of the
preceding sentence, all references to Holdings in this "Limitation on the
Issuance of Capital Stock of Restricted Subsidiaries" covenant shall refer to
the Successor Corporation.
Change of Control
(a) In the event of a Change in Control, each holder shall have the
right to require the repurchase of its Exchange Debentures by Holdings in cash
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the principal amount, plus accrued interest (if
any) to the date of purchase (the "Change of Control Payment"). Prior to the
mailing of the notice to holders provided for in the succeeding paragraph, but
in any event within 30 days following any Change of Control, Holdings covenants
to, or to cause Silgan to, (i) repay in full all Indebtedness under the Silgan
Credit Agreement and all other Senior Indebtedness required to be redeemed or
repurchased pursuant to the terms thereof, or to offer to repay in full all
Indebtedness under the Silgan Credit Agreement and all such other Senior
Indebtedness and to repay the indebtedness of each holder of Senior Indebtedness
who has accepted such offer or (ii) obtain the requisite consents under the
Silgan Credit Agreement and such other Senior Indebtedness to permit the
repurchase of the Exchange Debentures as provided for in the succeeding
paragraph. Holdings shall first comply with the covenant in the preceding
sentence before it shall be required to repurchase the Exchange Debentures
pursuant to this "Change of Control" covenant.
(b) Within 30 days of the Change of Control, Holdings shall mail a
notice to the Trustee and each holder stating: (i) that a Change of Control has
occurred, that the Change of Control Offer is being made pursuant to this
"Change of Control" covenant and that all Exchange Debentures validly tendered
will be accepted for payment; (ii) the purchase price and the date of purchase
(which shall be a Business Day
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no earlier than 30 days nor later than 60 days from the date such notice is
mailed) (the "Change of Control Payment Date"); (iii) that any Exchange
Debenture not tendered will continue to accrue interest pursuant to its terms;
(iv) that, unless Holdings defaults in the payment of the Change of Control
Payment, any Exchange Debenture accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (v) that holders electing to have any Exchange Debenture purchased
pursuant to the Change of Control Offer will be required to surrender such
Exchange Debenture, together with the form entitled "Option of the Holder to
Elect Purchase" on the reverse side of such Exchange Debenture completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Change of Control Payment
Date; (vi) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of such
holder, the principal amount of Exchange Debentures delivered for purchase and a
statement that such holder is withdrawing his election to have such Exchange
Debentures purchased; and (vii) that holders of Exchange Debentures being
purchased only in part will be issued new Exchange Debentures equal in principal
amount to the unpurchased portion of the Exchange Debentures surrendered;
provided that each Exchange Debenture purchased and each new Exchange Debenture
issued shall be in an original principal amount of $1,000 or integral multiples
thereof.
(c) On the Change of Control Payment Date, Holdings shall: (i) accept
for payment Exchange Debentures or portions thereof tendered pursuant to the
Change of Control Offer; (ii) deposit with the Paying Agent money sufficient to
pay the purchase price of the Exchange Debentures or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee, all
Exchange Debentures or portions thereof so accepted together with an Officers'
Certificate specifying the Exchange Debentures or portions thereof accepted for
payment by Holdings. The Paying Agent shall promptly mail, to the holders of the
Exchange Debentures so accepted, payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail to such holders new
Exchange Debentures equal in principal amount to any unpurchased portion of the
Exchange Debentures surrendered; provided that each Exchange Debenture purchased
and each new Exchange Debenture issued shall be in an original principal amount
of $1,000 or integral multiples thereof. Holdings will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this "Change of Control"
covenant, the Trustee shall act as Paying Agent.
(d) Holdings will comply with 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 the event that a Change of Control occurs under
this "Change of Control" covenant and Holdings is required to repurchase
Exchange Debentures as described above.
(e) Notwithstanding any of the foregoing, nothing in this "Change of
Control" covenant shall prohibit the occurrence of (i) a Holdings Merger, (ii)
the sale of all or substantially all of the property and assets of Silgan or its
successors to Holdings, and the assumption by Holdings of all or substantially
all of the liabilities of Silgan or its successors or (iii) the assumption by
Silgan or its successors of Indebtedness represented by the Exchange Debentures.
Immediately upon the occurrence of an event specified in clause (i), (ii) or
(iii) of the preceding sentence, all references to Holdings in this "Change of
Control" covenant shall refer to the Successor Corporation.
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Limitation on Asset Sales
(a) In the event and to the extent that the Net Cash Proceeds received
by Holdings or any Restricted Subsidiary from one or more Asset Sales occurring
on or after the Closing Date in any period of 12 consecutive months (other than
Asset Sales by Holdings or any Restricted Subsidiary to Holdings or another
Restricted Subsidiary) exceed 15% of Consolidated Net Tangible Assets in any one
fiscal year (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of Holdings and its
Subsidiaries has been prepared), then Holdings shall, or shall cause such
Restricted Subsidiary to, (i) within 12 months after the date the Net Cash
Proceeds so received exceed 15% of Consolidated Net Tangible Assets in any one
fiscal year (determined as of the date closest to the commencement of such
12-month period for which a consolidated balance sheet of Holdings and its
Subsidiaries has been prepared), (A) apply an amount equal to such excess Net
Cash Proceeds to repay Senior Indebtedness of Holdings or Indebtedness of a
Restricted Subsidiary, in each case owing to a Person other than Holdings or any
of its Subsidiaries or (B) invest an equal amount, or the amount not so applied
pursuant to subclause (A) (or enter into a definitive agreement committing to so
invest within 12 months of the date of such agreement), in property or assets
that (as determined in good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a Board Resolution) are of a nature or type
or are used in a business (or in a company having property and assets of a
nature or type, or engaged in a business) similar or related to the nature or
type of the property and assets of, or the business of, Holdings and its
Subsidiaries existing on the date thereof and (ii) apply such excess Net Cash
Proceeds (to the extent not applied pursuant to clause (i)) as provided in the
following paragraphs of this "Limitation on Asset Sales" covenant. The amount of
such excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in subclause (A) or (B) of the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds."
(b) If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as
defined below) totals at least $10 million, Holdings must, not later than the
fifteenth Business Day of such month, make an offer (an "Excess Proceeds Offer")
to purchase from the holders on a pro rata basis an aggregate principal amount
of Exchange Debentures equal to the Excess Proceeds on such date, at a purchase
price equal to 101% of the principal amount thereof, plus accrued interest (if
any) to the date of purchase (the "Excess Proceeds Payment"); provided, however,
that no Excess Proceeds Offer shall be required to be commenced with respect to
the Exchange Debentures until the Business Day following the dates that payments
are made pursuant to similar offers that are made to holders of Senior
Indebtedness, and need not be commenced if the Excess Proceeds remaining after
application to the Senior Indebtedness purchased in the offers made to the
holders of the Senior Indebtedness are less than $10 million; provided further,
however, that no Exchange Debentures may be purchased under this "Limitation on
Asset Sales" covenant unless Holdings shall have purchased all Senior
Indebtedness tendered pursuant to the offers applicable thereto.
(c) Holdings shall commence an Excess Proceeds Offer by mailing a
notice to the Transfer Agent and each holder stating: (i) that the Excess
Proceeds Offer is being made pursuant to this "Limitation on Asset Sales"
covenant and that all Exchange Debentures validly tendered will be accepted for
payment on a pro rata basis; (ii) the purchase price and the date of purchase
(which shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the "Excess Proceeds Payment Date"); (iii)
that any Exchange Debenture not tendered will continue to accumulate interest
pursuant to its terms; (iv) that, unless Holdings defaults in the payment of the
Excess Proceeds Payment, any Exchange Debenture accepted for payment pursuant to
the Excess Proceeds Offer shall cease to accrue interest after the Excess
Proceeds Payment Date; (v) that holders electing to have any Exchange Debentures
purchased pursuant to the Excess Proceeds Offer will be required to surrender
such Exchange
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Debentures, together with the form entitled "Option of the Holder to Elect
Purchase" on the reverse side of the Exchange Debenture completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the Business Day immediately preceding the Excess Proceeds Payment Date; (vi)
that holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Excess Proceeds Payment Date, a telegram, telex,
facsimile transmission or letter, setting forth the name of such holder, the
principal amount of Exchange Debentures delivered for purchase and a statement
that such holder is withdrawing his election to have such Exchange Debentures
purchased; and (vii) that holders of Exchange Debentures being purchased only in
part will be issued new Exchange Debentures equal in principal amount to the
unpurchased portion of the Exchange Debentures surrendered; provided that each
Exchange Debenture purchased and each new Exchange Debenture issued shall be in
an original principal amount of $1,000 or integral multiples thereof.
(d) On the Excess Proceeds Payment Date, Holdings shall: (i) accept for
payment on a pro rata basis Exchange Debentures or portions thereof tendered
pursuant to the Excess Proceeds Offer; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Exchange Debentures or portions
thereof so accepted; and (iii) deliver, or cause to be delivered, to the
Trustee, all Exchange Debentures or portions thereof so accepted, together with
an Officer's Certificate specifying the Exchange Debentures or portions thereof
accepted for payment by Holdings. The Paying Agent shall promptly mail to the
holders of Exchange Debentures so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such
holders new Exchange Debentures equal in principal amount to any unpurchased
portion of the Exchange Debentures surrendered; provided that each Exchange
Debenture purchased and each new Exchange Debenture issued shall be in an
original principal amount of $1,000 or integral multiples thereof. Holdings will
publicly announce the results of the Excess Proceeds Offer as soon as
practicable after the Excess Proceeds Payment Date. For purposes of this
"Limitation on Asset Sales" covenant, the Trustee shall act as the Paying Agent.
(e) Holdings will comply with 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 the event that such Excess Proceeds are received
by Holdings under this "Limitation on Asset Sales" covenant and Holdings is
required to repurchase Exchange Debentures as described above.
(f) Notwithstanding the foregoing, nothing in this "Limitation on Asset
Sales" covenant shall prohibit the occurrence of (i) a Holdings Merger, (ii) the
sale of all or substantially all of the property and assets of Silgan or its
successors to Holdings, and the assumption by Holdings of all or substantially
all of the liabilities of Silgan or its successors or (iii) the assumption by
Silgan or its successors of Indebtedness represented by the Exchange Debentures.
Immediately upon the occurrence of an event specified in clause (i), (ii) or
(iii) of the preceding sentence, all references to Holdings in this "Limitation
on Asset Sales" covenant shall refer to the Successor Corporation.
Events of Default
An "Event of Default" occurs with respect to the Exchange Debentures
if: (i) Holdings defaults in payment of principal of (or premium, if any, on)
any Exchange Debenture when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise, whether or not such payment is prohibited
by the subordination provisions of the Exchange Debenture Indenture, if such
provisions are then applicable; (ii) Holdings defaults in the payment of
interest on any Exchange Debenture when the same becomes due and payable, and
such default continues for a period of 30 days, whether or not such payment is
prohibited by the subordination provisions of the Exchange Debenture Indenture,
if such provisions are then applicable; (iii) Holdings defaults in the
performance of or breaches any other
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covenant or agreement of Holdings in the Exchange Debenture Indenture or under
the Exchange Debentures, and such default or breach continues for a period of 30
consecutive days after written notice by the Trustee or the holders of 25% or
more in aggregate principal amount of the Exchange Debentures; (iv) there occurs
with respect to any issue or issues of Indebtedness of Holdings and/or any
Significant Subsidiary having an outstanding principal amount of $20 million or
more in the aggregate for all such issues of Holdings and/or any Significant
Subsidiary, whether such Indebtedness now exists or shall hereafter be created,
(I) an event of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and such
Indebtedness has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration and/or (II) the
failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (v) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million
individually or $20 million or more in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against
Holdings or any Significant Subsidiary and shall not be discharged, and there
shall be any period of 60 consecutive days following entry of the final judgment
or order in excess of $10 million individually or that causes the aggregate
amount for all such final judgments or orders outstanding against all such
Persons to exceed $20 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; (vi) a court having jurisdiction in the premises enters a decree or
order for (a) relief in respect of Holdings or any Significant Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (b) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of Holdings or
any Significant Subsidiary or for all or substantially all of the property and
assets of Holdings or any Significant Subsidiary or (c) the winding up or
liquidation of the affairs of Holdings or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; and (vii) Holdings or any Significant Subsidiary (a)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (b) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of Holdings or any
Significant Subsidiary or for all or substantially all of the property and
assets of Holdings or any Significant Subsidiary or (c) effects any general
assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (vi) or (vii) above that occurs with respect to Holdings or Silgan)
occurs and is continuing under the Exchange Debenture Indenture, the Trustee
thereunder or the holders of at least 25% of the aggregate principal amount of
the Exchange Debentures then outstanding, by written notice to Holdings (and to
the Trustee if such notice is given by the holders (the "Acceleration Notice")),
may, and the Trustee at the request of the holders of at least 25% in aggregate
principal amount of the Exchange Debentures then outstanding shall, declare the
principal of and all accrued and unpaid interest on the Exchange Debentures to
be immediately due and payable. Any such declaration of acceleration shall not
become effective until the earlier of (A) five Business Days after receipt of
the Acceleration Notice by the Bank Agent, Holdings and the agent for the
holders of the Silgan Notes and the Discount Debentures or (B) acceleration of
the Indebtedness under the Silgan Credit Agreement, the Silgan Notes or the
Discount Debentures; provided that such acceleration shall automatically be
rescinded and annulled without any further action required on the part of the
holders in the event that any and all Events of Default specified in the
Acceleration Notice under the Exchange Debenture Indenture shall have been
cured, waived or otherwise remedied as provided in the Exchange Debenture
Indenture prior to the expiration of the period referred to in the preceding
clauses (A) and (B). In the event of a declaration of acceleration because an
Event of Default set forth in clause (iv) above has occurred and is continuing,
such declaration of acceleration shall be automatically
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rescinded and annulled if the event of default triggering such Event of Default
pursuant to clause (iv) shall be remedied, cured by Holdings and/or such
Significant Subsidiary or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If an
Event of Default specified in clause (vi) or (vii) above occurs with respect to
Holdings or Silgan, the principal of and all accrued and unpaid interest on the
Exchange Debentures shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder. The holders
of at least a majority in aggregate principal amount of the outstanding Exchange
Debentures, by written notice to Holdings and to the Trustee, may waive all past
defaults and rescind and annul a declaration of acceleration and its
consequences if (1) all existing Events of Default, other than the non-payment
of the principal of, premium, if any, and interest on the Exchange Debentures
that have become due solely by such declaration of acceleration, have been cured
or waived and (2) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction. For information as to the waiver of
defaults, see "--Modification and Waiver" below.
The holders of at least a majority in aggregate principal amount of the
outstanding Exchange Debentures 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 the Trustee. However, the Trustee may refuse to
follow any direction that the Trustee is advised by counsel conflicts with law
or the Exchange Debenture Indenture, that may involve the Trustee in personal
liability or that the Trustee determines in good faith may be unduly prejudicial
to the rights of holders not joining in the giving of such direction. A holder
may not pursue any remedy with respect to the Exchange Debenture Indenture or
the Exchange Debentures unless: (i) the holder gives to the Trustee written
notice of a continuing Event of Default; (ii) the holders of at least 25% in
aggregate principal amount of outstanding Exchange Debentures make a written
request to the Trustee to pursue the remedy; (iii) such holder or holders offer
to the Trustee indemnity satisfactory to the Trustee against any costs,
liability or expense; (iv) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and (v) during
such 60-day period, the holders of a majority in aggregate principal amount of
the outstanding Exchange Debentures do not give the Trustee a direction that is
inconsistent with the request. However, such limitations do not apply to the
right of any holder to receive payment of the principal of, premium, if any, or
interest on its Exchange Debentures, or to bring suit for the enforcement of any
such payment, on or after the respective due dates expressed in its Exchange
Debentures, which rights shall not be impaired or affected without the consent
of the holder.
The Exchange Debenture Indenture requires certain officers of
Holdings to certify, on or before a date not more than 120 days after the end of
each fiscal year, that a review has been conducted of the activities of Holdings
and its Subsidiaries and Holdings' and its Subsidiaries' performance under the
Exchange Debenture Indenture and that Holdings has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof.
Holdings will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Exchange Debenture
Indenture.
Consolidation, Merger and Sale of Assets
Holdings shall not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially as an entirety in one
transaction or a series of related transactions) to, any Person (other than a
Restricted Subsidiary that is a Wholly Owned Subsidiary of Holdings; provided
that, in connection with any merger of Holdings with any Restricted Subsidiary
that is a Wholly Owned Subsidiary of Holdings, no consideration (other than
common stock in the surviving Person or Holdings) shall be issued or distributed
to the stockholders of Holdings) or permit any Person to merge with or into
Holdings, unless:
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(i) Holdings shall be the continuing Person, or the Person (if other than
Holdings) formed by such consolidation or into which Holdings is merged or that
acquired or leased such property and assets of Holdings shall be a corporation
organized and validly existing under the laws of the United States of America or
any jurisdiction thereof and shall expressly assume, by supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
of the obligations of Holdings on all of the Exchange Debentures and under the
Exchange Debenture Indenture; (ii) immediately after giving effect to such
transaction, no Event of Default, and no event that after the giving of notice
or lapse of time or both will become an Event of Default, shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction on
a pro forma basis, the Interest Coverage Ratio of Holdings (or any Person
becoming the successor obligor on the Exchange Debentures) is at least 1:1;
provided that if the Interest Coverage Ratio of Holdings before giving effect to
such transaction is within the range set forth in column (A) below, then the
Interest Coverage Ratio of Holdings (or any Person becoming the successor
obligor on the Exchange Debentures) shall be at least equal to the lesser of (1)
the ratio determined by multiplying the percentage set forth in column (B) below
by the Interest Coverage Ratio of Holdings prior to such transaction and (2) the
ratio set forth in column (C) below:
(A) (B) (C)
--- --- ---
1.11:1 to 1.99:1........................ 90% 1.5:1
2.00:1 to 2.99:1........................ 80% 2.1:1
3.00:1 to 3.99:1........................ 70% 2.4:1
4.00:1 or more.......................... 60% 2.5:1
and provided further that, if the Interest Coverage Ratio of Holdings (or any
Person becoming the successor obligor on the Exchange Debentures) is 3:1 or
more, the calculation in the preceding proviso shall be inapplicable and such
transaction shall be deemed to have complied with the requirements of this
clause (iii); (iv) immediately after giving effect to such transaction on a pro
forma basis, Holdings (or any Person that becomes the successor obligor on the
Exchange Debentures) shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of Holdings immediately prior to such
transaction; and (v) Holdings delivers to the Trustee an Officer's Certificate
(attaching the arithmetic computations to demonstrate compliance with clauses
(iii) and (iv)) and an Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture comply with
this provision and that all conditions precedent provided for herein relating to
such transaction have been complied with; provided, however, that clause (iv) of
this covenant does not apply to, and the Interest Coverage Ratio required by
clause (iii) of this "Consolidation, Merger and Sale of Assets" covenant (A)
shall be 1.75:1 with respect to, (1) a Holdings Merger, (2) the sale of all or
substantially all of the property and assets of Silgan or its successors to
Holdings, and the assumption by Holdings of all or substantially all of the
liabilities of Silgan or its successors or (3) the assumption by Silgan or its
successors of Indebtedness represented by the Exchange Debentures and (B) does
not apply if, in the good faith determination of the Board of Directors, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of Holdings; and
provided further, however, that any such transaction shall not have as one of
its purposes the evasion of the limitations of this covenant.
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Defeasance
Defeasance and Discharge
The Exchange Debenture Indenture provides that Holdings will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Exchange Debentures and the provisions of the Exchange Debenture
Indenture will no longer be in effect with respect to the Exchange Debentures on
the 123rd day after the deposit described below (except for, among other
matters, certain obligations to register the transfer or exchange of the
Exchange Debentures, to replace stolen, lost or mutilated Exchange Debentures,
to maintain paying agencies and to hold monies for payment in trust) if, among
other things, (A) Holdings has deposited with the Indenture Trustee, in trust,
money and/or U.S. Government Obligations that through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Exchange Debentures on the Stated Maturity of such
payments in accordance with the terms of the Exchange Debenture Indenture and
the Exchange Debentures, (B) Holdings has delivered to the Indenture Trustee (i)
either (x) an Opinion of Counsel to the effect that holders will not recognize
income, gain or loss for federal income tax purposes as a result of Holdings'
exercise of its option under this "Defeasance" provision 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 deposit, defeasance and discharge had
not occurred, which Opinion of Counsel must be accompanied by a ruling of the
Internal Revenue Service to the same effect or a change in applicable federal
income tax law after the date of the Exchange Debenture Indenture or, a ruling
directed to the Trustee received from the Internal Revenue Service to the same
effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor
Law, (C) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day after
the date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which Holdings is a party or by which Holdings is bound, (D) the Successor
Corporation is not prohibited from making payments in respect of the Exchange
Debentures by the provisions described under "Subordination," above and (E) if
at such time the Exchange Debentures are listed on a national securities
exchange, Holdings has delivered to the Trustee an Opinion of Counsel to the
effect that the Exchange Debentures will not be delisted as a result of such
deposit, defeasance and discharge.
Defeasance of Certain Covenants and Certain Events of Default
The Exchange Debenture Indenture provides that the provisions of
the Exchange Debenture Indenture will no longer be in effect with respect to
clauses (iii) and (iv) under "--Consolidation, Merger and Sales of Assets" and
all the covenants described herein under "--Covenants," clause (iii) under
"--Events of Default" with respect to such covenants and clauses (iii) and (iv)
under "--Consolidation, Merger and Sales of Assets" and clauses (iv) and (v)
under "--Events of Default" shall be deemed not to be Events of Default, and, if
the defeasance is permitted by the Silgan Credit Agreement, the provisions
described herein under "--Subordination" shall not apply, upon, among other
things, the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations that through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, premium, if any, and accrued interest on the
Exchange Debentures on the Stated Maturity of such payments in accordance with
the terms of the Exchange
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Debenture Indenture and the Exchange Debentures, the satisfaction of the
provisions described in clauses (B)(ii), (C), (D) and (E) of the preceding
paragraph and the delivery by Holdings to the Trustee of an Opinion of Counsel
to the effect that, among other things, the holders will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and
defeasance of certain covenants and Events of Default 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 deposit and defeasance had not
occurred.
Defeasance and Certain Other Events of Default
In the event Holdings exercises its option to omit compliance with
certain covenants and provisions of the Exchange Debenture Indenture with
respect to the Exchange Debentures as described in the immediately preceding
paragraph and the Exchange Debentures are declared due and payable because of
the occurrence of an Event of Default that remains applicable, the amount of
money and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Exchange Debentures at the time of their
Stated Maturity but may not be sufficient to pay amounts due on the Exchange
Debentures at the time of the acceleration resulting from such Event of Default.
However, Holdings shall remain liable for such payments.
Modification and Waiver
Modifications and amendments of the Exchange Debenture Indenture may be
made by Holdings and the Trustee with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Exchange
Debentures; provided, however, that no such modification or amendment may,
without the consent of each holder affected thereby, (i) change the Stated
Maturity of the principal of, or any installment of interest on, any Exchange
Debenture, (ii) reduce the principal amount of, premium, if any, or interest on,
any Exchange Debenture, (iii) change the place or currency of payment of
principal of, premium, if any, or interest on, any Exchange Debenture, (iv)
impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity (or, in the case of a redemption, on or after the
Redemption Date) of any Exchange Debenture, (v) modify the subordination
provisions in a manner adverse to the holders in any material respect, (vi)
reduce the above-stated percentage of outstanding Exchange Debentures the
consent of whose holders is necessary to modify or amend the Exchange Debenture
Indenture, (vii) waive a default in the payment of principal of, premium, if
any, or interest on the Exchange Debentures or (viii) reduce the percentage of
aggregate principal amount of outstanding Exchange Debentures the consent of
whose holders is necessary for waiver of compliance with certain provisions of
the Exchange Debenture Indenture or for waiver of certain defaults.
The holders of a majority in aggregate principal amount of the
outstanding Exchange Debentures may waive compliance by Holdings with certain
restrictive provisions of the Exchange Debenture Indenture.
The Silgan Credit Agreement contains a covenant prohibiting Holdings
from consenting to any modification of the Exchange Debenture Indenture or
waiver of any provision thereof without the consent of a specified percentage of
the lenders under the Silgan Credit Agreement. See "Description of Certain
Indebtedness--Description of the Silgan Credit Agreement."
No Personal Liability of Incorporators, Shareholders, Officers, Directors or
Employees
The Exchange Debenture Indenture provides that no recourse for the
payment of the principal of, premium, if any, or interest on any of the Exchange
Debentures, or for any claim based thereon or
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otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of Holdings contained in the Exchange Debenture Indenture
or in any of the Exchange Debentures, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or past,
present or future shareholder, officer, director, employee or controlling person
of Holdings or of any Successor Corporation. Each holder, by accepting such
Exchange Debenture, waives and releases all such liability.
Concerning the Trustee
Fleet National Bank will act as Trustee under the Exchange Debenture
Indenture.
The Exchange Debenture Indenture provides that, except during the
continuance of an Event of Default, the Trustee will perform only such duties as
are specifically set forth in the Exchange Debenture Indenture. If an Event of
Default has occurred and is continuing, the Trustee will exercise those rights
and powers vested in it under such Exchange Debenture Indenture and use the same
degree of care and skill in its exercise of such rights and powers as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Exchange Debenture Indenture and provisions of the Trust Indenture
Act of 1939, as amended, incorporated by reference in the Exchange Debenture
Indenture contain limitations on the rights of the Trustee thereunder, should it
become a creditor of Holdings, to obtain payment of claims in certain cases or
to realize on certain property received by it in respect of any such claims, as
security or otherwise. The Trustee is permitted to engaged in other
transactions; provided, however, that if it acquires any conflicting interest,
it must eliminate such conflict or resign.
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DESCRIPTION OF CERTAIN HOLDINGS INDEBTEDNESS
Holdings sold the 13-1/4% Senior Discount Debentures due 2002 in a
public offering on June 29, 1992. The Discount Debentures were offered at a
substantial discount from their principal amount and there is no payment of
interest due on the Discount Debentures prior to December 15, 1996. From and
after June 15, 1996, the Discount Debentures bear interest, payable in cash, at
a rate of 13-1/4% per annum. The gross proceeds to Holdings from the offering of
the Discount Debentures were $165.4 million. The Discount Debentures are
redeemable at any time, at the option of Holdings, in whole or in part, at 100%
of their principal amount plus accrued interest (if any) to the redemption date.
Holdings has repurchased and redeemed approximately $216 million principal
amount of Discount Debentures, and there is approximately $59 million principal
amount of Discount Debentures currently outstanding. In the event of a Change of
Control (as defined in the Discount Debenture Indenture), each holder of
Discount Debentures may require Holdings to repurchase such Discount Debentures
at 101% of the Accreted Value (as defined in the Discount Debenture Indenture)
plus accrued interest (if any).
The Discount Debenture Indenture contains certain covenants that, among
other things, direct the application of proceeds from certain asset sales, limit
the ability of Holdings and its subsidiaries to incur indebtedness, make certain
payments with respect to their capital stock, make prepayments of certain
indebtedness, make loans or investments in entities other than Restricted
Subsidiaries (as defined in the Discount Debenture Indenture), enter into
transactions with affiliates, engage in mergers or consolidations, and the
ability of the Restricted Subsidiaries to issue stock.
DESCRIPTION OF CERTAIN SILGAN INDEBTEDNESS
Description of the Silgan Credit Agreement
The following is a summary of the terms of the Silgan Credit Agreement.
The Available Credit Facility. Pursuant to the Silgan Credit Agreement,
the Banks loaned to Silgan (i) $225 million of term loans designated as "A Term
Loans" and (ii) $350 million of term loans designated as "B Term Loans"
(together with the A Term Loans, the "Term Loans"), and agreed to lend to
Containers or Plastics up to an aggregate of $225 million of revolving loans
(the "Revolving Loans"). As part of the Revolving Loans, Bankers Trust agreed to
lend to Containers or Plastics up to an aggregate of $10 million of revolving
loans (the "Swingline Loans") and to issue to Containers or Plastics for the
account of Containers or Plastics up to an aggregate of $20 million of letters
of credit, such Swingline Loans and letters of credit outstanding being deducted
from the amount of Revolving Loans available to be borrowed by Containers or
Plastics.
To secure the obligations of the Borrowers under the Silgan Credit
Agreement: (i) Silgan pledged to the Banks all of the capital stock of
Containers and Plastics held by Silgan; (ii) Plastics pledged to the Banks 65%
of the capital stock of 827599 Ontario Inc. ("Canadian Holdco") held by
Plastics; (iii) Containers pledged to the Banks all of the capital stock of SCCW
Can Corporation ("SCCW Can"), a California corporation and a wholly owned
subsidiary of Containers, held by Containers; (iv) Containers pledged to the
Banks all of the capital stock of California-Washington Can Corporation ("C-W
Can"), a California corporation and a wholly owned subsidiary of Containers,
held by Containers; (iv) Silgan, Containers, Plastics, C-W Can and SCCW Can each
granted to the Banks security interests in substantially all of their respective
real and personal property; and (v) Holdings pledged to the Banks all of the
capital stock of Silgan held by Holdings.
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The aggregate amount of Revolving Loans which may be outstanding at any
time is subject to a borrowing base limitation of the sum of (i) 85% of eligible
accounts receivable of Containers and its subsidiaries and Plastics and (ii) 50%
of eligible inventory of Containers and its subsidiaries and Plastics.
Each of the Term Loans and each of the Revolving Loans, at the
respective Borrower's election, consists of loans designated as Eurodollar rate
loans or as Base Rate (as defined in the Silgan Credit Agreement) loans. Subject
to certain conditions, each of the Term Loans and each of the Revolving Loans
can be converted from a Base Rate loan into a Eurodollar rate loan and vice
versa.
As of June 30, 1996, the outstanding principal amounts of A Term Loans,
B Term Loans and Revolving Loans under the Silgan Credit Agreement were $219.5
million, $222.3 million (increasing to $347.3 million after the Refinancing) and
$148.6 million, respectively.
Payment of Loans. Generally, the Revolving Loans can be borrowed,
repaid and reborrowed from time to time until December 31, 2000, on which date
all Revolving Loans mature and are payable in full. Amounts repaid under the
Term Loans cannot be reborrowed.
The A Term Loans mature on December 31, 2000 and are payable in
installments as follows:
A Term Loan
Installment Repayment Date Principal Amount
-------------------------- ----------------
December 31, 1996........................... $24,946,471
December 31, 1997........................... 34,925,059
December 31, 1998........................... 49,892,942
December 31, 1999........................... 49,892,942
December 31, 2000........................... 59,871,530
The B Term Loans mature on March 15, 2002 and are payable in
installments as follows (after giving effect to the recent amendment to the
Silgan Credit Agreement to include an additional $125 million of B Term Loans):
B Term Loan
Installment Repayment Date Principal Amount
-------------------------- ----------------
December 31, 1996........................... $3,507,813
December 31, 1997........................... 3,507,813
December 31, 1998........................... 3,507,813
December 31, 1999........................... 3,507,813
December 31, 2000........................... 66,258,608
December 31, 2001........................... 155,902,607
March 15, 2002.............................. 111,080,589
Under the Silgan Credit Agreement, Silgan is required to repay the
Terms Loans (pro rata for each tranche of Term Loans) in an amount equal to 50%
of Silgan's Excess Cash Flow (as defined in the Silgan Credit Agreement) in any
fiscal year during the Silgan Credit Agreement (beginning with the 1996 fiscal
year). Additionally, Silgan is required to repay the Term Loans (pro rata for
each tranche of Term
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Loans) in an amount equal to 80% of the net sale proceeds received from certain
asset sales (increasing to 100% of such net sale proceeds under certain
circumstances as described in the Silgan Credit Agreement) and 100% of the net
equity proceeds received from certain sales of equity (subject to certain
exceptions permitting Silgan and/or Holdings to use net equity proceeds to repay
certain of their other indebtedness or to repurchase certain outstanding capital
stock of Holdings), decreasing to 50% of net equity proceeds received after the
occurrence of certain events as described in the Silgan Credit Agreement, all as
provided in the Silgan Credit Agreement.
Interest and Fees. Interest on the Term Loans and the Revolving Loans
is payable at certain margins over certain rates as summarized below.
Interest on Term Loans maintained as Base Rate loans accrues at
floating rates of 1.5% less the then applicable Interest Reduction Discount (as
defined below) (in the case of A Term Loans) and 2% (in the case of B Term
Loans) over the Base Rate. Interest on Term Loans maintained as Eurodollar rate
loans accrues at floating rates of 2.5% less the then applicable Interest
Reduction Discount (in the case of A Term Loans) and 3% (in the case of B Term
Loans) over a formula rate (the "Eurodollar Rate") determined with reference to
the rate offered by Bankers Trust for dollar deposits in the New York interbank
Eurodollar market. Interest on Revolving Loans maintained as (i) Base Rate loans
accrues at floating rates of 1.5%, less the then applicable Interest Reduction
Discount, plus the Base Rate or (ii) Eurodollar Rate loans accrues at floating
rates of 2.5%, less the then applicable Interest Reduction Discount, plus the
Eurodollar Rate.
Under the Silgan Credit Agreement, Silgan agreed to pay to the Banks,
on a quarterly basis, a commitment commission calculated as 1/2 of 1% per annum
on the daily average term loan commitment of the Banks until such commitment is
terminated. Each of Containers and Plastics has agreed to jointly and severally
pay to the Banks, on a quarterly basis, a commitment commission calculated as
1/2 of 1% (decreasing to 3/8 of 1% under certain circumstances, as set forth in
the Silgan Credit Agreement) per annum on the daily average unused portion of
the Banks' revolving commitment in respect of the Revolving Loans until such
revolving commitment is terminated. Additionally, Containers and Plastics are
required to pay to the Banks, on a quarterly basis in arrears, a letter of
credit fee at a rate per annum of 2.5% less the then applicable Interest
Reduction Amount, and to pay to Bankers Trust a facing fee of 1/4 of 1% per
annum, each on the average daily stated amount of each letter of credit issued
for the account of Containers or Plastics, respectively.
Certain Covenants. The Silgan Credit Agreement contains numerous
financial and operating covenants, under which Silgan and its subsidiaries must
operate. Failure to comply with any of such covenants permits the Banks to
accelerate, subject to the terms of the Silgan Credit Agreement, the maturity of
all amounts outstanding under the Silgan Credit Agreement.
The Silgan Credit Agreement restricts or limits each of the Borrowers'
and their respective subsidiaries' abilities: (i) to create certain liens; (ii)
to consolidate, merge or sell its assets and to purchase assets, except that
Holdings and Silgan may merge under certain limited circumstances and Silgan and
its subsidiaries may make certain purchases of assets and/or stock, all as
provided in the Silgan Credit Agreement; (iii) to pay dividends on, or
repurchase shares of, its capital stock, except that, among other things: (a)
Silgan may pay dividends to Holdings under certain circumstances, including (1)
dividends in amounts to allow Holdings to pay cash dividends on the Preferred
Stock (or interest on the Exchange Debentures) on and after the earlier of the
third anniversary of the issuance of the Old Preferred Stock or the second
anniversary of the issuance of the Old Preferred Stock if Holdings has
theretofore consummated a registered public offering of its common stock, so
long as the Company meets an interest coverage ratio test under the Silgan
Credit Agreement (which treats such dividends to be then paid as
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interest expense), (2) dividends in amounts to allow Holdings to pay interest
due on the Discount Debentures, (3) dividends with the proceeds from Retained
Excess Cash Flow (as defined in the Silgan Credit Agreement) provided that such
dividends are used by Holdings to pay cash dividends on the Preferred Stock (or
interest on the Exchange Debentures), (4) dividends with the proceeds of
Retained Excess Cash Flow, Refinancing Indebtedness (as defined herein) issued
by Silgan, or any registered public equity offering by Silgan, provided that
such dividends are used by Holdings to repurchase, redeem or repay the Discount
Debentures or any Refinancing Indebtedness issued by Holdings, (5) dividends
under certain circumstances as provided in the Silgan Credit Agreement to enable
Holdings to repurchase certain of its outstanding capital stock, and (6)
dividends in amounts and at the times as provided in the Silgan Credit Agreement
after the consummation of a registered public equity offering by Holdings; (b)
Containers and Plastics may pay dividends to Silgan as long as they remain
wholly owned subsidiaries of Silgan, Canadian Holdco may pay dividends to
Plastics, and Express may pay dividends to Canadian Holdco; (c) Containers and
Plastics may repurchase or redeem its respective stock options (or common stock
issuable upon exercise thereof) or SARs issued to its management under certain
circumstances; and (d) Silgan may pay dividends to the holders of its common
stock in amounts and at the times as provided in the Silgan Credit Agreement
after the consummation of a registered public equity offering by Silgan; (iv) to
lease real and personal property; (v) to create additional indebtedness, except
for, among other things: (a) certain indebtedness existing on the date of the
Silgan Credit Agreement (including Silgan's indebtedness represented by the
11-3/4% Notes and by intercompany notes); (b) indebtedness of Containers to
Plastics or Plastics to Containers; (c) unsecured subordinated indebtedness of
Silgan, the proceeds of which are used to refinance, repay or redeem 11-3/4%
Notes; and (d) under certain limited circumstances, unsecured subordinated
indebtedness of Silgan, the proceeds of which are used by Silgan to pay a
dividend to Holdings, which dividend is then used by Holdings to refinance,
redeem or repay the Discount Debentures or any Refinancing Indebtedness of
Holdings; (vi) to make certain advances, investments and loans, except for,
among other things: (a) loans from Silgan to each of Containers and Plastics
represented by intercompany notes; (b) loans from Containers to Plastics or from
Plastics to Containers; (c) loans from Containers and/or Plastics to Silgan not
exceeding $25 million in aggregate principal amount outstanding at any time, (d)
advances from Silgan to Holdings to the same extent that Silgan is permitted to
pay dividends to Holdings for the purpose of enabling Holdings to pay cash
dividends on the Preferred Stock (or interest on the Exchange Debentures); and
(e) certain limited acquisitions and investments as provided in the Silgan
Credit Agreement; (vii) to enter into transactions with affiliates; (viii) to
make certain capital expenditures, except for, among other things, capital
expenditures which do not exceed in the aggregate for the Borrowers $65 million
for each calendar year during the term of the Silgan Credit Agreement; provided,
however, that to the extent capital expenditures made during any period are less
than the amounts that are permitted to be made during such period, such amount
may be carried forward and utilized to make capital expenditures in the
immediately succeeding calendar year (except that no more than $10 million of
capital expenditures can be carried forward from 1995 to 1996), with any such
amount being deemed utilized first in such succeeding calendar year; (ix) except
as otherwise permitted under the Silgan Credit Agreement, to make any voluntary
payments, prepayments, acquire for value, redeem or exchange, among other
things, any 11-3/4% Notes, any of the Discount Debentures, any Refinancing
Indebtedness, any of the Preferred Stock (or Exchange Debentures) or to make
certain amendments to the 11-3/4% Notes, the Borrowers' or their respective
subsidiaries' respective certificates of incorporation and by-laws, or to
certain other agreements; (x) with certain exceptions, to have any subsidiaries
other than Containers and Plastics with respect to Silgan, C-W Can and SCCW Can
with respect to Containers, and Canadian Holdco and Express with respect to
Plastics; (xi) with certain exceptions, to permit its respective subsidiaries to
issue capital stock; (xii) to permit its respective subsidiaries to create
limitations on the ability of any such subsidiary to (a) pay dividends or make
other distributions, (b) make loans or advances, or (c) transfer assets; (xiii)
to engage in any business other than the packaging business; and (xiv) to
designate indebtedness as "Designated
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Senior Indebtedness" for purposes of the 11-3/4% Notes or any Refinancing
Indebtedness issued by Silgan.
The Silgan Credit Agreement requires that Silgan own not less than 90%
of the outstanding common stock of Containers and Plastics and 100% of all other
outstanding capital stock of Containers and Plastics.
The Silgan Credit Agreement requires that the ratio of Consolidated
Current Assets (as defined below) to Consolidated Current Liabilities (as
defined below) may not, at any time, be less than 1.75:1, and that the ratio of
EBITDA (as defined below) to Interest Expense (as defined below) may not be, for
any period of four consecutive fiscal quarters (in each case, taken as one
accounting period) ended during a period set forth below, less than the ratio
set forth opposite such period below:
Period Ratio
------ -----
Fiscal quarter ending September 30, 1996.............. 1.75:1
Fiscal quarter ending December 31, 1996............... 1.80:1
Fiscal quarter ending March 31, 1997.................. 1.80:1
Fiscal quarter ending June 30, 1997................... 1.80:1
Fiscal quarter ending September 30, 1997.............. 1.80:1
Fiscal quarter ending December 31, 1997............... 1.90:1
Fiscal quarter ending March 31, 1998.................. 1.90:1
Fiscal quarter ending June 30, 1998................... 1.90:1
Fiscal quarter ending September 30, 1998.............. 1.90:1
Fiscal quarter ending December 31, 1998............... 2.00:1
Fiscal quarter ending March 31, 1999.................. 2.00:1
Fiscal quarter ending June 30, 1999................... 2.00:1
Fiscal quarter ending September 30, 1999.............. 2.00:1
Fiscal quarter ending December 31, 1999............... 2.20:1
Fiscal quarter ending March 31, 2000.................. 2.20:1
Fiscal quarter ending June 30, 2000................... 2.20:1
Fiscal quarter ending September 30, 2000.............. 2.20:1
Fiscal quarter ending December 31, 2000............... 2.40:1
Fiscal quarter ending March 31, 2001.................. 2.40:1
Fiscal quarter ending June 30, 2001................... 2.40:1
Fiscal quarter ending September 30, 2001.............. 2.40:1
Fiscal quarter ending December 31, 2001 and each
fiscal quarter thereafter.......................... 2.50:1
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In addition, the Silgan Credit Agreement requires that the Leverage
Ratio (as defined below) for any Test Period (as defined below) ended on the
last day of a fiscal quarter set forth below is not permitted to exceed the
ratio set forth opposite such fiscal quarter below:
Date Ratio
---- -----
Fiscal quarter ending September 30, 1996.............. 5.10:1
Fiscal quarter ending December 31, 1996............... 4.60:1
Fiscal quarter ending March 31, 1997.................. 4.60:1
Fiscal quarter ending June 30, 1997................... 4.60:1
Fiscal quarter ending September 30, 1997.............. 4.60:1
Fiscal quarter ending December 31, 1997............... 4.30:1
Fiscal quarter ending March 31, 1998.................. 4.30:1
Fiscal quarter ending June 30, 1998................... 4.30:1
Fiscal quarter ending September 30, 1998.............. 4.30:1
Fiscal quarter ending December 31, 1998............... 4.00:1
Fiscal quarter ending March 31, 1999.................. 4.00:1
Fiscal quarter ending June 30, 1999................... 4.00:1
Fiscal quarter ending September 30, 1999.............. 4.00:1
Fiscal quarter ending December 31, 1999............... 3.75:1
Fiscal quarter ending March 31, 2000.................. 3.75:1
Fiscal quarter ending June 30, 2000................... 3.75:1
Fiscal quarter ending September 30, 2000.............. 3.75:1
Fiscal quarter ending December 31, 2000............... 3.50:1
Fiscal quarter ending March 31, 2001.................. 3.50:1
Fiscal quarter ending June 30, 2001................... 3.50:1
Fiscal quarter ending September 30, 2001.............. 3.50:1
Fiscal quarter ending December 31, 2001 and each
fiscal quarter thereafter........................... 3.00:1
"Consolidated Current Assets" means the current assets of Holdings and
its subsidiaries determined on a consolidated basis, provided that the unused
amounts of commitments for Revolving Loans are included as current assets of
Holdings in making such determination.
"Consolidated Current Liabilities" means the current liabilities of
Holdings and its subsidiaries determined on a consolidated basis, provided that
the current portion of loans under the Silgan Credit Agreement, the current
portion of any loans made by Silgan to Containers or Plastics, and accrued
interest on the current portion of loans under the Silgan Credit Agreement, the
11-3/4% Notes, the Discount Debentures or any Refinancing Indebtedness from the
last regularly scheduled interest payment date shall not be considered current
liabilities for the purposes of making such determination.
"EBIT" means for any period the consolidated net income of Holdings and
its subsidiaries, before interest expense and provision for taxes and without
giving effect to any extraordinary noncash gains or extraordinary noncash losses
and gains or losses from sales of assets (other than sales of inventory in the
ordinary course of business), or any noncash adjustments resulting from changes
in value of employee stock options.
"EBITDA" means for any period, EBIT, adjusted by adding thereto the
amount of all depreciation and all amortization of intangibles (including
covenants not to compete), goodwill and loan fees that were deducted in arriving
at EBIT for such period.
"Indebtedness" means, as to any person, without duplication, (i) all
indebtedness (including principal, interest, fees and charges) of such person
for borrowed money or for the deferred purchase
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price of property or services, (ii) the face amount of all letters of credit
issued for the account of such person and all drafts drawn thereunder, (iii) all
liabilities secured by any lien on any property owned by such person, whether or
not such liabilities have been assumed by such person, (iv) the aggregate amount
required to be capitalized under leases under which such person is the lessee
and (v) all contingent obligations of such person.
"Interest Expense" means, for any period, the total consolidated
interest expense of Holdings and its subsidiaries for such period (without
giving effect to any amortization of up-front fees and expenses in connection
with any debt issuance).
"Interest Reduction Discount" means initially zero, and, from and after
September 30, 1996, the percentage set forth in clause (A), (B), (C), (D), (E)
or (F) below to the extent applicable:
(A) 1/4 of 1% if, but only if, the Modified Leverage Ratio for
the current Test Period is less than or equal to 3.75:1.00 and none of
the conditions set forth in clauses (B) through (F) below are
satisfied;
(B) 1/2 of 1% if, but only if, the Modified Leverage Ratio for
the current Test Period is less than or equal to 3.375:1.00 and none of
the conditions set forth in clauses (C) through (F) below are
satisfied;
(C) 3/4 of 1% if, but only if, the Modified Leverage Ratio for
the current Test Period is less than or equal to 3.00:1.00 and none of
the conditions set forth in clauses (D) through (F) below are
satisfied;
(D) 1% if, but only if, the Modified Leverage Ratio for the
current Test Period is less than or equal to 2.625:1.00 and neither of
the conditions set forth in clause (E) or (F) below is satisfied;
(E) 1-1/4% if, but only if, the Modified Leverage Ratio for
the current Test Period is less than or equal to 2.25:1.00 and the
condition set forth in clause (F) below is not satisfied; or
(F) 1-1/2% if, but only if, the Modified Leverage Ratio for
the current Test Period is less than or equal to 1.875:1.00.
Notwithstanding anything to the contrary above in this definition, (i)
if Silgan's long-term Indebtedness receives a stated "senior implied" rating of
at least BBB- from Standard & Poor's Ratings Group or at least Baa3 from Moody's
Investors Service, Inc., then from the date that is the first business day of
the fiscal quarter of Silgan following the fiscal quarter containing the first
date that either such rating is announced and for so long as such rating remains
in effect, the Interest Reduction Discount will be 1-1/2% and (ii) the Interest
Reduction Discount will be reduced to zero at all times when a default or an
event of default under the Silgan Credit Agreement exists.
"Letter of Credit Outstandings" means, at any time, the sum of (i) the
aggregate stated amount of all outstanding letters of credit issued under the
Silgan Credit Agreement and (ii) the amount of all unpaid drawings for letters
of credit issued under the Silgan Credit Agreement.
"Leverage Ratio" means, for any period, the ratio of (x) the sum of (I)
Total Indebtedness (excluding Revolving Outstandings) as of the last day of such
period plus (II) the Revolving Outstandings on the December 31st immediately
preceding the last day of such period (or, in the case of a Test Period
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ended on December 31 in any fiscal year, the Revolving Outstandings on such
December 31) to (y) EBITDA for the then most recently ended Test Period.
"Modified Leverage Ratio" means, at any time, the ratio of (x) the sum
of (I) Total Consolidated Term Debt at such time plus (II) the Revolving
Outstandings on the December 31st immediately preceding the last day of the
applicable period (or, in the case of a Test Period ended on December 31 in any
fiscal year, the Revolving Outstandings on such December 31) to (y) EBITDA for
the then most recently ended Test Period.
"Refinancing Indebtedness" means (i) any Indebtedness incurred as
permitted by the Silgan Credit Agreement the proceeds of which are used to
refinance, redeem or repay outstanding 11-3/4% Notes, Discount Debentures and/or
any Refinancing Indebtedness previously issued by Holdings or (ii) any
Indebtedness of Holdings incurred pursuant to the Holdings Guaranty the proceeds
of which are used to refinance, redeem or repay outstanding Discount Debentures.
"Revolving Outstandings" means, at any time, the sum of the aggregate
principal amount of Revolving Loans and Swingline Loans then outstanding plus
the aggregate amount of all Letter of Credit Outstandings at such time.
"Test Period" shall mean each period of four consecutive fiscal
quarters of Holdings (in each case taken as one accounting period), provided
that the first Test Period shall end on December 31, 1995.
"Total Consolidated Term Debt" means, at any time, the sum of (1) the
aggregate principal amount of Term Loans then outstanding, (2) the aggregate
accreted principal amount of Discount Debentures then outstanding, (3) the
aggregate principal amount of 11-3/4% Notes then outstanding, (4) the aggregate
principal amount (or accreted amount if issued at a discount) of all Refinancing
Indebtedness then outstanding, (5) the aggregate principal amount of all
Indebtedness then outstanding that was assumed in connection with an acquisition
permitted under the Silgan Credit Agreement, (6) the aggregate principal amount
of certain promissory notes then outstanding that were issued by Holdings
pursuant to the Holdings Guaranty (as defined herein) which notes provide for
the current payment of interest in cash, and (7) the aggregate principal amount
of Exchange Debentures then outstanding.
"Total Indebtedness" means the aggregate Indebtedness of Holdings and
its subsidiaries determined on a consolidated basis, provided that, in making
such determination, Indebtedness consisting of capitalized lease obligations
existing as of the effective date of the Silgan Credit Agreement or permitted to
be incurred pursuant to the Silgan Credit Agreement are excluded.
For purposes of the various computations under the Silgan Credit
Agreement, including the ratio of EBITDA to Interest Expense and the Leverage
Ratio, (i) all computations utilize accounting principles in conformity with
those used to prepare the statements of consolidated and consolidating financial
condition of Holdings and its subsidiaries and Silgan and its subsidiaries at
December 31, 1994 and the related consolidated and consolidating statements of
income and cash flow of Holdings and its subsidiaries and Silgan and its
subsidiaries for the fiscal year ended December 31, 1994, as audited by Ernst &
Young LLP, and (ii) no effect is given to certain other matters as provided in
the Silgan Credit Agreement.
The ability of Holdings to take certain actions is restricted or
limited pursuant to the terms of the Holdings Guaranty. The Holdings Guaranty
restricts or limits Holdings' ability to, among other things: (i) create certain
liens, (ii) incur additional indebtedness, except that, among other things,
Holdings may incur unsecured subordinated Indebtedness the proceeds of which are
used to refinance, redeem or repay the Discount Debentures or any Refinancing
Indebtedness of Holdings and Holdings may exchange the
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Preferred Stock for the Exchange Debentures on or after the earlier of the third
anniversary of the issuance of the Old Preferred Stock or the consummation by
Holdings of a registered public offering of its common stock in an amount equal
to or greater than the principal amount of the Exchange Debentures, (iii)
consolidate, merge or sell its assets and purchase or lease assets, except that
Holdings may merge with Silgan to the extent that such merger is permitted under
the Silgan Credit Agreement, (iv) pay cash dividends, except that, among other
things, Holdings may pay cash dividends on the Preferred Stock to the extent
that Silgan is permitted to pay cash dividends or make advances to Holdings
under the Silgan Credit Agreement for such purpose and dividends to the holders
of its common stock in amounts and at the times as provided in the Silgan Credit
Agreement after the consummation of a registered public equity offering by
Holdings, (v) repurchase any of its capital stock, except that Holdings is
permitted to purchase the Holdings Class B Stock held by Mellon, as trustee for
First Plaza, with proceeds from the Private Offering, (vi) make loans or
advances, except that, among other things, Holdings may make advances to Silgan
as permitted under the Silgan Credit Agreement, and (vii) engage in any business
other than holding Silgan's common stock and certain other limited matters
permitted by the Holding Guaranty.
Events of Default. Events of default under the Silgan Credit Agreement
include, with respect to each of the Borrowers, as the case may be, among
others: (i) the failure to pay any principal on the Term Loans or the Revolving
Loans, the failure to reimburse drawings under any letters of credit when due or
the failure to pay within two business days after the date such payment is due
interest on the Term Loans, the Revolving Loans or any unpaid drawings under any
letter of credit or any fees or other amounts owing under the Silgan Credit
Agreement; (ii) subject to certain limited exceptions, any failure to pay
amounts due under certain other agreements or any defaults that result in or
permit the acceleration of certain other indebtedness; (iii) subject to certain
limited exceptions, the breach of any covenants, representations or warranties
contained in the Silgan Credit Agreement or any related document; (iv) certain
events of bankruptcy, insolvency or dissolution; (v) the occurrence of certain
judgments, writs of attachment or similar process against any of the Borrowers
or any of their respective subsidiaries; (vi) the occurrence of certain ERISA
related liabilities; (vii) a default under or invalidity of the guarantees
(including an event of default under the Holdings Guaranty) or of the security
interests granted to the Banks pursuant to the Silgan Credit Agreement; (viii)
the failure of Holdings to own 100% of the capital stock of Silgan; (ix) a
Change of Control (as defined in the Silgan Credit Agreement) shall occur; and
(x) the requirement that Silgan repurchase any 11-3/4% Note or that Holdings
repurchase any Discount Debenture, in any case as a result of a Change of
Control (as defined in the agreements and indentures relating thereto).
Upon the occurrence of any event of default under the Silgan Credit
Agreement, the Banks are permitted, among other things, to accelerate the
maturity of the Term Loans and the Revolving Loans and all other outstanding
indebtedness under the Silgan Credit Agreement and terminate their commitment to
make any further Revolving Loans or to issue any letters of credit.
Description of the 11-3/4% Notes
Silgan sold the 11-3/4% Notes in a public offering on June 29, 1992.
The 11-3/4% Notes bear interest at a rate of 11-3/4% per annum. The 11-3/4%
Notes are redeemable at any time on and after June 15, 1997 at the option of
Silgan, in whole or in part, at 105.875% of their principal amount plus accrued
interest, declining to 100% of their principal amount plus accrued interest on
or after June 15, 1999. In the event of a Change of Control, each holder of the
11-3/4% Notes may require Silgan to repurchase its 11-3/4% Notes at 101% of the
principal amount plus accrued interest. The 11-3/4% Notes Indenture contains
certain covenants that, among other things, direct the application of the
proceeds from certain asset sales, limit the ability of Silgan and its
subsidiaries to incur indebtedness, make certain
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payments with respect to their capital stock, make prepayments of certain
indebtedness, make loans or investments to entities other than Restricted
Subsidiaries (as defined in the 11-3/4% Notes Indenture), enter into
transactions with affiliates, engage in mergers or consolidations, and, with
respect to Silgan's subsidiaries, issue stock.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the principal United States
federal income tax consequences of the purchase, ownership and disposition of
the New Preferred Stock and the Exchange Debentures, but does not purport to be
a complete analysis of all of the potential tax effects of such purchase,
ownership or disposition. This summary deals only with New Preferred Stock and
Exchange Debentures held as "capital assets" within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended by U.S. Holders (as defined
below). It does not address all aspects of the U.S. federal income tax
consequences of holding the New Preferred Stock or the Exchange Debentures that
may be relevant to a particular investor in the context of such investor's
individual investment circumstance or to investors in special tax situations,
such as life insurance companies, financial institutions, tax-exempt
organizations, dealers in securities and currencies, persons holding New
Preferred Stock or Exchange Debentures as a part of a hedging or conversion
transaction or a straddle, U.S. Holders whose "functional currency" is not the
U.S. dollar or Non-U.S. Holders (as defined below). This summary also does not
discuss tax consequences under state, local, or foreign tax laws. Holders of the
New Preferred Stock should consult their own tax advisors concerning the
application of United States federal income tax laws, as well as the laws of any
state, local or foreign taxing jurisdiction, to their particular situation.
Furthermore, the discussion below is based upon the provisions of the Code and
existing and proposed Treasury regulations, administrative rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified, possibly with retroactive effect, so as to result
in U.S. federal income tax consequences different from those discussed below.
As used herein, a "U.S. Holder" means a beneficial owner that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source. An
individual may, subject to certain exceptions, be deemed to be a resident (as
opposed to a non-resident alien) of the United States for certain purposes by
virtue of being present in the United States on at least 31 days in the calendar
year and for an aggregate of at least 183 days during a three-year period ending
in the current calendar year (counting for such purposes all of the days present
in the current year, one-third of the days present in the immediately preceding
year, and one-sixth of the days present in the second preceding year). A
"Non-U.S. Holder" is a holder that is not a U.S. Holder.
ALL PROSPECTIVE PURCHASERS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
OWNERSHIP AND DISPOSITION OF THE NEW PREFERRED STOCK OR THE EXCHANGE DEBENTURES.
Exchange of Old Preferred Stock for New Preferred Stock
An exchange of the Old Preferred Stock for the New Preferred Stock
should not constitute a taxable event for federal income tax purposes because
the New Preferred Stock should not be considered to differ materially in kind or
extent from the Old Preferred Stock. Rather, the New Preferred Stock received by
a U.S. Holder should be treated as a continuation of the Old Preferred Stock in
the hands
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of such U.S. Holder. As a result, U.S. Holders who exchange their Old Preferred
Stock for New Preferred Stock should not recognize any income, gain or loss for
federal income tax purposes with respect to such exchange. The following
discussion assumes that an exchange of Old Preferred Stock for New Preferred
Stock will not be treated as an exchange for federal income tax purposes.
Distributions on the New Preferred Stock
Distributions of cash or, under Section 305(b)(4) of the Code, of
additional shares of New Preferred Stock on the New Preferred Stock will be
treated as dividends taxable as ordinary income to U.S. Holders to the extent of
Holdings' current and accumulated earnings and profits as determined under U.S.
federal income tax principles. The amount of a distribution of additional shares
of New Preferred Stock will equal the fair market value of the shares of New
Preferred Stock distributed as of the date of such distribution. To the extent
that the amount of a distribution on the New Preferred Stock exceeds Holdings'
current and accumulated earnings and profits, such distribution will be treated
as a nontaxable return of capital and will be applied against and reduce the
adjusted tax basis of the New Preferred Stock in the hands of each U.S. Holder
(but not below zero), thus increasing the amount of any gain (or reducing the
amount of any loss) which would otherwise be realized by such U.S. Holder upon
the sale or other taxable disposition of such New Preferred Stock. The amount of
any such distribution which exceeds the adjusted tax basis of the New Preferred
Stock in the hands of the U.S. Holder will be treated as capital gain and will
be either long-term or short-term capital gain depending on the U.S. Holder's
holding period for the New Preferred Stock. There can be no assurance that for
any particular taxable year Holdings will have current or accumulated earnings
and profits.
Under Section 243 of the Code, corporate U.S. Holders generally will be
able to deduct 70% of the amount of any distribution qualifying as a dividend.
There are, however, many exceptions and restrictions relating to the
availability of such dividends-received deduction. Section 246A of the Code
reduces the dividends-received deduction allowed to a corporate U.S. Holder that
has incurred indebtedness "directly attributable" to its investment in portfolio
stock. Section 246(c) of the Code requires that, in order to be eligible for the
dividends-received deduction, a corporate U.S. Holder must generally hold the
shares of New Preferred Stock for a 46-day minimum holding period or a 91-day
period in certain circumstances. A taxpayer's holding period for these purposes
is suspended during any period in which a U.S. Holder has certain options or
contractual obligations with respect to substantially identical stock or holds
one or more other positions with respect to substantially identical stock that
diminishes the risk of loss from holding the New Preferred Stock. A recent
legislative proposal would (i) reduce the dividends-received deduction from 70%
to 50% and (ii) modify the manner in which the 46- or 91-day minimum holding
period is determined. It is unclear whether and in what form such proposal will
be enacted.
Under Section 1059 of the Code, a corporate U.S. Holder is required to
reduce its tax basis (but not below zero) in the New Preferred Stock by the
non-taxed portion of any "extraordinary dividend" if such stock has not been
held for more than two years before the earliest of the date such dividend is
declared, announced or agreed to. Generally, the non-taxed portion of an
extraordinary dividend is the amount excluded from income by operation of the
dividends-received deduction provisions of Section 243 of the Code. An
extraordinary dividend on the Preferred Stock generally would be a dividend that
(i) equals or exceeds 5% of the corporate U.S. Holder's adjusted tax basis in
the Preferred Stock, treating all dividends received and all dividends having
ex-dividend dates within an 85-day period as one dividend, or (ii) exceeds 20%
of the corporate U.S. Holder's adjusted tax basis in such Preferred Stock,
treating all dividends received and all dividends having ex-dividend dates
within a 365-day period as one dividend. In determining whether a dividend paid
on the New Preferred Stock is an extraordinary dividend, a corporate U.S. Holder
may elect to substitute the fair market value of the New Preferred Stock for
such
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U.S. Holder's tax basis for purposes of applying these tests, provided such fair
market value is established to the satisfaction of the Secretary of Treasury
(the "Secretary") as of the day before the ex-dividend date. An extraordinary
dividend also includes any amount treated as a dividend in the case of a
redemption that is either non-pro rata as to all stockholders or in partial
liquidation of a company, regardless of the stockholder's holding period and
regardless of the size of the dividend, including a redemption pursuant to
Holding's right to redeem the New Preferred Stock for cash or exchange the New
Preferred Stock for Exchange Debentures. If any part of the non-taxed portion of
an extraordinary dividend is not applied to reduce the corporate U.S. Holder's
tax basis as a result of the limitation on reducing such basis below zero, such
part will be treated as gain upon the sale or exchange of the New Preferred
Stock. However, recently introduced legislation would require gain on the
non-taxed portion of an extraordinary dividend to be recognized in the taxable
year in which the extraordinary dividend is received rather than at the time of
the sale or exchange of the New Preferred Stock. It is unclear whether and in
what form such legislation will be enacted. Corporate U.S. Holders are urged to
consult their tax advisors with respect to the possible application of Section
1059 to their ownership and disposition of the New Preferred Stock.
A corporate U.S. Holder's liability for alternative minimum tax may be
affected by the portion of the dividends received which such corporate U.S.
Holder deducts in computing taxable income. This results from the fact that
corporate stockholders are required to increase alternative minimum taxable
income by 75% of the excess of the current earnings and profits (with certain
adjustments) over alternative minimum taxable income (determined without regard
to earnings and profit adjustments or the alternative tax net operating loss
deduction).
Redemption Premium
Under Section 305(c) of the Code and the applicable Treasury
regulations thereunder, if the redemption price of New Preferred Stock exceeds
its issue price, the difference ("redemption premium") may be taxable as a
constructive distribution of additional New Preferred Stock to the U.S. Holder
(treated as a dividend to the extent of Holdings' current and accumulated
earnings and profits and otherwise subject to the treatment described above for
distributions) over a certain period.
Because the New Preferred Stock provides for optional rights of
redemption by Holdings at prices in excess of the issue price, U.S. Holders
could be required to recognize such redemption premium under a constant yield
method similar to that described below for accruing OID (see "--Interest and OID
on the Exchange Debentures--Original Issue Discount" below) if, based on all of
the facts and circumstances, the optional redemption is more likely than not to
occur. If stock may be redeemed at more than one time, the time and price at
which such redemption is most likely to occur must be determined based on all of
the facts and circumstances. Applicable Treasury regulations provide a "safe
harbor" under which a right to redeem will not be treated as more likely than
not to occur if (i) the issuer and the holder are not related within the meaning
of the Treasury regulations; (ii) there are no plans, arrangements or agreements
that effectively require or are intended to compel the issuer to redeem the
stock (disregarding, for this purpose, a separate mandatory redemption); and
(iii) exercise of the right to redeem would not reduce the yield of the stock,
as determined under the Treasury regulations. Further, the Treasury regulations
provide that such redemption premium is not taxable as a constructive
distribution if it is solely in the nature of a penalty for premature
redemption. A redemption premium is solely in the nature of a penalty for
premature redemption if it is paid as a result of changes in economic or market
conditions over which neither the issuer nor the holder has control. Regardless
of whether the optional redemption is more likely than not to occur, or whether
the redemption premium is solely in the nature of a penalty for premature
redemption, constructive dividend treatment will not result if the redemption
premium does not exceed a de minimis amount. Based on the Treasury regulations,
Holdings intends to take the position
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that the existence of Holdings' optional redemption rights do not result in a
constructive distribution to the U.S. Holders.
Further, because the New Preferred Stock provides for an optional right
of the U.S. Holders to require Holdings to acquire the New Preferred Stock at a
price equal to 101% of the liquidation value upon a Change in Control, U.S.
Holders could be required to recognize such redemption premium under the
constant yield method discussed above unless, very generally, the likelihood of
redemption is remote. Here, too, regardless of whether the likelihood of
redemption is remote, constructive dividend treatment will not result if the
redemption premium does not exceed a de minimis amount of 1/4 of 1% of the
stated redemption price at maturity multiplied by the number of complete years
to maturity. Since the premium is 1% and the New Preferred Stock has a term of
ten years, Holdings intends to take the position that the existence of U.S.
Holders' optional redemption right does not result in a constructive
distribution to the Holders.
Moreover, the New Preferred Stock provides for a mandatory redemption
at a redemption price equal to the liquidation value of the New Preferred Stock,
plus accrued and unpaid dividends. If at the time of issuance of preferred
stock, there is no intention for dividends to be paid currently, the IRS may
treat the payment of such dividends on redemption as disguised redemption
premium subject to the constant yield rules discussed above. Dividends on the
New Preferred Stock are payable in cash or, on or prior to July 15, 2000, in
additional shares of New Preferred Stock. Holdings intends to pay all such
dividends currently. Thus, while the appropriate treatment of unpaid cumulative
dividends has not yet been addressed in Treasury regulations and no assurance
can be given as to the outcome of such guidance, Holdings intends to take the
position that the terms of the mandatory redemption should not result in a
constructive distribution to the U.S. Holders.
Finally, in the event that additional New Preferred Stock is
distributed on the New Preferred Stock as dividends and such additional New
Preferred Stock has an issue price at the time of distribution that is less than
its redemption price, such additional New Preferred Stock would have a
redemption premium that may be taxable as a constructive distribution of
additional stock to a U.S. Holder (treated as a dividend to the extent of
Holdings current and accumulated earnings and profits) under the constant yield
method (discussed above) over the term of such additional New Preferred Stock.
Redemption, Sale or Exchange of New Preferred Stock
Exchange or Distribution Characterization
The sale of the New Preferred Stock by a U.S. Holder will be a taxable
transaction. Likewise, a redemption of shares of the New Preferred Stock for
cash or an exchange of the New Preferred Stock for Exchange Debentures will be a
taxable transaction. For U.S. federal income tax purposes, the exchange of the
New Preferred Stock for Exchange Debentures will be treated as if Holdings made
a distribution of the Exchange Debentures in redemption of the New Preferred
Stock. Under Section 302(b) of the Code, such a redemption for cash or the
Exchange Debentures will be treated as a sale or exchange transaction on which a
U.S. Holder will generally recognize capital gain or loss (except to the extent
of amounts received on the exchange that are attributable to declared dividends,
which will be treated in the same manner as distributions described above)
provided that the redemption (i) results in complete termination of the holder's
stock interest in Holdings under Section 302(b)(3) of the Code; (ii) is
"substantially disproportionate" with respect to the stockholder under Section
302(b)(2) of the Code or (iii) is not "essentially equivalent to a dividend"
under Section 302(b)(1) of the Code because it results in a "meaningful
reduction" in a U.S. Holder's stock interest in Holdings. Whether a redemption
will result in a meaningful reduction depends on the particular holder's facts
and circumstances. In
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determining whether any of these tests have been met, the holder is deemed,
under the constructive ownership rules of Section 302(c) of the Code, to own any
shares of Holdings stock that are owned, or deemed owned, by certain related
persons and entities and any shares that such holder, or related person or
entity, has the right to acquire by exercise of an option.
Distribution Treatment
If the redemption of the New Preferred Stock does not result in a
complete termination or meaningful reduction and is not substantially
disproportionate, the transaction will be treated as a distribution of cash or
Exchange Debentures, as the case may be. The amount of such distribution will be
measured by the amount of cash received by the U.S. Holder or the "issue price,"
as defined below, of the Exchange Debentures received by the U.S. Holder, and
such distribution will be treated in the same manner as distributions described
above. However, corporate U.S. Holders should be aware that to the extent such
distribution is treated as a dividend it may be treated as an extraordinary
dividend under Section 1059 of the Code. A U.S. Holder's aggregate tax basis in
the Exchange Debentures will be equal to the issue price of the Exchange
Debentures received by the U.S. Holder.
Sale or Exchange Treatment
If a U.S. Holder sells the New Preferred Stock, or the redemption of
the New Preferred Stock results in a complete termination or meaningful
reduction or is substantially disproportionate, the gain or loss recognized on
such sale or exchange will generally be equal to the difference between the
amount realized by the U.S. Holder and such U.S. Holder's adjusted tax basis in
the New Preferred Stock surrendered. In the case of a sale or redemption for
cash, the amount realized will be the cash received on such sale or redemption.
In the case of an exchange of New Preferred Stock for Exchange Debentures, the
amount realized on receipt of the Exchange Debenture will be equal to the "issue
price" of the Exchange Debenture. Thus, the amount realized on the exchange will
be equal to the issue price of the Exchange Debentures plus any cash received on
the exchange (other than amounts received with respect to declared dividends).
If, as of the exchange date, the Exchange Debentures or the New Preferred Stock
are traded on an established securities market on or at any time during the
60-day period ending 30 days after the exchange date, the issue price of an
Exchange Debenture would be equal to the fair market value of the traded
instrument. If neither the New Preferred Stock nor the Exchange Debentures are
so traded, the issue price of the Exchange Debentures would be the stated
principal amount of the Exchange Debentures provided that the yield on the
Exchange Debentures is equal to or greater than the "applicable federal rate" in
effect at the time the Exchange Debenture is issued. If the yield on the
Exchange Debentures is less than such applicable Federal rate, its issue price
under Section 1274 of the Code would be equal to the present value, as of the
issue date, of all payments to be made on the Exchange Debentures, discounted at
the applicable federal rate. It cannot be determined at the present time whether
the New Preferred Stock or the Exchange Debentures will be, at the relevant
time, traded on an established securities market within the meaning of the OID
Regulations or whether the yield on the Exchange Debentures will equal or exceed
the applicable federal rate, as discussed above. However, Holdings does not
expect a public market for the New Preferred Stock (or the Exchange Debentures)
to develop in the foreseeable future. A U.S. Holder's adjusted tax basis in the
New Preferred Stock surrendered in the redemption will equal the amount paid for
such stock plus any amount included in gross income pursuant to an actual
distribution of additional New Preferred Stock or a constructive distribution of
redemption premium, in each case under Section 305 of the Code, as described in
"--Distributions on the New Preferred Stock" and "--Redemption Premium," and
reduced by the amount of any distribution treated as a nontaxable return of
capital that reduced the adjusted tax basis of the New Preferred Stock, as
described in "--Distributions on the New Preferred Stock." Such gain or loss
will be
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either long-term or short-term capital gain depending on the U.S. Holder's
holding period for the New Preferred Stock at the time of redemption, sale,
exchange or retirement of the New Preferred Stock.
Depending upon a U.S. Holder's particular circumstances, the tax
consequences of holding Exchange Debentures may be less advantageous than the
tax consequences of holding New Preferred Stock because, for example, payments
of interest on the Exchange Debentures will not be eligible for any
dividends-received deduction that may be available to corporate U.S. Holders.
Interest and OID on the Exchange Debentures
The tax treatment of the Exchange Debentures will turn on whether or
not they are issued with original issue discount. Exchange Debentures issued on
or before July 15, 2000 will be issued with OID. Exchange Debentures issued
after July 15, 2000 will not be issued with OID unless their stated redemption
price at maturity, as defined below, exceeds their issue price, as defined
above. Exchange Debentures issued with OID will be referred to as "OID
Debentures." Prospective investors are urged to consult their own tax advisors
as to the consequences of owning Exchange Debentures.
Stated Interest
Payments of interest on a debt instrument generally will be includible
in a U.S. Holder's income as ordinary income under the holder's method of
accounting for U.S. federal income tax purposes. However, because Holdings has
the option through July 15, 2000 to pay interest on the Exchange Debentures by
issuing additional Exchange Debentures, Exchange Debentures issued prior to that
date may be treated as issued with OID, and stated interest on such Exchange
Debentures would not be treated as interest for U.S. federal income tax
purposes, but instead will be subject to the OID rules described below. If the
Exchange Debentures are not issued with OID, then interest on an Exchange
Debenture generally will be includible in a U.S. Holder's income as ordinary
income under the U.S. Holder's method of accounting. Exchange Debentures issued
after July 15, 2000 may also be issued with OID.
Original Issue Discount
U.S. Holders of OID Debentures will be subject to special tax
accounting rules, as described in greater detail below. U.S. Holders of such OID
Debentures should be aware that they generally must include OID in gross income
for U.S. federal income tax purposes on an annual basis under a constant yield
accrual method. As a result, such U.S. Holders will include OID in income in
advance of the receipt of cash attributable to that income. However, U.S.
Holders of OID Debentures generally will not be required to include separately
in income cash payments received on such OID Debentures, even if denominated as
interest, to the extent such payments do not constitute qualified stated
interest (as defined below). Holdings will report to U.S. Holders of any OID
Debentures on a timely basis the reportable amount of OID and interest income
based on its understanding of applicable law.
The amount of OID, if any, on a debt instrument is the excess of its
"stated redemption price at maturity" over its "issue price," subject to a
statutorily defined de minimis exception. The "stated redemption price at
maturity" of a debt instrument is the sum of its principal amount plus all other
payments required thereunder, other than payments of "qualified stated
interest." For this purpose, "qualified stated interest" means stated interest
that is unconditionally payable in cash or in property (other than the debt
instruments of the issuer), at least annually at a single fixed rate during the
entire term of the debt instrument that appropriately takes into account the
length of intervals between payments). The "issue price" of an Exchange
Debenture will be determined as described under "--Redemption, Sale or Exchange
of New Preferred Stock" above.
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As noted above, because Holdings has the option through July 15, 2000
to pay interest on the Exchange Debentures by issuing additional Exchange
Debentures, any Exchange Debentures issued prior to that date will be treated as
OID Debentures, and none of the stated interest on such OID Debentures will be
treated as qualified stated interest unless, under special rules for interest
holidays, the amount of OID is treated as de minimis. Any OID Debentures so
issued would be treated as having been issued with OID equal to the excess of
their stated redemption price at maturity (which will be equal to the sum of the
principal amount plus all payments of stated interest) over their issue price
(which will be as described under "--Redemption, Sale or Exchange of New
Preferred Stock" above). Any additional OID Debentures issued in lieu of cash
would not be treated as debt instruments separate from the OID Debentures upon
which they were issued, but instead are aggregated with such OID Debentures.
The right to issue additional Exchange Debentures in lieu of paying
cash interest through July 15, 2000 is treated for purposes of the OID
provisions of the Code as an option to defer the interest payments on the
Exchange Debentures until maturity. Treasury regulations provide that in the
case of a debt instrument that provides the issuer with an unconditional option
or options exercisable during the term of the debt instrument that, if
exercised, require payments to be made on the debt instrument under an
alternative payment schedule, the yield and maturity of such debt instrument for
purposes of calculating OID are determined by assuming the issuer exercises or
does not exercise the option in a manner that minimizes the yield on the debt
instrument.
If the issue price of the Exchange Debentures is at least equal to
their principal amount, the yield to maturity of the Exchange Debentures if the
option to pay interest with additional Exchange Debentures is exercised will be
no less than the yield to maturity if the option is not exercised. Accordingly,
for purposes of calculating OID, it would be assumed that Holdings will not
exercise the option because exercise of the option will not minimize the yield.
If the option was in fact subsequently exercised and additional Exchange
Debentures were issued by Holdings in lieu of cash, such additional Exchange
Debentures would be aggregated with the Exchange Debentures upon which they were
issued, and OID would be calculated for the remainder of the term of the
Exchange Debentures based upon an adjusted issue price which includes the
principal amount of the additional Exchange Debentures. As a result of such
exercise, U.S. Holders of Exchange Debentures would include OID in income in
advance of the receipt of cash, regardless of such U.S. Holders' regular methods
of accounting.
If the issue price of the Exchange Debentures is less than their
principal amount, the yield to maturity of the Exchange Debentures, if the
option to pay interest with additional Exchange Debentures is exercised, will be
less than the yield to maturity if the option is not exercised. Accordingly, for
purposes of calculating OID, it would be assumed that Holdings will exercise the
option because to do so will minimize the yield. If Holdings does in fact
exercise its option and issues additional Exchange Debentures in lieu of cash,
U.S. Holders of Exchange Debentures will include OID in income in advance of the
receipt of cash, regardless of such U.S. Holders' regular method of accounting.
If Holdings subsequently makes a cash payment instead of exercising its option
and issuing an additional Exchange Debenture, the cash payment made will be
treated as a prepayment of the Exchange Debentures, partially retiring such
Exchange Debentures on a pro rata basis on the date of such payment. Such
retirement would be a taxable exchange to a U.S. Holder of the Exchange
Debenture.
If the Exchange Debentures are issued after July 15, 2000, Holdings
will not have the option to pay interest with additional Exchange Debentures. In
such event, (i) all interest payments on any Exchange Debenture issued will be
qualified stated interest, (ii) the redemption price at maturity of any Exchange
Debenture will be equal to its principal amount, and (iii) any Exchange
Debenture will therefore be issued with OID only to the extent its principal
amount exceeds its issue price (provided that such excess is not de minimis). As
described under "--Redemption, Sale or Exchange of New Preferred
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<PAGE>
Stock" above, however, the issue price of the Exchange Debentures cannot be
determined at the present time.
The amount of OID includible in income by an initial U.S. Holder of an
OID Debenture is the sum of the "daily portions" of OID with respect to the OID
Debenture for each day during the taxable year or portion of the taxable year in
which such U.S. Holder holds such Debenture ("accrued OID"). The daily portion
is determined by allocating to each day in any "accrual period" a pro rata
portion of the OID allocable to that accrual period. The "accrual period" for an
OID Debenture may be of any length and may vary in length over the term of the
OID Debenture, provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occur on the first day or the
final day of an accrual period. The amount of OID allocable to any accrual
period is an amount equal to the excess, if any, of (a) the product of the OID
Debenture's adjusted issue price at the beginning of such accrual period and its
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the sum of any qualified stated interest allocable to the accrual period.
OID allocable to a final accrual period is the difference between the amount
payable at maturity (other than a payment of qualified stated interest) and the
adjusted issue price at the beginning of the final accrual period. Special rules
will apply for calculating OID for an initial short accrual period. The
"adjusted issue price" of an OID Debenture at the beginning of any accrual
period is equal to its issue price increased by the accrued OID for each prior
accrual period (determined without regard to the amortization of any acquisition
or bond premium, as described below) and reduced by any payments made on such
Debenture (other than qualified stated interest) on or before the first day of
the accrual period.
The Exchange Debentures may be redeemed prior to their stated maturity
at the option of Holdings. For purposes of computing the yield of such
instruments, Holdings will be deemed to exercise or not exercise its option to
redeem the OID Debentures in a manner that minimizes the yield on the OID
Debentures. It is not anticipated that Holdings' ability to redeem prior to
stated maturity would affect the yield of an OID Debenture.
In the event of a change of control, Holdings will be required to offer
to repurchase all of the Exchange Debentures. The right of holders to require
repurchase upon a Change of Control will not affect the yield or maturity date
of (i) the Exchange Debentures issued prior to August 13, 1996 unless, based on
all the facts and circumstances as of the issue date, it is more likely than not
that such an event giving rise to the repurchase will occur or (ii) the Exchange
Debentures issued on or after August 13, 1996, provided that, based on all the
facts and circumstances as of the issue date, the payment schedule on such
Exchange Debentures that does not reflect a change of control is significantly
more likely than not to occur. Holdings does not intend to treat the change of
control provisions of the Exchange Debentures as affecting the computation of
the yield to maturity of any Exchange Debentures.
U.S. Holders may elect to treat all interest on any Exchange Debenture
as OID and calculate the amount includible in gross income under the constant
yield method described above. For the purposes of this election, interest
includes stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. The election is to be made for
the taxable year in which the U.S. Holder acquired the Exchange Debenture, and
may not be revoked without the consent of the Internal Revenue Service (the
"IRS"). United States Holders should consult with their own tax advisors about
this election.
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Market Discount on Exchange Debentures
If a U.S. Holder acquires an Exchange Debenture (other than an OID
Debenture) for an amount less than its stated redemption price at maturity or,
in the case of an OID Debenture for an amount that is less than its adjusted
issue price, the amount of the difference will be treated as "market discount"
for federal income tax purposes, unless such difference is less than a specified
de minimis amount. Under the market discount rules, a U.S. Holder will be
required to treat any principal payment on an Exchange Debenture, or any gain on
the sale, exchange, retirement or other disposition of, an Exchange Debenture as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such Exchange
Debenture at the time of such payment or disposition. In addition, the U.S.
Holder may be required to defer, until the maturity of the Exchange Debenture or
its earlier disposition in a taxable transaction, the deduction of all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such Exchange Debenture.
Any market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Exchange
Debenture, unless the U.S. Holder elects to accrue on a constant interest
method. A U.S. Holder of an Exchange Debenture may elect to include market
discount in income currently as it accrues (on either a ratable or constant
interest method), in which case the rule described above regarding deferral of
interest deductions will not apply. This election to include market discount in
income currently, once made, applies to all market discount obligations acquired
on or after the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
Acquisition Premium; Amortizable Bond Premium
A U.S. Holder that acquires an Exchange Debenture with OID for an
amount that is greater than its adjusted issue price but equal to or less than
the sum of all amounts payable on the Exchange Debenture after the purchase
date, other than qualified stated interest, will be considered to have purchased
such Exchange Debenture at an "acquisition premium." Under the acquisition
premium rules, the amount of OID, if any, which such U.S. Holder must include in
its gross income with respect to such Exchange Debenture for any taxable year
will be reduced by the portion of such acquisition premium properly allocable to
such year.
If at the time the New Preferred Stock is exchanged for Exchange
Debentures or at the time a subsequent U.S. Holder acquires Exchange Debentures,
the U.S. Holder's tax basis in any such Exchange Debenture exceeds the sum of
all amounts payable on the Exchange Debenture after the exchange date or
purchase date, other than qualified stated interest, such excess may constitute
"premium" and such U.S. Holder will not be required to include any OID in
income. A U.S. Holder generally may elect to amortize bond premium over the
remaining term of the Exchange Debenture on a constant yield method. The amount
amortized in any year will be treated as a reduction of the U.S. Holder's
interest income, including OID, from the Exchange Debenture. Bond premium on an
Exchange Debenture held by a U.S. Holder that does not make such an election
will decrease the gain or increase the loss otherwise recognized on disposition
of the Exchange Debenture. The election to amortize bond premium on a constant
yield method, once made, applies to all debt obligations held or subsequently
acquired by the electing U.S. Holder on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS.
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Redemption, Sale or Exchange of Exchange Debentures
Upon the redemption, sale, exchange or retirement of an Exchange
Debenture, a U.S. Holder will recognize gain or loss equal to the difference
between the amount realized upon the redemption, sale, exchange or retirement
(less any accrued qualified stated interest, not previously taken into account,
which will be taxable as such) and the adjusted tax basis of the Exchange
Debenture. The adjusted tax basis of a U.S. Holder who received Exchange
Debentures in exchange for New Preferred Stock will, in general, be equal to the
issue price of such Exchange Debentures, increased by OID and market discount
previously included in income by the U.S. Holder and reduced by any amortized
premium and any cash payments on the Exchange Debentures other than qualified
stated interest. Such gain or loss will be either long-term or short-term
capital gain depending on the U.S. Holder's holding period for the Exchange
Debenture at the time of redemption, sale, exchange or retirement of the
Exchange Debenture.
Applicable High Yield Discount Obligations
If (x) the term of the OID Debentures is more than five years, (y) the
yield-to-maturity of the OID Debentures, computed as of their issue date, equals
or exceeds the sum of (A) the "applicable federal rate" (as determined under
Section 1274(d) of the Code) in effect for the month in which the OID Debentures
are issued (the "AFR") and (B) 5%, and (z) the OID on such OID Debentures is
"significant," the OID Debentures will be considered AHYDOS under Section 163(i)
of the Code. If the OID Debentures are AHYDOS, Holdings would not be allowed to
take a deduction for interest (including OID) accrued on the OID Debentures for
U.S. federal income tax purposes until such time as Holdings actually paid such
interest (including OID) in cash or in other property (other than stock or debt
of Holdings or a person deemed to be related to Holdings under Section 453(f)(1)
of the Code).
Moreover, if the yield-to-maturity on the OID Debenture were to exceed
the sum of the AFR and 6% (such excess shall be referred to hereinafter as the
"Disqualified Yield"), the deduction for interest (including OID) accrued on the
OID Debentures would be permanently disallowed for U.S. federal income tax
purposes (regardless of whether Holdings actually paid such interest or OID in
cash or in other property) to the extent such interest or OID is attributable to
such Disqualified Yield ("Dividend-Equivalent Interest"). For purposes of the
dividends-received deduction, such Dividend-Equivalent Interest will be treated
as a dividend to the extent it is deemed to have been paid out of Holdings'
current or accumulated earnings and profits.
Because the amount of OID, if any, attributable to the OID Debentures
will be determined at such time such OID Debentures are issued and the AFR at
the time such OID Debentures are issued in exchange for New Preferred Stock is
not predictable, it is impossible to determine at the present time whether an
OID Debenture will be treated as an AHYDO.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to certain
payments of dividends, principal, interest, OID, and premium and to the proceeds
of sales of Exchange Debentures and New Preferred Stock made to U.S. Holders
other than certain exempt recipients (such as corporations). A 31% backup
withholding tax will apply to such payments if the U.S. Holder fails to provide
a correct taxpayer identification number or certification of exempt status or,
with respect to certain payments, the U.S. Holder fails to report in full
dividend and interest income and the IRS notifies the payor of such
underreporting.
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Any amounts withheld under the backup withholding rules will be allowed
as a credit against such U.S. Holder's U.S. federal income tax liability and may
entitle such U.S. Holder to a refund, provided the required information is
furnished to the IRS.
PLAN OF DISTRIBUTION
The New Preferred Stock will be offered by Holdings to the holders of
the Old Preferred Stock in exchange for the Old Preferred Stock pursuant to the
Exchange Offer.
Except as described below, a broker-dealer may not participate in the
Exchange Offer in connection with a distribution of the New Preferred Stock.
Each broker-dealer that receives New Preferred Stock for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Preferred Stock. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Preferred Stock received in
exchange for Old Preferred Stock where such Old Preferred Stock was acquired as
a result of market-making activities or other trading activities. The Company
has agreed that for a period of 90 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until , 1996 all dealers
effecting transactions in the New Preferred Stock may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of New
Preferred Stock by broker-dealers. New Preferred Stock received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the counter market, in
negotiated transactions, through the writing of options on the New Preferred
Stock or a combination of such methods of resale, at market prices prevailing at
the time of resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers of
any such New Preferred Stock. Any broker or dealer that participates in a
distribution of such New Preferred Stock may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
New Preferred Stock and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Exchange
Offer other than commissions or concessions of any brokers or dealers and
expenses of counsel for the holders of the New Preferred Stock and will
indemnify the holders of the New Preferred Stock (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The legality of the New Preferred Stock offered hereby will be passed
upon for Holdings by Winthrop, Stimson, Putnam & Roberts, Financial Centre, 695
East Main Street, Stamford, Connecticut 06904-6760. G. William Sisley, a partner
in Winthrop, Stimson, Putnam & Roberts, is Secretary of Holdings and Silgan.
Winthrop, Stimson, Putnam & Roberts from time to time represents the Placement
Agent in connection with certain legal matters unrelated to its representation
of Holdings.
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EXPERTS
The consolidated financial statements of Silgan Holdings Inc. at
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995 appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The financial statements of American National Can Company's Food Metal
& Specialty Division as of December 31, 1994 and 1993, and for each of the three
years in the period ended December 31, 1994, incorporated by reference in this
Prospectus and Registration Statement have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors ........................................ F-2
Consolidated Balance Sheets at December 31, 1995 and 1994 ............. F-3
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 ............................. F-4
Consolidated Statements of Deficiency in Stockholders' Equity
for the years ended December 31, 1995, 1994 and 1993 ......... F-5
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993 ....................... F-6
Notes to Consolidated Financial Statements ............................ F-8
Condensed Consolidated Balance Sheets (Unaudited) at
June 30, 1996 and 1995 ....................................... F-37
Condensed Consolidated Statements of Operations (Unaudited)
for the six months ended June 30, 1996 and 1995 .............. F-38
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 1996 and 1995 .............. F-39
Notes to Condensed Consolidated Financial Statements (Unaudited) ...... F-40
Unaudited Pro Forma Condensed Statements of Operations for
the six months ended June 30, 1996 and for the year
ended December 31, 1995 ...................................... F-44
Notes of Unaudited Pro Forma Condensed Statements of Operations ....... F-48
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Silgan Holdings Inc.
We have audited the accompanying consolidated balance sheets of Silgan
Holdings Inc. as of December 31, 1995 and 1994, and the related consolidated
statements of operations, deficiency in stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Silgan Holdings Inc. at December 31, 1995 and 1994, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Notes 2 and 12 to the consolidated financial
statements, in 1993 the Company changed its method of accounting for income
taxes, postemployment benefits and postretirement benefits other than pensions.
Ernst & Young LLP
Stamford, Connecticut
March 8, 1996
F-2
<PAGE>
SILGAN HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(Dollars in thousands)
1995 1994
---- ----
Assets
Current assets:
Cash and cash equivalents ......................... $ 2,102 $ 2,682
Accounts receivable, less allowances for
doubtful accounts of $4,832 and $1,557 for
1995 and 1994, respectively ...................... 109,929 64,700
Inventories ....................................... 210,471 122,429
Prepaid expenses and other current assets ......... 5,801 8,044
-------- --------
Total current assets .......................... 328,303 197,855
Property, plant and equipment, net ..................... 487,301 251,810
Goodwill, net .......................................... 53,562 30,009
Other assets ........................................... 30,880 24,618
-------- --------
$900,046 $504,292
======== ========
Liabilities and deficiency in stockholders' equity
Current liabilities:
Trade accounts payable ............................ $138,195 $ 36,845
Accrued payroll and related costs ................. 32,805 26,019
Accrued interest payable .......................... 4,358 1,713
Other accrued expenses ............................ 43,457 21,976
Bank working capital loans ........................ 7,100 12,600
Current portion of long-term debt ................. 28,140 21,968
-------- --------
Total current liabilities ..................... 254,055 121,121
Long-term debt ......................................... 750,873 510,763
Deferred income taxes .................................. 6,836 6,836
Other long-term liabilities ............................ 68,086 23,570
Deficiency in stockholders' equity:
Common stock ($0.01 par value per share;
2,167,500 shares authorized, 1,135,000
shares issued and outstanding) .................. 12 12
Additional paid-in capital ........................ 33,606 33,606
Accumulated deficit ............................... (213,422) (191,616)
-------- --------
Total deficiency in stockholders' equity ...... (179,804) (157,998)
-------- --------
$900,046 $504,292
======== ========
See accompanying notes
F-3
<PAGE>
SILGAN HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
1995 1994 1993
---- ---- ----
Net sales .................................. $1,101,905 $861,374 $645,468
Cost of goods sold ......................... 970,491 748,290 571,174
---------- -------- --------
Gross profit .......................... 131,414 113,084 74,294
Selling, general and administrative expenses 46,848 37,997 32,495
Reduction in carrying value of assets ...... 14,745 16,729 --
---------- -------- --------
Income from operations ................ 69,821 58,358 41,799
Interest expense and other related
financing costs ....................... 80,710 65,789 54,265
---------- -------- --------
Loss before income taxes .............. (10,889) (7,431) (12,466)
Income tax provision ....................... 5,100 5,600 1,900
---------- -------- --------
Loss before extraordinary charges and
cumulative effect of changes in
accounting principles ............... (15,989) (13,031) (14,366)
Extraordinary charges relating to early
extinguishment of debt ................ (5,817) -- (1,341)
Cumulative effect of changes in accounting
principles ............................ -- -- (6,276)
---------- -------- --------
Net loss .............................. $ (21,806) $(13,031) $(21,983)
========== ======== ========
See accompanying notes.
F-4
<PAGE>
SILGAN HOLDINGS INC.
CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS'
EQUITY For the years ended December 31, 1995,
1994 and 1993
(Dollars in thousands)
Total
Additional deficiency in
Common paid-in Accumulated stockholders'
stock capital deficit equity
------ ---------- ----------- -------------
Balance at December 31, 1992 ... $ 9 $18,609 $(156,602) $(137,984)
Issuance of 250,000 shares of
Class B Common Stock ......... 3 14,997 -- 15,000
Net loss ....................... -- -- (21,983) (21,983)
---- ------- --------- ---------
Balance at December 31, 1993 ... 12 33,606 (178,585) (144,967)
Net loss ....................... -- -- (13,031) (13,031)
---- ------- --------- ---------
Balance at December 31, 1994 ... 12 33,606 (191,616) (157,998)
Net loss ....................... -- -- (21,806) (21,806)
---- ------- --------- ---------
Balance at December 31, 1995 ... $ 12 $33,606 $(213,422) $(179,804)
==== ======= ========= =========
See accompanying notes.
F-5
<PAGE>
SILGAN HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net loss ................................ $(21,806) $(13,031) $(21,983)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation ........................ 42,217 35,392 31,607
Amortization ........................ 8,083 7,075 5,488
Accretion of discount on discount
debentures .................... 28,672 27,477 24,167
Reduction in carrying value of assets 14,745 16,729 --
Extraordinary charges relating
to early extinguishment of debt 6,301 -- 1,341
Cumulative effect of changes in
accounting principles ......... -- -- 6,276
Changes in assets and liabilities,
net of effect of acquisitions:
(Increase) decrease in accounts
receivable .................... (1,011) (21,267) 707
Decrease (increase) in inventories 10,852 (16,741) (4,316)
Increase in trade accounts payable 43,108 4,478 3,757
Working capital provided by AN Can
since acquisition date ........ 85,213 -- --
Other, net (decrease) increase .... (6,745) 7,221 1,091
-------- -------- --------
Total adjustments .......................... 231,435 60,364 70,118
-------- -------- --------
Net cash provided by operating
activities ........................... 209,629 47,333 48,135
-------- -------- --------
Cash flows from investing activities:
Acquisition of ANC's Food Metal &
Specialty business ................ (348,762) -- --
Acquisition of Del Monte Can
manufacturing assets .............. -- 519 (73,865)
Capital expenditures .................. (51,897) (29,184) (42,480)
Proceeds from sale of assets .......... 3,541 765 262
-------- -------- --------
Net cash used in investing activities ... $(397,118) $(27,900) $(116,083)
--------- -------- ---------
Continued on following page.
F-6
<PAGE>
SILGAN HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the years ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
1995 1994 1993
---- ---- ----
Cash flows from financing activities:
Borrowings under working capital loans .. $669,260 $393,250 $328,050
Repayments under working capital loans .. (674,760) (382,850) (366,250)
Proceeds from issuance of long-term debt. 450,000 -- 140,000
Proceeds from issuance of common stock .. -- -- 15,000
Repayments of long-term debt ............ (234,506) (20,464) (42,580)
Debt financing costs .................... (19,290) -- (8,935)
Payments to former shareholders of
Silgan ................................ (3,795) (6,911) --
-------- -------- --------
Net cash provided (used) by financing
activities ............................ 186,909 (16,975) 65,285
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents ............................. (580) 2,458 (2,663)
Cash and cash equivalents at beginning
of year ................................. 2,682 224 2,887
-------- -------- --------
Cash and cash equivalents at end of year ... $ 2,102 $ 2,682 $ 224
======== ======== ========
Supplementary data:
Interest paid ......................... $ 45,293 $ 30,718 $ 25,733
Income taxes paid, net of refunds ..... 8,967 2,588 722
See accompanying notes.
F-7
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. Basis of Presentation
Silgan Holdings Inc. ("Holdings", together with its wholly-owned subsidiary, the
"Company") is a company controlled by Silgan management and The Morgan Stanley
Leveraged Equity Fund II, L. P. ("MSLEF II"), an affiliate of Morgan Stanley &
Co., Incorporated ("MS & Co."). Holdings owns all of the outstanding common
stock of Silgan Corporation ("Silgan"). Since 1993, Silgan has made two
significant acquisitions. Silgan acquired the U. S. metal container
manufacturing business of Del Monte Corporation ("Del Monte") in 1993 and it
acquired the Food Metal and Specialty business from American National Can
Company ("ANC") in 1995. Both acquisitions were accounted for using the purchase
method of accounting (see Note 3 - Acquisitions).
The Company, together with its wholly-owned operating subsidiaries Silgan
Containers Corporation ("Containers") and Silgan Plastics Corporation
("Plastics"), is predominantly engaged in the manufacture and sale of steel and
aluminum containers for human and pet food products and also manufactures custom
designed plastic containers used for health and personal care products.
Principally, all of the Company's businesses are based in the United States.
Foreign subsidiaries are not significant to the consolidated results of
operations or financial position of the Company.
2. Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All significant intercompany
transactions have been eliminated. Assets and liabilities of the Company's
foreign subsidiary are translated at rates of exchange in effect at the balance
sheet date. Income statement amounts are translated at the average of monthly
exchange rates.
Certain reclassifications have been made to prior year's financial statements to
conform with current year presentation.
F-8
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
2. Summary of Significant Accounting Policies (continued)
Cash and cash equivalents
Cash equivalents represent short-term, highly liquid investments having original
maturities of three months or less from the time of purchase. The carrying
values of these assets approximate their fair values. As a result of the
Company's cash management system, checks issued and presented to the banks for
payment may create negative cash balances. Checks outstanding in excess of
related cash balances totaling approximately $30.0 million at December 31, 1995
and $5.4 million at December 31, 1994 are included in trade accounts payable.
Inventories
Inventories are stated at the lower of cost or market (net realizable value) and
are principally accounted for by the last-in, first-out method (LIFO).
Property, Plant, and Equipment
Property, plant and equipment are stated at historical cost less accumulated
depreciation. Major renewals and betterments that extend the life of an asset
are capitalized and repairs and maintenance expenditures are charged to expense
as incurred. Depreciation is computed using the straight-line method over their
estimated useful lives. The principal estimated useful lives are 35 years for
buildings and range between 3 to 18 years for machinery and equipment. Leasehold
improvements are amortized over the shorter of the life of the related asset or
the life of the lease.
Goodwill
The Company has classified as goodwill the cost in excess of fair value of net
assets acquired in purchase transactions. Goodwill is stated at cost less
accumulated amortization. Amortization is computed on a straight-line basis over
periods ranging from 20 to 40 years. The Company periodically evaluates the
existence of goodwill impairment to access whether goodwill is fully recoverable
from projected, undiscounted net cash flows of the related business unit.
Impairments would be recognized in operating results if a permanent reduction in
values were to occur.
F-9
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
2. Summary of Significant Accounting Policies (continued)
Other Assets
Other assets consist principally of debt issuance costs which are being
amortized on a straight-line basis over the terms of the related debt agreements
(5 to 10 years). Other intangible assets are amortized over their expected
useful lives using the straight-line method.
Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 109, "Accounting for Income Taxes". Under SFAS No. 109,
the liability method is used to calculate deferred income taxes. The provision
for income taxes includes federal, state and foreign income taxes currently
payable and those deferred because of temporary differences between the
financial statement and tax bases of assets and liabilities. The Company had
previously reported under SFAS No. 96, "Accounting for Income Taxes". There was
no effect for the difference in methods at the date of adoption.
Postemployment Benefits
During 1993, the Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits". SFAS No. 112 requires accrual accounting for employee
benefits that are paid between the termination of active employment but prior to
retirement. Such benefits include salary continuation, disability, severance,
and health care. The cumulative effect as of January 1, 1993 of this accounting
change was to decrease net income by $1.3 million. There was no tax effect for
this charge due to the net operating loss position of the Company.
Fair Values of Financial Instruments
The carrying amounts for cash, accounts receivable, accounts payable, and other
accrued liabilities are reflected in the financial statements and reasonably
approximate fair value due to the short maturity of these items. The carrying
value for short and long-term debt also approximates fair value but may vary due
to changing market conditions. Methods and assumptions used to estimate fair
value and the fair value of the Company's debt instruments are disclosed in Note
9.
F-10
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
2. Summary of Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities, revenues and expenses, as
well as footnote disclosures in the financial statements. Actual results may
differ from those estimates.
3. Acquisitions
During the three years ended December 31, 1995, the Company made two
acquisitions, as discussed below. Both were accounted for using the purchase
method of accounting and the results of operations have been included with the
Company's results from the respective acquisition dates. The excess of the
purchase price over the fair value of net assets acquired was allocated to
goodwill.
Fiscal year 1995 acquisition
On August 1, 1995, Containers acquired from ANC substantially all of the fixed
assets and working capital, and assumed certain specified limited liabilities,
of ANC's Food Metal & Specialty business ("AN Can"), which manufactures, markets
and sells metal food containers and rigid plastic containers for a variety of
food products and metal caps and closures for food and beverage products. The
purchase price for the assets acquired and the assumption of certain specified
liabilities, including related transaction costs, was $364.0 million (including
$15.2 million for the operations of ANC's St. Louis, MO facility which the
Company intends to purchase by mid-1996 upon completion of a rationalization
project undertaken at that location).
F-11
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
3. Acquisitions (continued)
Fiscal year 1995 acquisition (continued)
The purchase price was allocated to the tangible and identifiable assets
acquired and liabilities assumed based upon their estimated fair values as
determined from preliminary appraisals and valuations which management believes
are reasonable. The purchase price allocation will be finalized within one year
of the acquisition date. Differences between actual and preliminary valuations
will cause adjustments to the AN Can purchase price allocation as shown below.
Estimated items subject to change include employee benefit costs and termination
costs associated with plant rationalization and administrative workforce
reductions and other plant exit costs. The aggregate purchase price and its
preliminary allocation to the assets and liabilities is as follows for AN Can
(dollars in thousands):
Net working capital acquired $155,967
Property, plant and equipment 240,079
Goodwill .................... 24,832
Other liabilities assumed ... (56,916)
--------
$363,962
========
Set forth below are the Company's summary unaudited pro forma results of
operations for the years ended December 31, 1995 and 1994. The pro forma results
include the historical results of the Company and AN Can and reflect the effect
of purchase accounting adjustments based on preliminary appraisals and
valuations, the financing of the acquisition, the refinancing of the Company's
debt obligations, and certain other adjustments as if these events occurred as
of the beginning of the periods presented. The pro forma data does not give
effect to adjustments for decreased costs from manufacturing synergies resulting
from the integration of AN Can with Containers' existing can manufacturing
operations and anticipated benefits the Company may realize as a result of its
planned rationalization of plant operations. The pro forma data does not purport
to represent what the Company's results of operations actually would have been
if the operations were combined as of January 1, 1995 or 1994, or to project the
Company's results of operations for any future period.
1995 1994
---- ----
(Dollars in thousands)
Net sales ....................... $1,404,382 $1,457,968
Income from operations .......... 92,749(1) 54,886(2)
Income (loss) before income taxes 4,064 (34,636)
Net income (loss) ............... (2,736) (36,536)
F-12
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
3. Acquisitions (continued)
Fiscal year 1995 acquisition (continued)
(1) Included in pro forma income from operations for the year ended December
31, 1995 is a charge incurred by the Company of $14.7 million to adjust
the carrying value of certain underutilized machinery and equipment at
Silgan facilities (existing prior to the AN Can acquisition) to net
realizable value.
(2) Included in pro forma income from operations for the year ended December
31, 1994 are charges incurred by AN Can of $10.1 million for shut down
costs necessary to realign the assets of the business more closely with
the existing customer base, $16.7 million related to Silgan and $7.1
million related to AN Can to adjust the carrying value of certain
technologically obsolete and inoperable equipment to realizable value,
and $26.7 million for the write-down of goodwill by AN Can.
Fiscal year 1993 acquisition
On December 21, 1993, Containers acquired from Del Monte substantially all of
the fixed assets and certain working capital of Del Monte's container
manufacturing business in the United States ("DM Can"). The final purchase price
for the assets acquired and the assumption of certain specified liabilities,
including related transaction costs, was $73.3 million. The detail of the assets
acquired is as follows (dollars in thousands):
Net working capital ......... $21,944
Property, plant and equipment 47,167
Goodwill .................... 13,729
Other liabilities assumed ... (9,494)
-------
$73,346
=======
F-13
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
4. Inventories
The components of inventories at December 31, 1995 and 1994 consist of the
following:
1995 1994
---- ----
(Dollars in thousands)
Raw materials ..................... $ 46,027 $ 38,575
Work-in-process ................... 24,869 19,045
Finished goods .................... 135,590 63,409
Spare parts and other ............. 6,344 1,621
-------- --------
212,830 122,650
Adjustment to value inventory
at cost on the LIFO method ..... (2,359) (221)
-------- --------
$210,471 $122,429
======== ========
The amount of inventory recorded on the first-in first-out method at December
31, 1995 and 1994 was $14.9 million and $6.5 million, respectively.
5. Property, Plant, and Equipment
Property, plant, and equipment consist of the following:
1995 1994
---- ----
(Dollars in thousands)
Land .............................. $ 6,355 $ 3,707
Buildings and improvements ........ 68,860 51,665
Machinery and equipment ........... 584,526 346,061
Construction in progress .......... 33,764 18,124
-------- --------
693,505 419,557
Accumulated depreciation
and amortization ............... (206,204) (167,747)
-------- --------
Property, plant and equipment, net $487,301 $251,810
======== ========
For the years ended December 31, 1995, 1994, and 1993, depreciation expense was
$42.2 million, $35.4 million, and $31.6 million respectively. The total amount
of repairs and maintenance expense was $26.9 million in 1995, $19.9 million in
1994, and $17.1 million in 1993.
F-14
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
5. Property, Plant, and Equipment (continued)
Effective October 1, 1994, the Company extended the estimated useful lives of
certain fixed assets to more properly reflect the true economic lives of the
assets and to better align the Company's depreciable lives with the predominate
practice in the industry. The change had the effect of decreasing depreciation
expense and increasing net income in 1994 by approximately $1.3 million.
Based upon a review of its depreciable assets, the Company determined that
certain adjustments were necessary to properly reflect net realizable values. In
1995, the Company recorded a write-down of $14.7 million for the excess of
carrying value over estimated realizable value of machinery and equipment at
existing facilities which have become underutilized due to excess capacity. In
1994, charges of $16.7 million were recorded which included $2.6 million to
write-down the excess carrying value over estimated realizable value of various
plant facilities held for sale and $14.1 million for technologically obsolete
and inoperable machinery and equipment.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" which is
effective for the 1996 fiscal year. As required by this standard, impairment
losses will be recognized when events or changes in circumstances indicate that
the fair value of identified assets is less than the carrying amount. In making
such a determination, the Company will compare the undiscounted cash flows
generated by specified assets to the carrying value of such assets. The Company
will adopt SFAS No. 121 in 1996 and believes the effect of adoption will not be
material.
6. Goodwill
Goodwill amortization charged to operations was $1.3 million in 1995; $1.2
million in 1994; and $0.5 million in 1993. Accumulated amortization of goodwill
at December 31, 1995, 1994, and 1993 was $5.0 million; $3.7 million; and $2.5
million, respectively.
F-15
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
7. Other Assets
Other assets at December 31, 1995 and 1994 consist of the following:
1995 1994
---- ----
(Dollars in thousands)
Debt issuance costs ...................... $30,148 $25,142
Other .................................... 8,027 8,275
------- -------
38,175 33,417
Less: accumulated amortization .......... (7,295) (8,799)
------- -------
$30,880 $24,618
======= =======
During 1995, as part of the acquisition of AN Can and the related refinancing of
its secured debt facilities and its Discount Debentures, the Company wrote off
$6.3 million of unamortized debt issuance costs and capitalized $19.3 million in
new debt issuance costs. Amortization expense relating to debt issuance for the
years ended December 31, 1995, 1994, and 1993 was $4.9 million, $5.3 million,
and $3.3 million, respectively.
8. Short-Term Borrowings and Long-Term Debt
The Company has a working capital revolving credit facility which it uses to
finance its seasonal liquidity needs. As of December 31, 1995 and 1994, the
Company had $7.1 million and $12.6 million of working capital loans outstanding,
respectively.
Long-term debt consists of the following:
1995 1994
---- ----
(Dollars in thousands)
Bank A Term Loans ........................ $220,000 $ 39,845
Bank B Term Loans ........................ 222,750 79,691
Senior Secured Floating Rate Notes due
June 30, 1997 ......................... -- 50,000
11 3/4% Senior Subordinated Notes due
June 15, 2002 ......................... 135,000 135,000
13 1/4% Senior Subordinated Debentures due
December 15, 2002 ..................... 201,263 228,195
-------- --------
779,013 532,731
Less: Amounts due within one year ........ 28,140 21,968
-------- --------
$750,873 $510,763
======== ========
F-16
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
8. Short-Term Borrowings and Long-Term Debt (continued)
The aggregate annual maturities of long-term debt at December 31, 1995 are as
follows (dollars in thousands):
1996 .............. $ 28,140
1997 .............. 37,170
1998 .............. 52,138
1999 .............. 52,138
2000 .............. 102,281
2001 and thereafter 507,146
--------
$779,013
========
1995 Bank Credit Agreement
Effective August 1, 1995, Silgan, Containers, and Plastics entered into a $675.0
million credit agreement (the "Credit Agreement") with various banks to finance
the acquisition by Containers of AN Can, to refinance and repay in full all
amounts owing under the previous bank credit agreement and the Senior Secured
Notes and to repurchase up to $75.0 million of its 13 1/4% Senior Discount
Debentures ("Discount Debentures"). In connection with the refinancing of the
Credit Agreement, the Company incurred a charge of $5.8 million (net of taxes of
$2.6 million) in 1995 for the early extinguishment of amounts owed under
existing secured debt facilities and for the repurchase of a portion of its
Discount Debentures.
The Credit Agreement provided the Company with (i) $225.0 million of A Term
Loans, (ii) $225.0 million of B Term Loans, and (iii) a working capital
revolving credit facility of up to $225.0 million ("Working Capital Loans"). The
Company used proceeds from the Credit Agreement to repay $117.1 million of term
loans under the previous bank credit agreement, repay in full $50.0 million of
its Senior Secured Notes due 1997, acquire AN Can for $348.8 million (excluding
$15.2 million for the St. Louis operations which the Company expects to purchase
by mid-1996), repurchase $57.6 million of its Discount Debentures, and incur
debt issuance costs of $19.3 million. The Company is currently permitted under
the debt facilities to make additional repurchases of its Discount Debentures
prior to June 30, 1996.
F-17
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
8. Short-Term Borrowings and Long-Term Debt (continued)
1995 Bank Credit Agreement (continued)
The A Term Loans mature on December 31, 2000, and the B Term Loans mature on
March 15, 2002. During 1995, principal repayments of $5.0 million were made on
the A Term Loans and $2.3 million on the B Term Loans. Principal is to be repaid
on each term loan in installments in accordance with the Credit Agreement until
maturity.
As defined in the Credit Agreement, the Company is required to repay the term
loans (ratably allocated between the A Term Loans and the B Term Loans) in an
amount equal to 80% of the net sale proceeds from certain asset sales and up to
100% of the net equity proceeds from certain sales of equity. Effective for the
year ended December 31, 1996 and each year thereafter during the term of the
Credit Agreement, the Company is required to pre-pay the term loans (ratably
allocated between the A Term Loans and the B Term Loans) in an amount equal to
50% of the Company's excess cash flow. Amounts repaid under the term loans
cannot be reborrowed.
The Credit Agreement provides Containers and Plastics, together, a revolving
credit facility of $225.0 million for working capital needs. The commitment
under the Credit Agreement for Working Capital Loans was initially $150.0
million. This initial commitment will increase at the time and by the amount the
Company repurchases its Discount Debentures (up to a maximum commitment of
$225.0 million). As of December 31, 1995, Holdings had repurchased $57.6 million
of Discount Debentures, thereby increasing the commitment under the revolving
credit facility to $207.6 million. After taking into account outstanding letters
of credit of $6.6 million and Working Capital Loans of $7.1 million, the
borrowings available under the revolving credit facility were $193.9 million at
December 31, 1995. In addition to borrowings of Working Capital Loans, the
Company may utilize up to a maximum of $20.0 million in letters of credit as
long as the aggregate amount of borrowings and letters of credit do not exceed
the amount of the commitment. The aggregate amount of Working Capital Loans and
letters of credit which may be outstanding at any time is also limited to the
aggregate of 85% of eligible accounts receivable and 50% of eligible inventory.
Working Capital Loans may be borrowed, repaid, and reborrowed over the life of
the Credit Agreement until final maturity on December 31, 2000.
F-18
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
8. Short-Term Borrowings and Long-Term Debt (continued)
1995 Bank Credit Agreement (continued)
The borrowings under the Credit Agreement may be designated by the respective
Borrowers as Base Rate or Eurodollar Rate borrowings. The Base Rate is the
higher of (i) 1/2 of 1% in excess of Adjusted Certificate of Deposit Rate, or
(ii) Bankers Trust Company's prime lending rate. Base Rate borrowings bear
interest at the Base Rate plus 1.50%, in the case of A Term Loans and Working
Capital Loans; and 2.0%, in the case of B Term Loans. Eurodollar Rate borrowings
bear interest at the Eurodollar Rate plus 2.50% in the case of A Term Loans and
Working Capital Loans; and 3.0%, in the case of B Term Loans. At December 31,
1995, the interest rate for Base Rate borrowings was 10.0% and the interest rate
for Eurodollar Rate borrowings ranged between 8.1875% and 8.9375%.
For 1995, 1994 and 1993, respectively, the average amount of borrowings of
Working Capital Loans was $67.6 million, $14.4 million and $51.9 million; the
average annual interest rate paid on such borrowings was 8.9%, 8.4%, and 6.0%;
and the highest amount of such borrowings at any month-end was $184.0 million,
$43.9 million, and $80.3 million.
The Credit Agreement provides for the payment of a commitment fee of 0.5% per
annum on the daily average unused portion of commitments available under the
working capital revolving credit facility as well as a 2.75% per annum fee on
outstanding letters of credit.
The indebtedness under the Credit Agreement is guaranteed by Holdings and each
of the Borrowers and secured by a security interest in substantially all of the
real and personal property of the Borrowers. The stock of Silgan and the stock
of principally all of its subsidiaries have been pledged to the lenders under
the Credit Agreement.
The Credit Agreement contains various covenants which limit or restrict, among
other things, investments, indebtedness, liens, dividends, leases, capital
expenditures, and the use of proceeds from asset sales, as well as requiring the
Company to meet certain specified financial covenants. The Company is currently
in compliance with all covenants under the Credit Agreement.
F-19
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
8. Short-Term Borrowings and Long-Term Debt (continued)
1993 Bank Credit Agreement
Effective December 21, 1993, Silgan, Containers, and Plastics entered into a
credit agreement with a group of banks for $140.0 million in term loans and
$70.0 million in working capital loans to finance in part the acquisition of DM
Can and repay $41.6 million of term loans owed under a previous bank credit
agreement. In addition, Holdings issued and sold 250,000 shares of its Class B
Common Stock for $15.0 million and, in turn, contributed such amount to Silgan.
As a result of the early extinguishment of debt, the Company incurred a net
charge of $1.3 million.
According to the terms of this bank credit agreement, 80% of amounts received
from the sale or disposal of assets was to be used to repay term loans. Prior to
the refinancing and repayment of this bank facility, an additional principal
payment of $2.5 million was made early in 1995 from net proceeds received from
asset sales.
Senior Secured Floating Rate Notes
The Company redeemed its Senior Secured Notes on August 30, 1995 for a premium
of $0.1 million.
11 3/4% Senior Subordinated Notes
The Company's 11 3/4% Senior Subordinated Notes (the "11 3/4% Notes") which
mature on June 15, 2002, represent unsecured general obligations, subordinate in
right of payment to obligations of the Company under the Credit Agreement and
effectively subordinate to all of the obligations of the subsidiaries of the
Company. Interest is payable semi-annually on June 15 and December 15.
The 11 3/4% Notes are redeemable at the option of the Company, in whole or in
part, at any time during the twelve months commencing June 15 of the following
years at the indicated percentages of their principal amount, plus accrued
interest:
Redemption
Year Percentage
---- ----------
1997 .............. 105.8750%
1998 .............. 102.9375%
1999 and thereafter 100.0000%
F-20
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
8. Short-Term Borrowings and Long-Term Debt (continued)
11 3/4% Senior Subordinated Notes (continued)
The 11 3/4% Notes Indenture contains covenants which are comparable to or less
restrictive than those under the terms of the existing Credit Agreement.
13 1/4% Senior Discount Debentures
The 13 1/4% Senior Discount Debentures, which are due on December 15, 2002,
represent unsecured general obligations of Holdings, subordinate in right of
payment to the obligations of Silgan and its subsidiaries. The original issue
discount is being amortized through June 15, 1996 with a yield to maturity of 13
1/4%. During the year ended December 31, 1995, the Company repurchased $61.7
million face amount of its Discount Debentures for $57.6 million, including a
premium of $2.0 million. The carrying amount at December 31, 1995 of the
Discount Debentures represents the face amount less an unamortized discount of
$12.1 million. From and after June 15, 1996, interest on the Discount Debentures
will accrue on the principal amount at the rate of 13 1/4% and be payable in
cash semiannually. The Discount Debentures are redeemable at any time, at the
option of Holdings, in whole or in part, at 100% of their principal amount plus
accrued interest to the redemption date.
The Discount Debentures Indenture contains covenants which are comparable to or
less restrictive than those under the Credit Agreement and the 11 3/4% Notes.
9. Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance sheet for
cash and cash equivalents approximates fair value due to the short duration of
those investments.
Short and long-term debt: The carrying amounts of the Company's borrowings under
its working capital loans and variable-rate borrowings approximate their fair
value. The fair values of fixed-rate borrowings are based on quoted market
prices.
F-21
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
9. Fair Value of Financial Instruments (continued)
Letters of Credit: Fair values of the Company's outstanding letters of credit
are based on current contractual amounts outstanding.
The following table presents the carrying amounts and fair values of the
Company's financial instruments recorded at December 31, 1995 and 1994,
respectively:
1995 1994
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
(Dollars in thousands)
Working Capital Facility ........ $ 7,100 $ 7,100 $ 12,600 $ 12,600
Current Portion of long-term debt 28,140 28,140 21,968 21,968
Bank A Term Loans ............... 220,000 220,000 39,845 39,845
Bank B Term Loans ............... 222,750 222,750 79,691 79,691
Senior Secured Floating Rate
Notes due June 30, 1997 ...... -- -- 50,000 50,000
11 3/4% Senior Subordinated
Notes due June 15, 2002 ...... 135,000 144,500 135,000 140,400
13 1/4% Senior Subordinated
Debentures due
December 15, 2002 ............ 201,263 205,873 228,195 235,100
The Company has had limited involvement with derivative financial instruments
and does not use them for trading purposes. During 1995 and 1994, the Company
was not party to any interest rate hedge agreements, nor did it use derivative
instruments to hedge commodity or foreign exchange risks.
Subsequent to December 31, 1995, the Company entered into interest rate swap
agreements in order to manage its exposure to interest rate fluctuations. These
agreements effectively convert interest rate exposure from variable rate to a
fixed rate without the exchange of the underlying principal amounts. The Company
has agreed to pay fixed rates of interest ranging from 8.1% to 8.6% on notional
principal amounts totaling $100.0 million which mature in the year 1999. Net
payments or receipts under these agreements will be recorded as adjustments to
interest expense.
F-22
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
9. Fair Value of Financial Instruments (continued)
Concentration of Credit Risk
The Company derives a significant portion of its revenue from multi-year supply
agreements with many of its customers. Revenues from its two largest customers
accounted for approximately 36.0% of sales in 1995 and 47.3% in 1994. The
receivable balances from these customers collectively represented 28.2% and
34.4% of accounts receivable before allowances at December 31, 1995 and 1994,
respectively. As is common in the packaging industry, the Company provides
extended payment terms for some of its customers due to the seasonality of the
vegetable and fruit pack business. Exposure to losses is dependent on each
customer's financial position. The Company performs ongoing credit evaluations
of its customer's financial condition and its receivables are not
collateralized. The Company maintains an allowance for doubtful accounts which
management believes is adequate to cover potential credit losses based on
customer credit evaluations, collection history, and other information.
10. Commitments
The Company has a number of noncancelable operating leases for office and plant
facilities, equipment and automobiles that expire at various dates through 2020.
Certain operating leases have renewal options. Minimum future rental payments
under these leases are (dollars in thousands):
1996 .............. $13,442
1997 .............. 10,768
1998 .............. 7,973
1999 .............. 5,778
2000 .............. 4,928
2001 and thereafter 7,159
-------
$50,048
=======
Rent expense was approximately $10.8 million in 1995; $9.1 million in 1994; and
$8.0 million in 1993.
F-23
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
11. Retirement Plans
The Company sponsors pension and defined contribution plans which cover
substantially all employees, other than union employees covered by
multi-employer defined benefit pension plans under collective bargaining
agreements. Pension benefits are provided based on either a career average,
final pay or years of service formula. With respect to certain hourly employees,
pension benefits are provided for based on stated amounts for each year of
service. It is the Company's policy to fund accrued pension and defined
contribution costs in compliance with ERISA requirements. Assets of the plans
consist primarily of equity and bond funds.
The following table sets forth the funded status of the Company's retirement
plans as of December 31:
Plans in which Plans in which
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
--------------- ---------------
1995 1994 1995 1994
---- ---- ---- ----
(Dollars in thousands)
Actuarial present value of
benefit obligations:
Vested benefit obligations .... $12,135 $ 9,182 $31,465 $19,876
Non-vested benefit obligations 547 871 3,158 1,889
------- ------- ------- -------
Accumulated benefit obligations .. 12,682 10,053 34,623 21,765
Additional benefits due to
future salary levels .......... 5,667 5,358 7,132 3,557
------- ------- ------- -------
Projected benefit obligations .... 18,349 15,411 41,755 25,322
Plan assets at fair value ........ 12,988 11,612 23,535 17,249
------- ------- ------- -------
Projected benefit obligation
in excess of plan assets ...... 5,361 3,799 18,220 8,073
Unrecognized actuarial gain (loss) (165) 504 1,237 3,916
Unrecognized prior service costs . (615) (665) (2,128) (2,461)
Additional minimum liability ..... -- -- 1,990 1,677
------- ------- ------- -------
Accrued pension liability
recognized in the balance sheet $ 4,581 $ 3,638 $19,319 $11,205
======= ======= ======= =======
As of the AN Can acquisition date, the Company assumed an accrued pension
liability of $6.8 million related to the active employee population transferred
to the Company from AN Can. Under the terms of the acquisition, ANC retained the
liability for the retired population as of August 1, 1995.
F-24
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
11. Retirement Plans (continued)
For certain pension plans with accumulated benefits in excess of plan assets at
December 31, 1995 and December 31, 1994, the balance sheet reflects an
additional minimum pension liability and related intangible asset of $2.0
million and $1.7 million, respectively,
The components of net periodic pension costs for defined benefit plans are as
follows:
1995 1994 1993
---- ---- ----
(Dollars in thousands)
Service cost .............................. $3,067 $2,947 $1,809
Interest cost ............................. 3,887 3,334 2,144
Actual loss (return) on assets ............ (7,284) 539 (1,784)
Net amortization and deferrals ............ 5,008 (2,698) 317
------ ------ ------
Net periodic pension cost .............. $4,678 $4,122 $2,486
====== ====== ======
During 1995, the Company recognized settlement and curtailment losses of $0.4
million from the termination of participation in certain plans as a result of
plant closings and changes in pension benefit provisions. The Company
participates in several multi-employer pension plans which provide defined
benefits to certain of its union employees. The composition of total pension
cost for 1995, 1994, and 1993 in the Consolidated Statements of Operations is as
follows:
1995 1994 1993
---- ---- ----
(Dollars in thousands)
Net periodic pension cost ................. $4,678 $4,122 $2,486
Settlement and curtailment losses, net .... 418 -- --
Contributions to multi-employer union plans 2,708 2,700 2,000
------ ------ ------
Total pension costs .................... $7,804 $6,822 $4,486
====== ====== ======
F-25
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
11. Retirement Plans (continued)
The assumptions used in determining the actuarial present value of plan benefit
obligations as of December 31 are as follows:
1995 1994 1993
---- ---- ----
Discount rate .................................. 7.5% 8.5% 7.5%
Weighted average rate of compensation increase . 4.0% 4.5% 4.5%
Expected long-term rate of return on plan assets 8.5% 8.5% 8.5%
The Company also sponsors defined contribution pension and profit sharing plans
covering substantially all employees. Company contributions to these plans are
based upon employee contributions and operating profitability. Contributions
charged to income for these plans were $1.7 million in 1995; $2.5 million in
1994; and $1.5 million in 1993. The decline in defined contributions in 1995 as
compared to 1994 resulted from lower profit-sharing contributions made for
Company employees since target financial objectives were not achieved. This
decrease was partially offset by an increase in the contribution base
attributable to additional employee participation as a result of the acquisition
of AN Can.
12. Postretirement Benefits Other than Pensions
Effective January 1, 1993, the Company changed its method of accounting for
postretirement health care and other insurance benefits to conform to the
provisions of SFAS No. 106 "Employers' Accounting for Post Retirement Benefits
Other Than Pensions", which requires accrual of these benefits over the period
during which active employees become eligible for such benefits. Previously, the
Company recognized the cost of providing such benefits on the pay-as-you-go
basis. The Company elected to immediately recognize a cumulative charge of $5.0
million for this change in accounting principle which represents the accumulated
postretirement benefit obligation existing as of January 1, 1993.
The Company has defined benefit health care and life insurance plans that
provide postretirement benefits to certain employees. The plans are
contributory, with retiree contributions adjusted annually, and contain cost
sharing features including deductibles and coinsurance. Retiree health benefits
are paid as covered expenses are incurred.
F-26
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
12. Postretirement Benefits Other than Pensions (continued)
The following table presents the funded status of the postretirement plans and
amounts recognized in the Company's balance sheet as of December 31:
1995 1994
---- ----
(Dollars in thousands)
Accumulated postretirement benefit obligation:
Retirees ...................................... $ 1,587 $ 1,183
Fully eligible active plan participants ....... 11,647 1,521
Other active plan participants ................ 14,770 2,577
-------- -------
Total accumulated postretirement benefit obligation 28,004 5,281
Unrecognized net gain ............................. (2,929) (219)
Unrecognized prior service costs .................. (298) (79)
-------- -------
Accrued postretirement benefit liability .......... $ 24,777 $ 4,983
======== =======
As of the AN Can acquisition date, the Company assumed a postretirement benefit
liability in the amount of $19.6 million for the active population transferred
to the Company from AN Can. Under the terms of the acquisition, ANC retained the
liability for the retired population as of August 1, 1995.
Net periodic postretirement benefit cost include the following components:
1995 1994
---- ----
(Dollars in thousands)
Service cost ...................................... $ 372 $321
Interest cost ..................................... 1,097 412
Net amortization and deferral ..................... 42 (14)
------ ----
Net periodic postretirement benefit cost ........ $1,511 $719
====== ====
The weighted average discount rates used to determine the accumulated
postretirement benefit obligation as of December 31, 1995 and 1994 were 7.5% and
8.5%, respectively. The net periodic postretirement benefit costs were
calculated using a discount rate ranging from 7.5% to 8.5% for 1995 and 8.5% for
1994. The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation ranged from 7.14% to 10.0% in 1995 and was 14%
in 1994, declining to a rate ranging from 5.0% to 6.0% in the year 2003 and
thereafter.
F-27
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
12. Postretirement Benefits Other than Pensions (continued)
A 1% increase in the health care cost trend rate assumption would increase the
accumulated postretirement benefit obligation as of December 31, 1995 by
approximately $3.7 million and increase the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost for
1995 by approximately $0.2 million.
13. Income Taxes
The components of income tax expense are as follows:
1995 1994 1993
---- ---- ----
(Dollars in thousands)
Current
Federal ................ $ 500 $2,500 $ 300
State .................. 1,900 3,200 1,900
Foreign ................ 100 (100) (400)
------ ------ ------
2,500 5,600 1,800
Deferred
Federal ................ -- -- --
State .................. -- -- 100
Foreign ................ -- -- --
------ ------ ------
-- -- 100
------ ------ ------
$2,500 $5,600 $1,900
====== ====== ======
Income tax expense is included in the financial statements as follows:
1995 1994 1993
---- ---- ----
(Dollars in thousands)
Income before extraordinary
charges ................. $5,100 $5,600 $1,900
Extraordinary charges ..... (2,600) -- --
------ ------ ------
$2,500 $5,600 $1,900
====== ====== ======
F-28
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
13. Income Taxes (continued)
The income tax provision varied from that computed by using the U.S. statutory
rate as a result of the following:
1995 1994 1993
---- ---- ----
(Dollars in thousands)
Income tax benefit at the U.S. Federal
income tax rate ................ $(3,811) $(2,601) $(4,363)
State and foreign tax expense net of
Federal income benefit ......... 1,820 2,015 1,235
Amortization of goodwill ........... 471 576 154
Losses with no benefit ............. 6,620 5,610 4,874
------- ------- -------
$ 5,100 $ 5,600 $ 1,900
======= ======= =======
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets at December 31 are as follows:
1995 1994
---- ----
(Dollars in thousands)
Deferred tax liabilities:
Tax over book depreciation ................ $27,800 $21,900
Book over tax basis of assets acquired .... 41,700 21,400
Other ..................................... 3,900 4,100
------- -------
Total deferred tax liabilities .......... 73,400 47,400
Deferred tax assets:
Book reserves not yet deductible
for tax purposes ........................ 56,300 24,800
Deferred interest on high yield obligations 25,100 21,300
Net operating loss carryforwards .......... 35,600 26,200
Other ..................................... 1,200 4,100
------- -------
Total deferred tax assets ............... 118,200 76,400
Valuation allowance for deferred tax assets 51,636 35,836
------- -------
Net deferred tax assets ................ 66,564 40,564
------- -------
Net deferred tax liabilities ................ $ 6,836 $ 6,836
======= =======
F-29
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
13. Income Taxes (continued)
The Company files a consolidated Federal income tax return. At December 31,
1995, the Company has net operating loss carryforwards of approximately $100.0
million which are available to offset future consolidated taxable income of the
group and expire from 2001 through 2010. The Company had an alternative minimum
tax liability of $0.5 million in 1995 and $1.5 million in 1994. At December 31,
1995, the Company had $3.9 million of alternative minimum tax credits which are
available indefinitely to reduce future tax payments for regular federal income
tax purposes.
14. Acquisition Reserves
In connection with the acquisition of AN Can, the Company plans to improve
operating efficiencies through production and facility consolidation and through
workforce reductions. As part of its preliminary purchase price allocation, the
Company established a reserve for $25.0 million which primarily consists of
$20.5 million for severance and $4.5 million of facility exit costs. The
provision for severance includes employee termination benefits, such as, salary
continuation, pension, and medical. Plant exit costs include planned
expenditures relating to facility shut down, equipment removal, and compliance
with environmental regulations. During the year, $0.9 million of costs were
expended for severance. As of December 31, 1995, $7.1 million remained in other
accrued expenses for costs expected to be paid within one year and $17.0 million
remained in long term liabilities. Management believes that the operating
improvements will not be fully implemented until 1997 and the remaining reserve
balance will be adequate to cover anticipated costs.
15. Stock Option Plans
Holdings, Containers and Plastics have established stock option plans for their
key employees pursuant to which options to purchase shares of common stock of
Holdings and its subsidiaries and stock appreciation rights ("SARs") may be
granted.
Options granted under the plans may be either incentive stock options or
non-qualified stock options. To date, all stock options granted have been
non-qualified stock options. Under the plans, Holdings has reserved 24,000
shares of its Class C Common Stock and Containers and Plastics have each
reserved 1,200 shares of their common stock for issuance under their respective
plans. Containers has 13,764 shares and Plastics has 13,800 shares of $0.01 par
value common stock currently issued, and all such shares are owned by Silgan.
F-30
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
15. Stock Option Plans (continued)
The SARs extend to the shares covered by the options for the Containers and
Plastics plans and provide for the payment to the holders of the options of an
amount in cash equal to the excess of, in the case of Containers' plans, the pro
forma book value, as defined, of a share of common stock (or in the event of a
public offering or a change in control (as defined), the fair market value of a
share of common stock) over the exercise price of the option, with certain
adjustments for the portion of vested stock appreciation rights not paid at the
time of the recapitalization in June 1989; or, in the case of the Plastics plan,
in the event of a public offering or a change in control (as defined), the fair
market value of a share of common stock over the exercise price of the option.
Prior to a public offering or change in control, should an employee leave
Containers, Containers has the right to repurchase, and the employee has the
right to require Containers to repurchase, the common stock at the then pro
forma book value.
At December 31, 1995, there were outstanding options for 24,000 shares under the
Holdings plan, 936 shares under the Containers plan and 1,200 shares under the
Plastics plan. The exercise prices per share range from $35 to $61 for the
Holdings options, range from $2,122 and $4,933 for the Containers options and
$126 to $943 for the Plastics options. The stock options and SARs generally
become exercisable ratably over a five-year period. At December 31, 1995, there
were 16,800 options exercisable under the Holdings plans, 840 options/SARs
exercisable under the Containers plan and 180 options/SARs exercisable under the
Plastics plan. The Company incurred charges relating to the vesting and payment
of benefits under the stock option plans of $0.8 million in 1995; $1.5 million
in 1994; and $0.2 million in 1993.
In the event of a public offering of any of Holdings' capital stock or a change
in control of Holdings, (i) the options granted by Containers and Plastics
pursuant to the plans and (ii) any stock issued upon exercise of such options
issued by Containers are convertible into either stock options or common stock
of Holdings, as the case may be. The conversion of such options or shares will
be based upon a valuation of Holdings and an allocation of such value among the
subsidiaries after giving affect to, among other things, that portion of the
outstanding indebtedness of Holdings allocable to each such subsidiary.
F-31
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
15. Stock Option Plans (continued)
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", effective for the 1996 fiscal year. Under SFAS No. 123,
compensation expense for all stock-based compensation plans would be recognized
based on the fair value of the options at the date of grant using an option
pricing model. As permitted under SFAS No. 123, the Company may either adopt the
new pronouncement or may continue to follow the current accounting method as
prescribed under APB. Opinion No. 25, "Accounting for Stock Issued to
Employees". The Company does not intend to adopt SFAS No. 123 for expense
recognition purposes in 1996.
16. Deficiency in Stockholders' Equity
Deficiency in stockholders' equity includes the following classes of common
stock ($.01 par value) and preferred stock:
Shares
Shares Issued and Outstanding
Class Authorized December 31, 1995 and 1994
----- ---------- --------------------------
A .............. 500,000 417,500
B .............. 667,500 667,500
C .............. 1,000,000 50,000
--------- ---------
2,167,500 1,135,000
========= =========
Preferred Stock 1,000,000 --
The rights, privileges and powers of the Class A Common Stock and the Class B
Common Stock are identical, with shares of each class being entitled to one vote
on all matters to come before the stockholders of Holdings. The Class C common
stockholders do not have voting rights except in certain circumstances.
F-32
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
17. Related Party Transactions
Pursuant to various management services agreements entered into between
Holdings, Silgan, Containers, Plastics, and S&H, Inc. ("S&H"), a company
wholly-owned by Mr. Silver, the Chairman and Co-Chief Executive Officer and Mr.
Horrigan, the President and Co-Chief Executive Officer, of Holdings and Silgan,
S&H provides Holdings, Silgan and its subsidiaries with general management,
supervision and administrative services. In consideration for its services, S&H
receives a fee of 4.95% (of which 0.45% is payable to MS & Co.) of Holdings'
consolidated earnings before depreciation, amortization, interest and taxes
("EBDIT") until EBDIT has reached the Scheduled Amount set forth in the
Management Agreements and 3.3% (of which 0.3% is payable to MS & Co.) after
EBDIT has exceeded the Scheduled Amount up to the Maximum Amount as set forth in
the Management Agreements, plus reimbursement for all related out-of-pocket
expenses. The total amount incurred under the Management Agreements was $5.4
million in 1995, $5.0 million in 1994, and $4.4 million in 1993 and was
allocated, based upon EBDIT, as a charge to operating income of each business
segment. Included in accounts payable at December 31, 1995 and 1994, was $0.1
million payable to S&H.
Under the terms of the Management Agreements, the Company has agreed, subject to
certain exceptions, to indemnify S&H and any of its affiliates, officers,
directors, employees, subcontractors, consultants or controlling persons against
any loss or damage they may sustain arising in connection with the Management
Agreements.
In connection with the refinancings and bank credit agreements entered into
during 1995 and 1993, the banks thereunder (including Bankers Trust Company)
received fees totaling $17.2 million in 1995 and $8.1 million in 1993.
18. Litigation
In connection with the acquisition by Holdings of Silgan as of June 30, 1989
(the "Merger"), a decision was rendered in 1995 by the Delaware Court of
Chancery with respect to appraisal proceedings filed by certain former
stockholders of 400,000 shares of stock of Silgan. Pursuant to that decision,
these former holders were awarded $5.94 per share, plus simple interest at a
rate of 9.5%. This award was less than the amount, $6.50 per share, that these
former holders would have received in the Merger. The right of these former
holders to appeal the Chancery Court's decision has expired, and the Company has
tendered payment of $3.8 million to these former holders. In 1994, prior to the
trial for appraisal, the Company and the former holders of an additional 650,000
shares of stock of Silgan agreed to a settlement in respect of their appraisal
rights, and the Company made a payment of $6.9 million, including interest, in
respect of the settlement.
F-33
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
18. Litigation (continued)
With respect to a complaint filed by limited partners of The Morgan Stanley
Leveraged Equity Fund, L.P. against a number of defendants, including Silgan and
Holdings, all claims against Silgan and Holdings related to this action were
dismissed on January 14, 1993. The plaintiff's time to appeal the dismissal of
the claims against Holdings and Silgan expired following the dismissal of the
claims against certain other defendants in June 1995.
Other than the actions mentioned above, there are no other pending legal
proceedings to which the Company is a party or to which any of its properties
are subject which would have a material effect on the Company's financial
position.
F-34
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
19. Business Segment Information
The Company is engaged in the packaging industry and operates principally in two
business segments. Both segments operate in North America. There are no
intersegment sales. Presented below is a tabulation of business segment
information for each of the past three years (in millions):
Net Oper. Identifiable Dep.& Capital
Sales Profit Assets Amort. Expend.
----- ------ ------ ------ -------
1995
Metal container
& specialty(1) ......... $ 882.3 $72.9(2) $736.7 $31.6 $32.5
Plastic container ........ 219.6 13.2 159.4 13.8 19.4
-------- ----- ------ ----- -----
Consolidated ........... $1,101.9 $86.1 $896.1 $45.4 $51.9
======== ===== ====== ===== =====
1994
Metal container
& specialty(1) ......... $ 657.1 $67.0(3) $335.3 $23.1 $16.9
Plastic container ........ 204.3 9.4(3) 162.8 14.1 12.3
-------- ----- ------ ----- -----
Consolidated ........... $ 861.4 $76.4 $498.1 $37.2 $ 9.2
======== ===== ====== ===== =====
1993
Metal container
& specialty(1) ......... $ 459.2 $42.3 $324.5 $17.3 $25.3
Plastic container ........ 186.3 0.6 165.9 16.5 17.2
-------- ----- ------ ----- -----
Consolidated ........... $ 645.5 $42.9 $490.4 $33.8 $42.5
======== ===== ====== ===== =====
(1) Specialty packaging sales include closures, plastic bowls, and paper
containers used by processors and packagers in the food industry and are
not significant enough to be reported as a separate segment.
(2) Excludes charge for reduction in carrying value of assets of $14.7 million
for the metal container segment.
(3) Excludes charges for reduction in carrying value of assets of $7.2 million
for the metal container segment and $9.5 million for the plastic container
segment, respectively.
F-35
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
19. Business Segment Information (continued)
Operating profit is reconciled to income before tax as follows (in millions):
1995 1994 1993
---- ---- ----
Operating profit .................... $ 86.1 $76.4 $ 42.9
Reduction in carrying value of assets 14.7 16.7 --
Interest expense .................... 80.7 65.8 54.3
Corporate ........................... 1.5 1.3 1.1
----- ----- -----
Loss before income taxes ....... $(10.8) $(7.4) $(12.5)
===== ===== ======
Identifiable assets are reconciled to total assets as follows (in millions):
1995 1994 1993
---- ---- ----
Identifiable assets.................. $896.1 $498.1 $490.4
Corporate assets..................... 3.9 6.2 7.2
------ ------ ------
Total assets.................... $900.0 $504.3 $497.6
====== ====== ======
Metal container and other segment sales to Nestle Food Company accounted for
21.4%, 25.9% and 34.1%, of net sales of the Company during the years ended
December 31, 1995, 1994 and 1993, respectively. Similarly, sales to Del Monte
accounted for 14.5% and 21.4% of net sales of the Company during the years ended
December 31, 1995 and 1994, respectively.
F-36
<PAGE>
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
June 30, June 30,
1996 1995
---- ----
Assets
Current assets:
Cash and cash equivalents ..................... $ 1,859 $ 841
Accounts receivable, net ...................... 125,724 74,926
Inventories ................................... 286,448 164,138
Prepaid expenses and other current assets ..... 5,691 6,185
---------- --------
Total current assets ...................... 419,722 246,090
Property, plant and equipment, net ................. 482,723 255,453
Goodwill, net ...................................... 72,713 29,389
Other assets ....................................... 29,448 21,244
---------- --------
$1,004,606 $552,176
========== ========
Liabilities and deficiency in stockholder's equity
Current liabilities:
Trade accounts payable ........................ $ 90,361 $ 44,826
Accrued payroll and related costs ............. 41,378 25,307
Accrued interest payable ...................... 6,551 1,735
Accrued expenses and other current
liabilities ................................ 32,801 20,457
Bank working capital loans .................... 148,550 39,750
Current portion of long-term debt ............. 27,192 19,514
---------- --------
Total current liabilities ................. 346,833 151,589
Long-term debt ..................................... 745,550 525,884
Deferred income taxes .............................. 6,836 6,831
Other long-term liabilities ........................ 75,523 23,750
Deficiency in stockholders' equity:
Common stock .................................. 12 12
Additional paid-in capital .................... 33,606 33,606
Accumulated deficit ........................... (203,754) (189,496)
---------- --------
Total deficiency in stockholders' equity .. (170,136) (155,878)
---------- --------
$1,004,606 $552,176
========== ========
See accompanying notes.
F-37
<PAGE>
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands)
Six Months Ended
--------------------
June 30, June 30,
1996 1995
---- ----
Net sales ............................................ $606,922 $404,990
Cost of goods sold ................................... 521,683 346,144
-------- --------
Gross profit .................................... 85,239 58,846
Selling, general and administrative expenses ......... 27,210 17,729
-------- --------
Income from operations .......................... 58,029 41,117
Interest expense and other related
financing costs ............................... 45,861 34,797
-------- --------
Income before income taxes ...................... 12,168 6,320
Income tax provision ................................. 2,500 4,200
-------- --------
Net income ...................................... $ 9,668 $ 2,120
======== ========
See accompanying notes.
F-38
<PAGE>
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
------------------
June 30, June 30,
1996 1995
---- ----
Cash flows from operating activities:
Net income ......................................... $ 9,668 $ 2,120
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation ................................... 27,153 15,993
Amortization ................................... 4,761 3,562
Accretion of discount on discount debentures ... 12,077 15,121
Changes in assets and liabilities:
(Increase) in accounts receivable ............ (13,155) (9,814)
(Increase) in inventories .................... (74,520) (41,709)
(Decrease) increase in trade accounts
payable ................................... (47,834) 7,981
Other, net ................................... (864) (3,390)
--------- ---------
Total adjustments ......................... (92,382) (12,256)
--------- ---------
Net cash used by operating activities .......... (82,714) (10,136)
--------- ---------
Cash flows from investing activities:
Acquisition of St. Louis facility from
American National Can Company ................ (13,121) --
Capital expenditures ............................ (29,031) (19,671)
Proceeds from sale of assets .................... 1,521 3,270
--------- ---------
Net cash used in investing activities ........... (40,631) (16,401)
--------- ---------
Cash flows from financing activities:
Borrowings under working capital loans .......... 489,100 181,410
Repayments under working capital loans .......... (347,650) (154,260)
Repayment of long-term debt ..................... (18,348) (2,454)
--------- ---------
Net cash provided by financing activities ...... 123,102 24,696
--------- ---------
Net decrease in cash and cash equivalents ............ (243) (1,841)
Cash and cash equivalents at beginning of year ....... 2,102 2,682
--------- ---------
Cash and cash equivalents at end of period ........... $ 1,859 $ 841
========= =========
Supplementary data:
Interest paid ................................... $ 29,456 $ 16,943
Income taxes paid ............................... 363 8,055
See accompanying notes.
F-39
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 1996 and 1995 and for the
six months then ended is unaudited)
1. Basis of Presentation
The accompanying condensed unaudited consolidated financial statements of Silgan
Holdings Inc. ("Holdings" or the "Company") have been prepared in accordance
with Rule 10-01 of Regulation S-X and, therefore, do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. All adjustments of a normal recurring nature have been made,
including appropriate estimates for reserves and provisions which are normally
determined or settled at year end. In the opinion of the Company, however, the
accompanying financial statements contain all adjustments (consisting solely of
a normal recurring nature) necessary to present fairly Holdings' financial
position as of June 30, 1996 and 1995 and, the results of operations for the six
months ended June 30, 1996 and 1995, and the statements of cash flows for the
six months ended June 30, 1996 and 1995.
While the Company believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these financial statements
be read in conjunction with the financial statements and notes included in
Holdings' Annual Report on Form 10-K for the year ended December 31, 1995.
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" in the first quarter of 1996. Under SFAS No. 121,
impairment losses will be recognized when events or changes in circumstances
indicate that the undiscounted cash flows generated by the assets are less than
the carrying value of such assets. Impairment losses are then measured by
comparing the fair value of assets to their carrying amount. There were no
impairment losses recognized during the first or second quarter of 1996 as a
result of the adoption of SFAS No. 121.
In October 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123, "Accounting for Stock-Based Compensation", effective for the 1996
fiscal year. Under SFAS No. 123, compensation expense for all stock-based
compensation plans would be recognized based on the fair value of the options at
the date of grant using an option pricing model. As permitted under SFAS No.
123, the Company may either adopt the new pronouncement or follow the current
accounting methods as prescribed under APB No. 25. The Company continues to
recognize compensation expense in accordance with APB No. 25.
F-40
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 1996 and 1995 and
for the six months then ended is unaudited)
2. Inventories
Inventories consisted of the following:
June 30, June 30,
1996 1995
---- ----
(Dollars in thousands)
Raw materials and supplies .. $ 36,776 $ 30,430
Work-in-process ............. 35,107 19,413
Finished goods .............. 205,233 119,629
Spare parts and other ....... 7,730 --
-------- --------
284,846 169,472
Adjustment to value inventory
at cost on the LIFO Method 1,602 (5,334)
-------- --------
$286,448 $164,138
======== ========
3. Acquisitions
Set forth below is the Company's summary unaudited pro forma results of
operations for the six months ended June 30, 1995. The unaudited pro forma
results of operations of the Company for the six months ended June 30, 1995
include the historical results of the Company and the Food Metal & Specialty
business of American National Can Company ("AN Can") for such period and give
effect to certain pro forma adjustments. The pro forma adjustments made to the
historical results of operations for June 30, 1995 reflect the effect of
purchase accounting adjustments based upon appraisals and valuations, the
financing of the acquisition of AN Can by the Company, the refinancing of
certain of the Company's debt obligations, and certain other adjustments as if
these events had occurred as of the beginning of 1995. The pro forma results of
operations do not give effect to adjustments for decreased costs from
manufacturing synergies resulting from the integration of AN Can with
Containers' existing can manufacturing operations and anticipated benefits the
Company may realize as a result of its planned rationalization of plant
operations. The pro forma adjustments are based upon available information and
upon certain assumptions that the Company believes are reasonable. The following
unaudited pro forma results of operations do not purport to represent what the
Company's results of operations would actually have been had the transactions in
fact occurred on January 1, 1995, or to project the Company's results of
operations for any future period (in thousands):
Pro forma
June 30, 1995
-------------
Net sales ................ $650,042
Income from operations ... 61,488
Income before income taxes 16,414
Net income ............... 10,014
F-41
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 1996 and 1995 and
for the six months then ended is unaudited)
3. Acquisitions (continued)
In connection with the acquisition of AN Can, the Company has finalized its
plant rationalization and integration plans. These plans consist primarily of
the closing or downsizing of manufacturing plants and the integration of the
selling, general, and administrative functions of the former AN Can operations
with the Company. The Company estimates that costs related to such plans include
approximately $6.6 million related to plant exit costs, $22.6 million related to
employee severance and relocation costs, and $3.5 million related to
administrative workforce reductions. The timing of the plant rationalizations
will be primarily dependent on covenants in existing labor agreements and
accordingly these costs will be incurred during the period from late 1996
through early 1998. Costs related to administrative workforce reductions and
relocation were incurred principally during the second half of 1995 and the
first half of 1996. Through June 30, 1996, the Company has incurred costs of
$2.5 million for administrative workforce reductions.
During the second quarter of 1996, the purchase price allocation for the AN Can
acquisition was adjusted for differences between the actual and preliminary
valuations for the asset appraisals and for projected employee benefit costs as
well as for a revision in estimated costs of plant rationalizations,
administrative workforce reductions and other various matters, which in
aggregate resulted in an adjustment to increase goodwill by $20.7 million.
4. 13 1/4% Senior Discount Debentures
On June 15, 1996, the Company redeemed $17.4 million principal amount of its 13
1/4% Senior Discount Debentures due 2002 ("Discount Debentures") at par.
5. Subsequent Events
On May 31, 1996, Silgan Corporation ("Silgan"), a wholly-owned subsidiary of the
Company, amended its Credit Agreement to, among other things, provide for the
borrowing of an additional $125.0 million of B term loans. On July 3, 1996,
Silgan borrowed the additional B term loans and as permitted under the Credit
Agreement used the proceeds therefrom to fund the redemption by Holdings of
$125.0 million principal amount of Discount Debentures at par. In connection
with the early redemption of the Discount Debentures, it is expected that during
the third quarter of 1996 the Company will incur an extraordinary charge of
approximately $1.7 million, net of tax, for the write-off of unamortized
deferred financing costs.
F-42
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 1996 and 1995 and
for the six months then ended is unaudited)
5. Subsequent Events (continued)
On July 22, 1996, the Company issued 50,000 shares of 13 1/4% Exchangeable
Preferred Stock, mandatorily redeemable in 2006 ("Preferred Stock"), for net
proceeds of $47.8 million. The Company used $35.8 million of these proceeds to
purchase its Class B Common Stock held by Mellon Bank, as trustee for First
Plaza Group Trust. During the third quarter, additional paid in capital will be
reduced by $15.0 million, the original issuance amount received for the Class B
Common Stock, and the remainder of the payment will be applied to Holdings'
accumulated deficit. Additionally, the balance of the proceeds received from the
issuance of Preferred Stock will be used to redeem $12.0 million principal
amount of Discount Debentures on August 26, 1996.
F-43
<PAGE>
SILGAN HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
Introductory Note
Set forth below is the Company's unaudited pro forma condensed statements of
operations for the six months ended June 30, 1996 and the year ended December
31, 1995. The unaudited pro forma results of operations of the Company include
the historical results of the Company for such periods and give effect to
certain pro forma adjustments.
The unaudited pro forma condensed statement of operations for the six months
ended June 30, 1996 gives effect to (i) the sale of $50.0 million of Old
Preferred Stock pursuant to the Private Offering and the use of such proceeds to
purchase the Holdings Class B Stock held by Mellon and to redeem a portion of
the Discount Debentures, and (ii) the incurrence of $125.0 million of additional
B term loans in July 1996 and $17.4 million of working capital loans in June
1996 under the Silgan Credit Agreement, as recently amended in May 1996, and the
use of such proceeds to redeem a portion of the Discount Debentures
(collectively, the "Refinancing"), as if such events had occurred as of January
1, 1996.
The unaudited pro forma condensed statement of operations for the fiscal year
ended December 31, 1995 gives effect to (i) the acquisition of AN Can, (ii)
proceeds received under the Silgan Credit Agreement which were used to finance
the acquisition of AN Can, repay in full amounts owing under the Company's
previous credit agreement and the Secured Notes and repurchase $61.7 million
principal amount at maturity of Discount Debentures, (iii) the sale of $50.0
million of Old Preferred Stock pursuant to the Private Offering and the use of
such proceeds to purchase the Holdings Class B Stock held by Mellon and to
redeem a portion of the Discount Debentures, and (iv) the incurrence of $125.0
million of additional B term loans in July 1996 and $17.4 million of working
capital loans in June 1996 under the Silgan Credit Agreement and the use of such
proceeds to redeem a portion of the Discount Debentures, as if such events had
occurred as of January 1, 1995.
In conjunction with the acquisition of AN Can, pro forma adjustments have been
made to reflect manufacturing cost savings resulting from the combination of the
Company's and AN Can's manufacturing operations, as well as reduced selling,
general and administrative expenditures realized as a result of the integration
of sales, administrative and research functions of the Company and AN Can.
Depreciation, goodwill amortization, and interest expense (including debt
amortization) have also been adjusted for the allocated cost of the acquisition
of AN Can and its related financing. As required, the Company has not given pro
forma effect to the anticipated benefits it will realize as a result of the
planned rationalization of its plant operations. The Company will not begin to
realize these benefits until 1997.
F-44
<PAGE>
SILGAN HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
Introductory Note
(continued)
The unaudited pro forma condensed statements of operations for the six months
ended June 30, 1996 and for the fiscal year ended December 31, 1995 assume the
Refinancing occurred at the beginning of the periods presented. The amount
necessary to purchase the Holdings Class B Stock held by Mellon increased over
time. Because the Refinancing did not occur at the beginning of the periods
presented and because the Discount Debentures accreted in value, the aggregate
principal amount of the Discount Debentures outstanding after the Refinancing
will be greater than the aggregate principal amount used to calculate interest
expense in the pro forma condensed statements of operations. Currently, there
are approximately $59.0 million aggregate principal amount of Discount
Debentures that remain outstanding. As a result, actual interest expense of the
Company will be greater than the interest expense reflected in the pro forma
condensed statements of operations.
The unaudited pro forma financial data do not purport to represent what the
Company's financial position or results of operations would actually have been
had such transactions been completed at the beginning of the periods presented,
or to project the Company's financial position or results of operations at any
future date or for any future period. The unaudited pro forma adjustments are
based upon available information and upon certain assumptions that the Company
believes are reasonable. The unaudited pro forma financial data and accompanying
notes should be read in conjunction with the historical financial information of
Holdings, including notes thereto, included elsewhere in this Prospectus.
F-45
<PAGE>
SILGAN HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(Dollars in thousands)
Pro Forma
Adjustments
for the
Historical Refinancing Pro Forma
---------- ----------- ---------
Net sales .................................. $606,922 $ -- $606,922
Cost of goods sold ......................... 521,683 -- 521,683
-------- ------- --------
Gross profit .......................... 85,239 -- 85,239
Selling, general and administrative
expenses ................................ 27,210 -- 27,210
-------- ------- --------
Income from operations ................ 58,029 -- 58,029
Interest expense and other related
financing costs (a) ..................... 45,861 (4,066) 41,795
-------- ------- --------
Income before income taxes ............ 12,168 4,066 16,234
Income tax provision ....................... 2,500 (600)(b) 1,900
-------- ------- --------
Income before extraordinary item (c) .. $ 9,668 $ 4,666 $ 14,334
======== ======= ========
F-46
<PAGE>
SILGAN HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(Dollars in thousands)
Historical Pro Forma Adjustments
---------------------- -------------------------------
ANC Food
Silgan Metal & AN Can
Holdings Inc. Specialty Acquisition Refinancing Pro Forma
------------- --------- ----------- ----------- ---------
Net sales .......... $1,101,905 $302,477 $ -- $ -- $1,404,382
Cost of goods sold . 970,491 266,156 2,882(d) -- 1,239,529
---------- ------- ------ ------- ----------
Gross profit .. 131,414 36,321 (2,882) -- 164,853
Selling, general
and administrative
expenses .......... 46,848 17,982 (7,470)(e) -- 57,360
Reduction in asset
carrying value .... 14,745 -- -- -- 14,745
---------- ------- ------- ------ --------
Income from
operations .... 69,821 18,339 4,588 -- 92,748
Interest expense
and other related
financing costs(a) . 80,710 7,476 87 (11,509) 76,764
---------- ------- ------- -------- ----------
Income (loss)
before income
taxes .......... (10,889) 10,863 4,501 11,509 15,984
Income tax
provision ...... 5,100 4,023 (1,923) (5,200)(b) 2,000
---------- ------- ------- -------- ----------
Income (loss)
before extra-
ordinary item(c) $ (15,989) $ 6,840 $ 6,424 $ 16,709 $ 13,984
========== ======= ======= ======== ==========
F-47
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
(a) Pro forma adjustments made to the historical data for interest expense as of
June 30, 1996 and December 31, 1995 consist of the following:
For the six For the
months ended year ended
June 30, 1996(1) December 31, 1995(2)
--------------- -------------------
(Dollars in thousands)
Historical interest expense ................. $ 45,861 $ 80,710
Increase in interest expense related
to additional bank borrowings used
to finance the acquisitionof AN Can
at current borrowing rates(3) .............. -- 8,384
Increase in interest expense related
to additional bank borrowings of
B term loans and working capital loans
used to fund the redemption of Discount
Debentures at current borrowing rates(3) ... 6,103 16,832
Net decrease in deferred financing costs
related to amortization of new
indebtedness less retired debt costs ...... (37) (1,073)
Decrease in interest expense due to the
redemption of the Discount Debentures(4) .. (10,132) (28,089)
-------- --------
Pro forma interest expense .................. $ 41,795 $ 76,764
======== ========
F-48
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
(1) Pro forma interest expense for the six months ended June 30, 1996 gives
effect to (i) the Private Offering and the use of the proceeds to
purchase the Holdings Class B Stock held by Mellon and to redeem a
portion of the Discount Debentures and (ii) the incurrence of $125.0
million of B term loans in July 1996 and $17.4 million of working
capital loans in June 1996 under the Silgan Credit Agreement and the
use of such proceeds to redeem a portion of Discount Debentures, as if
such events had occurred as of January 1, 1996.
(2) Pro forma interest expense for the year ended December 31, 1995 gives
effect to (i) proceeds received under the Silgan Credit Agreement which
were used to finance the acquisition of AN Can, repay in full amounts
owing under the Company's previous credit agreement and the Secured
Notes, (ii) the Private Offering and the use of the proceeds to
purchase the Holdings Class B Stock held by Mellon and to redeem a
portion of the Discount Debentures, and (iii) the incurrence of $125.0
million of additional B term loans in July 1996 and $75.0 million of
working capital loans (including $17.4 million of working capital loans
incurred in June 1996) under the Silgan Credit Agreement and the use of
such amounts to repurchase or redeem Discount Debentures, as if such
events had occurred as of January 1, 1995.
(3) For the computations above, the assumed interest rates for borrowings
under the Silgan Credit Agreement are based upon the three month LIBOR
of 5.531% per annum as of August 29, 1996 plus a fixed spread of 2 1/2%
per annum for the A term loans and working capital loans and 3% per
annum for the B term loans.
(4) The adjustment in interest expense related to the Discount Debentures
has been calculated based upon the redemption of $212.0 million
principal amount of Discount Debentures as if such redemption occurred
at the beginning of the periods presented with proceeds as follows (in
millions):
Proceeds from August 1, 1995 bank financing $ 75.0
Additional B term loans ................... 125.0
Excess proceeds from the Private Offering . 12.0
------
Total .................................. $212.0
======
F-49
<PAGE>
SILGAN HOLDINGS INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995
(b) The income tax provision is comprised of federal, state and foreign income
taxes currently payable. The income tax provision for the six months ended
June 30, 1996 and the year ended December 31, 1995 has been adjusted to
reflect the federal income tax benefit realized from the current deduction
of the accreted interest on the retired Discount Debentures, and
redemptions, and the estimated effect of state income tax applied to the
increase in pro forma income before tax.
(c) The pro forma consolidated operating data for the six months ended June 30,
1996 and for the year ended December 31, 1995 do not include an
extraordinary charge, net of tax, that the Company expects to incur in the
third quarter of 1996 of $1.7 million for the write-off of unamortized
deferred financing costs related to the early redemption of the Discount
Debentures.
(d) Pro forma adjustments to cost of goods sold reflects adjustments for (i)
increased depreciation charges of $2.282 million from historical amounts
based upon the fair values of property, plant and equipment acquired,
applying an estimated useful life of 25 years for buildings and 5 to 11
years for machinery and equipment, (ii) increased charge for amortization
of goodwill of $0.361 million from the historical amount for the excess of
fair value of net assets acquired over a 40-year period and (iii) increased
employee benefits costs for pension and post-retirement medical expense of
$0.239 million to reflect change to Containers' employee benefit plans. The
unaudited pro forma statements of operations for the year ended December
31, 1995 does not give effect to adjustments for decreased costs from
manufacturing synergies resulting from the integration of AN Can with
Containers' existing can manufacturing operations and anticipated benefits
the Company may realize as a result of its planned rationalization of plant
operations.
(e) Pro forma adjustments to selling, general and administrative expenses
reflects adjustments for (i) increased depreciation charges of $0.074
million from historical amounts for the reasons described in footnote (d)
above, (ii) increased employee benefits costs for pension and
post-retirement medical expense of $0.039 million to reflect change to
Containers' employee benefit plans, and (iii) decreased administrative
support costs of $7.583 million realized as a result of the integration of
Containers' and AN Can's sales, administrative and research functions.
F-50
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law makes provision for
the indemnification of officers and directors in terms sufficiently broad to
indemnify officers and directors of the Company under certain circumstances from
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. The Certificate of Incorporation (as amended) and By-laws of the
Company provide for indemnification of officers and directors against costs and
expenses incurred in connection with any action or suit to which such person is
a party to the fullest extent permitted by the Delaware General Corporation Law.
See item 22 of this Registration Statement regarding the position of
the Securities and Exchange Commission on indemnification for liabilities
arising under the Securities Act.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits:
--------
Exhibit
Number Description
- ------- -----------
3.1 Restated Certificate of Incorporation of Silgan, as amended
(incorporated by reference to Exhibit 3.1 filed with Silgan's
Annual Report on Form 10-K for the year ended December 31,
1993, Commission File No. 1-11200).
3.2 By-laws of Silgan (incorporated by reference to Exhibit 3(ii)
filed with Silgan's Registration Statement on Form S-1, dated
January 11, 1988, Registration Statement No.
33-18719).
3.3 Restated Certificate of Incorporation of Holdings (incorporated
by reference to Exhibit 1 filed with Holdings' Current Report
on Form 8-K, dated August 2, 1996, Commission File No.
33-28409).
3.4 Certificate of Amendment to the Restated Certificate of
Incorporation of Holdings, dated July 19, 1996 (incorporated by
reference to Exhibit 2 filed with Holdings' Current Report on
Form 8-K, dated August 2, 1996, Commission File No. 33-28409).
3.5 By-laws of Holdings (incorporated by reference to Exhibit 3.4
filed with Silgan's Registration Statement on Form S-1, dated
May 1, 1989, Registration Statement No. 33-28409).
4.1 Indenture, dated as of June 29, 1992, between Holdings and The
Connecticut National Bank, as trustee, with respect to the
Discount Debentures (incorporated by reference to Exhibit 1
filed with Holdings' Current Report on Form 8-K dated July 15,
1992, Commission File No. 33-47632).
II-1
<PAGE>
4.2 Indenture dated as of June 29, 1992, between Silgan and Shawmut
Bank, N.A., as Trustee, with respect to the 11-3/4% Notes
(incorporated by reference to Exhibit 1 filed with Silgan's
Current Report on Form 8-K dated July 15, 1992, Commission File
No. 33-46499).
4.3 Silgan Holdings Inc. Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other
Special Rights of 13 1/4% Cumulative Exchangeable Redeemable
Preferred Stock and Qualifications, Limitations and
Restrictions Thereof (incorporated by reference to Exhibit 3
filed with Holdings' Current Report on Form 8-K dated August 2,
1996, Commission File No. 33-28409).
4.4 Form of Holdings' 13-1/4% Senior Discount Debentures Due 2002
(incorporated by reference to Exhibit 4.4 filed with Holdings'
Annual Report on Form 10-K for the year ended December 31,
1992, Commission File No. 33-28409).
4.5 Form of Silgan's 11-3/4% Senior Subordinated Notes due 2002
(incorporated by reference to Exhibit 4.5 filed with Holdings'
Annual Report on Form 10-K for the year ended December 31,
1992, Commission File No. 33-28409).
4.6 Form of Holdings' 13-1/4% Cumulative Exchangeable Redeemable
Preferred Stock Certificate (the Old Preferred Stock
Certificate) (incorporated by reference to Exhibit 4 filed with
Holdings's Current Report on Form 8-K dated August 2, 1996,
Commission File No. 33-28409).
4.7 Registration Rights Agreement, dated July 22, 1996, between
Holdings and Morgan Stanley & Co. Incorporated (incorporated by
reference to Exhibit 5 filed with Holdings' Current Report on
Form 8-K dated August 2, 1996, Commission File No. 33-28409).
**4.8 Form of Holdings' 13-1/4% Cumulative Exchangeable Redeemable
Preferred Stock Certificate (the New Preferred Stock
Certificate).
**4.9 Form of Letter of Transmittal with respect to the Exchange
Offer.
*4.10 Indenture, dated as of July 22, 1996, among Holdings and Fleet
National Bank, as Trustee, with respect to the Exchange
Debentures.
*4.11 Form of Holdings' Subordinated Debentures due 2006.
**5 Opinion of Winthrop, Stimson, Putnam & Roberts as to the
legality of the New Preferred Stock.
**8 Opinion of Winthrop, Stimson, Putnam & Roberts as to tax
matters.
10.1 Agreement for Purchase and Sale of Assets, dated as of June 18,
1987, between Carnation Company and Canaco Corporation
(Containers) (incorporated by reference to Exhibit 2(i) filed
with Silgan's Registration Statement on Form S-1, dated January
11, 1988, Registration Statement No. 33-18719).
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10.2 First Amendment to Agreement for Purchase and Sale of Assets,
dated as of July 15, 1987, between Carnation Company and Canaco
Corporation (Containers) (incorporated by reference to Exhibit
2(ii) filed with Silgan's Registration Statement on Form S-1,
dated January 11, 1988, Registration Statement No. 33-18719).
10.3 Second Amendment to Agreement for Purchase and Sale of Assets,
dated as of August 31, 1987, between Carnation Company and
Canaco Corporation (Containers) (incorporated by reference to
Exhibit 2(iii) filed with Silgan's Registration Statement on
Form S-1, dated January 11, 1988, Registration Statement No.
33-18719).
10.4 Asset Purchase Agreement, dated as of July 29, 1987, between
Plastics Corporation (Plastics) and Monsanto Company
(incorporated by reference to Exhibit 2(iv) filed with Silgan's
Registration Statement on Form S-1, dated January 11, 1988,
Registration Statement No. 33-18719).
10.5 First Amendment to the Asset Purchase Agreement, dated as of
July 29, 1987, between Plastics Corporation (Plastics) and
Monsanto Company (incorporated by reference to Exhibit 2(v)
filed with Silgan's Registration Statement on Form S-1, dated
January 11, 1988, Registration Statement No. 33-18719).
10.6 Agreement for Purchase and Sale of Assets, dated as of
September 27, 1988, between Carnation Company and Containers
(incorporated by reference to Exhibit 1 filed with Silgan's
Current Report on Form 8-K, dated October 17, 1988).
10.7 Agreement for Sale and Purchase of Containers, dated as of
December 3, 1988, between Containers and Dial (incorporated by
reference to Exhibit 2 filed with Silgan's Current Report on
Form 8-K, dated December 19, 1988).
10.8 Asset Purchase Agreement, dated as of November 7, 1988, between
Containers and Dial (incorporated by reference to Exhibit 1
filed with Silgan's Current Report on Form 8-K, dated December
19, 1988).
10.9 Amended and Restated Stock Purchase Agreement, dated as of
January 1, 1989, among Aim, certain shareholders of Aim, and
Silgan (incorporated by reference to Exhibit 1 filed with
Silgan's Current Report on Form 8-K, dated March 15, 1989).
10.10 Assignment and Assumption, dated as of March 1, 1989, between
Silgan and InnoPak Plastics Corporation (Plastics)
(incorporated by reference to Exhibit 2 filed with Silgan's
Current Report on Form 8-K, dated March 15, 1989).
10.11 Agreement for Purchase and Sale of Assets between Fortune and
InnoPak Plastics Corporation (Plastics) dated as of March 1,
1989 (incorporated by reference to Exhibit 1 filed with
Silgan's Current Report on Form 8-K, dated April 14, 1989).
10.12 Amendment to Agreement for Purchase and Sale of Assets, dated
as of March 30, 1989, between Fortune and InnoPak Plastics
Corporation (Plastics) (incorporated by reference to Exhibit 2
to Silgan's Current Report on Form 8-K, dated April 14, 1989).
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<PAGE>
10.13 Assignment and Assumption Agreement, dated as of March 31,
1989, between InnoPak Plastics Corporation (Plastics) and
Fortune Acquisition Corporation (incorporated by reference to
Exhibit 3 to Silgan's Current Report on Form 8-K, dated April
14, 1989).
10.14 Agreement for Purchase and Sale of Shares between and among
InnoPak Plastics Corporation (Plastics), Gordon Malloch and
Jurgen Arnemann and Express, dated as of March 1, 1989
(incorporated by reference to Exhibit 5 to Silgan's Current
Report on Form 8-K, dated April 14, 1989).
10.15 Amendment to Agreement for Purchase and Sale of Shares, dated
as of March 31, 1989, among InnoPak Plastics Corporation
(Plastics), Express, Gordon Malloch and Jurgen Arnemann
(incorporated by reference to Exhibit 6 to Silgan's Current
Report on Form 8-K, dated April 14, 1989).
10.16 Assignment and Assumption Agreement dated as of March 31, 1989,
between InnoPak Plastics Corporation (Plastics) and 827598
Ontario Inc. (incorporated by reference to Exhibit 7 to
Silgan's Current Report on Form 8-K, dated April 14, 1989).
10.17 Employment Agreement, dated as of September 14, 1987, between
James Beam and Canaco Corporation (Containers) (incorporated by
reference to Exhibit 10(vi) filed with Silgan's Registration
Statement on Form S-1, dated January 11, 1988, Registration
Statement No. 33-18719).
10.18 Amended and Restated Employment Agreement, dated as of June 18,
1987, between Gerald Wojdon and Canaco Corporation (Containers)
(incorporated by reference to Exhibit 10(vii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719).
10.19 Employment Agreement, dated as of September 1, 1989, between
Silgan, InnoPak Plastics Corporation (Plastics), Russell F.
Gervais and Aim (incorporated by reference to Exhibit 5 filed
with Silgan's Report on Form 8-K, dated March 15, 1989).
10.20 Supply Agreement for Gridley, California effective August 31,
1987 (incorporated by reference to Exhibit 10(ix) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.21 Amendment to Supply Agreement for Gridley, California, dated
July 1, 1990 (incorporated by reference to Exhibit 10.27 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.22 Supply Agreement for Gustine, California effective August 31,
1987 (incorporated by reference to Exhibit 10(x) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.23 Amendment to Supply Agreement for Gustine, California, dated
March 1, 1990 (incorporated by reference to Exhibit 10.29 filed
with Silgan's Registration Statement on
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<PAGE>
Form S-1, dated March 18, 1992, Registration Statement No.
33-46499) (Portions of this Exhibit are subject to confidential
treatment pursuant to order of the Commission).
10.24 Supply Agreement for Hanford, California effective August 31,
1987 (incorporated by reference to Exhibit 10(xi) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.25 Amendment to Supply Agreement for Hanford, California, dated
July 1, 1990 (incorporated by reference to Exhibit 10.31 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.26 Supply Agreement for Riverbank, California effective August 31,
1987 (incorporated by reference to Exhibit 10(xii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.27 Supply Agreement for Woodland, California effective August 31,
1987 (incorporated by reference to Exhibit 10(xiii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.28 Amendment to Supply Agreement for Woodland, California, dated
July 1, 1990 (incorporated by reference to Exhibit 10.34 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.29 Supply Agreement for Morton, Illinois, effective August 31,
1987 (incorporated by reference to Exhibit 10(vii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.30 Amendment to Supply Agreement for Morton, Illinois, dated July
1, 1990 (incorporated by reference to Exhibit 10.36 filed with
Silgan's Registration Statement on Form S-1, dated March 18,
1992, Registration Statement No. 33-46499) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.31 Supply Agreement for Ft. Dodge, Iowa, effective August 31, 1987
(incorporated by reference to Exhibit 10(xiv) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.32 Amendment to Supply Agreement for Ft. Dodge, Iowa, dated March
1, 1990 (incorporated by reference to Exhibit 10.38 filed with
Silgan's Registration statement on Form S-1, dated March 18,
1992, Registration Statement No. 33-46499) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.33 Supply Agreement for Maysville, Kentucky, effective August 31,
1987 (incorporated by reference to Exhibit 10(xvi) filed with
Silgan's Registration Statement on Form S-1, dated
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<PAGE>
January 11, 1988, Registration Statement No. 33-18719)
(Portions of this Exhibit are subject to confidential treatment
pursuant to order of the Commission).
10.34 Amendment to Supply Agreement for Maysville, Kentucky, dated
March 1, 1990 (incorporated by reference to Exhibit 10.40 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.35 Supply Agreement for St. Joseph, Missouri, effective August 31,
1987 (incorporated by reference to Exhibit 10(xvii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.36 Amendment to Supply Agreement for St. Joseph, Missouri, dated
March 1, 1990 (incorporated by reference to Exhibit 10.42 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.37 Supply Agreement for Trenton, Missouri, effective August 31,
1987 (incorporated by reference to Exhibit 10(xviii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.38 Amendment to Supply Agreement for Trenton, Missouri, dated
March 1, 1990 (incorporated by reference to Exhibit 10.44 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.39 Supply Agreement for South Dayton, New York, effective August
31, 1987 (incorporated by reference to Exhibit 10(xix) filed
with Silgan's Registration Statement on Form S-1, dated January
11, 1988, Registration Statement No. 33-18719) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.40 Amendment to Supply Agreement for South Dayton, New York, dated
March 1, 1990 (incorporated by reference to Exhibit 10.46 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.41 Supply Agreement for Statesville, North Carolina, effective
August 31, 1987 (incorporated by reference to Exhibit 10(xx)
filed with Silgan's Registration Statement on Form S-1, dated
January 11, 1988, Registration Statement No. 33-18719)
(Portions of this Exhibit are subject to confidential treatment
pursuant to order of the Commission).
10.42 Supply Agreement for Hillsboro, Oregon, effective August 31,
1987 (incorporated by reference to Exhibit 10(xxi) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.43 Amendment to Supply Agreement for Hillsboro, Oregon, dated
March 1, 1990 (incorporated by reference to Exhibit 10.49 filed
with Silgan's Registration Statement on
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<PAGE>
Form S-1, dated March 18, 1992, Registration Statement No.
33-46499) (Portions of this Exhibit are subject to confidential
treatment pursuant to order of the Commission).
10.44 Supply Agreement for Moses Lake, Washington, effective August
31, 1987 (incorporated by reference to Exhibit 10(xxii) filed
with Silgan's Registration Statement on Form S-1, dated January
11, 1988, Registration Statement No. 33-18719) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.45 Amendment to Supply Agreement for Moses Lake, Washington, dated
March 1, 1990 (incorporated by reference to Exhibit 10.51 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.46 Supply Agreement for Jefferson, Wisconsin, effective August 31,
1987 (incorporated by reference to Exhibit 10(xxiii) filed with
Silgan's Registration Statement on Form S-1, dated January 11,
1988, Registration Statement No. 33-18719) (Portions of this
Exhibit are subject to confidential treatment pursuant to order
of the Commission).
10.47 Amendment to Supply Agreement for Jefferson, Wisconsin, dated
March 1, 1990 (incorporated by reference to Exhibit 10.53 filed
with Silgan's Registration Statement on Form S-1, dated March
18, 1992, Registration Statement No. 33-46499) (Portions of
this Exhibit are subject to confidential treatment pursuant to
order of the Commission).
10.48 Supply Agreement for Fort Madison, dated as of December 3, 1988
(incorporated by reference to Exhibit 2 filed with Silgan's
Current Report on Form 8-K, dated December 19, 1988).
10.49 Amendment to Supply Agreements dated November 17, 1989 for Ft.
Dodge, Iowa; Hillsboro, Oregon; Jefferson, Wisconsin; St.
Joseph, Missouri; and Trenton, Missouri (incorporated by
reference to Exhibit 10.49 filed with Silgan's Annual Report on
Form 10-K for the year ended December 31, 1989, Commission File
No. 33-18719) (Portions of this Exhibit are subject to
confidential treatment pursuant to order of the Commission).
10.50 InnoPak Plastics Corporation (Plastics) Pension Plan for
Salaried Employees (incorporated by reference to Exhibit 10.32
filed with Silgan's Annual Report on Form 10-K for the year
ended December 31, 1988, Commission File No. 33-18719).
10.51 Containers Pension Plan for Salaried Employees (incorporated by
reference to Exhibit 10.34 filed with Silgan's Annual Report on
Form 10-K for the year ended December 31, 1988, Commission File
No. 33-18719).
10.52 Express Guaranty dated as of March 31, 1989 (incorporated by
reference to Exhibit 10.66 to Holdings' Registration Statement
on Form S-1, dated May 1, 1989, Registration No.
33-28409).
10.53 Express Security Agreement dated as of March 31, 1989
(incorporated by reference to Exhibit 10.67 to Holdings'
Registration Statement on Form S-1, dated May 1, 1989,
Registration No. 33-28409).
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<PAGE>
10.54 Canadian Holdco Guaranty dated as of March 31, 1989
(incorporated by reference to Exhibit 10.68 to Holdings'
Registration Statement on Form S-1, dated May 1, 1989,
Registration No. 33-28409).
10.55 Canadian Holdco Pledge Agreement dated as of March 31, 1989
(incorporated by reference to Exhibit 10.69 to Holdings'
Registration Statement on Form S-1, dated May 1, 1989,
Registration No. 33-28409).
10.56 Canadian Acquisition Co. Guaranty dated as of March 31, 1989
(incorporated by reference to Exhibit 10.70 to Holdings'
Registration Statement on Form S-1, dated May 1, 1989,
Registration No. 33-28409).
10.57 Canadian Acquisition Co. Pledge Agreement dated as of March 31,
1989 (incorporated by reference to Exhibit 10.71 to Holdings'
Registration Statement on Form S-1, dated May 1, 1989,
Registration No. 33-28409).
10.58 Agreement and Plan of Merger, dated as of April 28, 1989, among
Holdings, Acquisition and Silgan (incorporated by reference to
Exhibit 2.6 to Holdings' Registration Statement on Form S-1,
dated May 1, 1989, Registration No. 33-28409).
10.59 Lease between Containers and Riverbank Venture dated May 1,
1990 (incorporated by reference to Exhibit 10.99 filed with
Silgan's Annual Report on Form 10-K for the year ended December
31, 1989, Commission File No. 33-18719).
10.60 Loan Agreement between The Iowa Department of Economic
Development, City of Iowa City and Iowa City Can Manufacturing
Company, dated November 17, 1988 (incorporated by reference to
Exhibit 10.100 filed with Silgan's Annual Report on Form 10-K
for the year ended December 31, 1989, Commission File No.
33-18719).
10.61 Promissory Note and Promissory Note Agreement dated November
17, 1988 from Iowa City Can Manufacturing Company to the City
of Iowa City (incorporated by reference to Exhibit 10.101 filed
with Silgan's Annual Report on Form 10-K for the year ended
December 31, 1989, Commission File No. 33-18719).
10.62 Mortgage between City of Iowa City, Iowa City Can Manufacturing
Company and Michael Development dated January 5, 1990
(incorporated by reference to Exhibit 10.102 filed with
Silgan's Annual Report on Form 10-K for the year ended December
31, 1989, Commission File No. 33-18719).
10.63 Containers Master Equipment Lease with Decimus Corporation,
dated as of October 11, 1989 (incorporated by reference to
Exhibit 10.103 filed with Silgan's Annual Report on Form 10-K
for the year ended December 31, 1989, Commission File No.
33-18719).
10.64 Amended and Restated Tax Allocation Agreement by and among
Holdings, Silgan, Containers, InnoPak Plastics Corporation
(Plastics), Aim, Fortune, SPHI and Silgan PET dated as of July
13, 1990 (incorporated by reference to Exhibit 10.107 filed
with Post-Effective Amendment No. 6 to Silgan's Registration
Statement on Form S-1, dated August 20, 1990, Registration
Statement No. 33-18719).
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<PAGE>
10.65 Sublease Agreement between Amoco and PET Acquisition Corp.
(Silgan PET) dated July 24, 1989 (incorporated by reference to
Exhibit 10.111 filed with Post-Effective Amendment No. 6 to
Silgan's Registration Statement on Form S-1, dated August 20,
1990, Registration Statement No. 33-18719).
10.66 Lease Agreement between the Trustees of Cabot 95 Trust and
Amoco Plastic Products Company dated August 16, 1978
(incorporated by reference to Exhibit 10.112 filed with
Post-Effective Amendment No. 6 to Silgan's Registration
Statement on Form S-1, dated August 20, 1990, Registration
Statement No. 33-18719).
10.67 Contribution Agreement by and among Messrs. Silver, Horrigan,
Rankin and Rodriguez, MSLEF II and BTNY dated as of July 13,
1990 (incorporated by reference to Exhibit 2 filed with
Silgan's Current Report on Form 8-K, dated July 1990).
10.68 Asset Purchase Agreement, dated as of November 1, 1991 by and
among Silgan PET, Holdings and Sewell Plastics Inc.
(incorporated by reference to Exhibit 1 filed with Silgan's
Current Report on Form 8-K, dated December 2, 1991).
10.69 Inventory and Equipment Purchase Agreement, dated as of
November 1, 1991 by and among Silgan PET, Holdings and Sewell
Plastics, Inc. (incorporated by reference to Exhibit 2 filed
with Silgan's Current Report on Form 8-K, dated December 2,
1991).
10.70 Letter Agreement, dated November 15, 1991, amending the Asset
Purchase Agreement dated as of November 1, 1991 by and among
Silgan PET, Holdings and Sewell Plastics, Inc. (incorporated by
reference to Exhibit 3 to Silgan's Current Report on Form 8-K,
dated December 2, 1991).
10.71 Letter Agreement, dated November 15, 1991, amending the
Inventory and Equipment Purchase Agreement dated as of November
1, 1991 by and among Silgan PET, Holdings and Sewell Plastics,
Inc. (incorporated by reference to Exhibit 4 filed with
Silgan's Current Report on Form 8-K, dated December 2, 1991).
10.72 Letter Agreement, dated November 31, 1991, amending the
Inventory and Equipment Purchase Agreement dated as of November
1, 1991 by and among Silgan PET, Holdings and Sewell Plastics,
Inc. (incorporated by reference to Exhibit 5 filed with
Silgan's Current Report on Form 8-K, dated December 2, 1991).
10.73 Containers Deferred Incentive Savings Plan (incorporated by
reference to Exhibit 10.144 filed with Silgan's Registration
Statement on Form S-1, dated March 18, 1992, Registration
Statement No. 33-46499).
10.74 Amended and Restated Pledge Agreement dated as of June 18,
1992, made by Silgan (incorporated by reference to Exhibit 5
filed with Silgan's Current Report on Form 8-K dated July 15,
1992, Commission File No. 33-46499).
10.75 Amended and Restated Pledge Agreement dated as of June 18,
1992, made by Containers and Plastics (incorporated by
reference to Exhibit 6 filed with Silgan's Current Report on
Form 8-K dated July 15, 1992, Commission File No. 33-46499).
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<PAGE>
10.76 Amended and Restated Pledge Agreement dated as of June 18,
1992, made by Holdings (incorporated by reference to Exhibit 7
filed with Silgan's Current Report on Form 8-K dated July 15,
1992, Commission File No. 33-46499).
10.77 Amended and Restated Security Agreement dated as of June 18,
1992, among Plastics, Containers and Bankers Trust
(incorporated by reference to Exhibit 8 filed with Silgan's
Current Report on Form 8-K dated July 15, 1992, Commission File
No. 33-46499).
10.78 Underwriting Agreement, dated June 22, 1992, between Holdings
and Morgan Stanley with respect to the Discount Debentures
(incorporated by reference to Exhibit 2 filed with Holdings'
Current Report on Form 8-K dated July 15, 1992, Commission File
No. 33-47632).
10.79 Underwriting Agreement, dated June 22, 1992, between Silgan and
Morgan Stanley with respect to the 11-3/4% Notes (incorporated
by reference to Exhibit 3 filed with Silgan's Current Report on
Form 8-K dated July 15, 1992, Commission File No. 33-46499).
10.80 Silgan Containers Corporation Second Amended and Restated 1989
Stock Option Plan (incorporated by reference to Exhibit 10.100
filed with Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form S-1, dated May 11, 1994,
Commission File No. 33-46499).
10.81 Form of Containers Nonstatutory Restricted Stock Option and
Stock Appreciation Right Agreement (incorporated by reference
to Exhibit 10.120 filed with Holdings' Annual Report on Form
10-K for the year ended December 31, 1992, Commission File No.
33-28409).
10.82 Silgan Plastics Corporation 1994 Stock Option Plan
(incorporated by reference to Exhibit 10.102 filed with
Post-Effective Amendment No. 2 to the Company's Registration
Statement on Form S-1, dated May 11, 1994, Commission File No.
33-46499).
10.83 Form of Plastics Nonstatutory Restricted Stock Option and Stock
Appreciation Right Agreement (incorporated by reference to
Exhibit 10.103 filed with Post-Effective Amendment No. 2 to the
Company's Registration Statement on Form S-1, dated May 11,
1994, Commission File No. 33-46499).
10.84 Silgan Holdings Inc. Third Amended and Restated 1989 Stock
Option Plan (incorporated by reference to Exhibit 10.84 filed
with Holdings' Annual Report on Form 10-K for the year ended
December 31, 1995, Commission File No. 33-28409).
10.85 Form of Holdings Nonstatutory Restricted Stock Option and Stock
Appreciation Right Agreement (incorporated by reference to
Exhibit 10.124 filed with Holdings' Annual Report on Form 10-K
for the year ended December 31, 1992, Commission File No.
33-28409).
10.86 Purchase Agreement, dated as of September 3, 1993, between
Containers and Del Monte (incorporated by reference to Exhibit
1 filed with Holdings' Current Report on Form 8-K, dated
January 5, 1994, Commission File No. 33-28409).
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10.87 Amendment to Purchase Agreement, dated as of December 10, 1993,
between Containers and Del Monte (incorporated by reference to
Exhibit 2 filed with Holdings' Current Report on Form 8-K,
dated January 5, 1994, Commission File No. 33-28409).
10.88 Amended and Restated Organization Agreement, dated as of
December 21, 1993, among R. Philip Silver, D. Greg Horrigan,
MSLEF II, BTNY, First Plaza and Holdings (incorporated by
reference to Exhibit 2 filed with Holdings' Current Report on
Form 8-K, dated March 25, 1994, Commission File No. 33-28409).
10.89 Stockholders Agreement, dated as of December 21, 1993, among R.
Philip Silver, D. Greg Horrigan, MSLEF II, BTNY, First Plaza
and Holdings (incorporated by reference to Exhibit 3 filed with
Holdings' Current Report on Form 8-K, dated March 25, 1994,
Commission File No. 33-28409).
10.90 Amended and Restated Management Services Agreement, dated as of
December 21, 1993, between S&H and Holdings (incorporated by
reference to Exhibit 4 filed with Holdings' Current Report on
Form 8-K, dated March 25, 1994, Commission File No. 33-28409).
10.91 Amended and Restated Management Services Agreement, dated as of
December 21, 1993, between S&H and Silgan (incorporated by
reference to Exhibit 5 filed with Holdings' Current Report on
Form 8-K, dated March 25, 1994, Commission File No. 33-28409).
10.92 Amended and Restated Management Services Agreement, dated as of
December 21, 1993, between S&H and Containers (incorporated by
reference to Exhibit 6 filed with Holdings' Current Report on
Form 8-K, dated March 25, 1994, Commission File No. 33-28409).
10.93 Amended and Restated Management Services Agreement, dated as of
December 21, 1993, between S&H and Plastics (incorporated by
reference to Exhibit 7 filed with Holdings' Current Report on
Form 8-K, dated March 25, 1994, Commission File No. 33-28409).
10.94 Stock Purchase Agreement, dated as of December 21, 1993,
between Holdings and First Plaza (incorporated by reference to
Exhibit 8 filed with Holdings' Current Report on Form 8-K,
dated March 25, 1994, Commission File No. 33-28409).
10.95 Supply Agreement, dated as of September 3, 1993, between
Containers and Del Monte (incorporated by reference to Exhibit
10.118 filed with Silgan's Annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No. 1-11200).
(Portions of this Exhibit are subject to an application for
confidential treatment filed with the Commission.)
10.96 Amendment to Supply Agreement, dated as of December 21, 1993,
between Containers and Del Monte (incorporated by reference to
Exhibit 10.119 filed with Silgan's Annual Report on Form 10-K
for the year ended December 31, 1993, Commission File No.
1-11200). (Portions of this Exhibit are subject to an
application for confidential treatment filed with the
Commission.)
10.97 Credit Agreement, dated as of August 1, 1995, among Silgan,
Containers, Plastics, the lenders from time to time party
thereto, Bankers Trust Company, as Administrative Agent and as
a Co-Arranger, and Bank of America Illinois, as Documentation
Agent and as a
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Co-Arranger (incorporated by reference to Exhibit 2 filed with
Holdings' Current Report on Form 8-K, dated August 14, 1995,
Commission File No. 33-28409).
10.98 Amended and Restated Holdings Guaranty, dated as of August 1,
1995, made by Holdings (incorporated by reference to Exhibit 4
filed with Holdings' Current Report on Form 8-K, dated August
14, 1995, Commission File No. 33-28409).
10.99 Amended and Restated Borrowers Guaranty, dated as of August 1,
1995, made by Silgan, Containers, Plastics,
California-Washington Can Corporation and SCCW Can Corporation
(incorporated by reference to Exhibit 3 filed with Holdings'
Current Report on Form 8-K, dated August 14, 1995, Commission
File No. 33-28409).
10.100 Asset Purchase Agreement, dated as of June 2, 1995, between ANC
and Containers (incorporated by reference to Exhibit 1 filed
with Holdings' Current Report on Form 8-K, dated August 14,
1995, Commission File No. 33-28409).
10.101 Placement Agreement between Holdings and Morgan Stanley & Co.
Incorporated, dated July 17, 1996 (incorporated by reference to
Exhibit 6 filed with Holdings's Current Report on Form 8-K
dated August 2, 1996, Commission File No. 33-28409).
**12.1 Computations of Holdings' Ratio of Earnings to Fixed Charges
for the six months ended June 30, 1996 and 1995 .
12.2 Computations of Holdings' Ratio of Earnings to Fixed Charges
for the years ended December 31, 1995, 1994, 1993, 1992 and
1991 (incorporated by reference to Exhibit 12.2 filed with
Holdings' Post-Effective Amendment No. 7 to Registration
Statement on Form S-1, dated May 29, 1996, Registration
Statement No. 33-47632).
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 filed with Holdings' Annual Report on Form 10-K for
the year ended December 31, 1995, Commission File No.
33-28409).
*23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Price Waterhouse LLP.
**23.3 Consent of Winthrop, Stimson, Putnam & Roberts (included in
Exhibit 5).
**24 Power of Attorney.
*25 Statement of Eligibility of Trustee on form T-1 with respect to
the Exchange Debentures.
- -------------------------
* Filed herewith.
** Previously filed.
II-12
<PAGE>
Item 22. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus pursuant
to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail
II-13
<PAGE>
or other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Stamford,
State of Connecticut, on October 29, 1996.
SILGAN HOLDINGS INC.
By /s/ R. Philip Silver
__________________________
R. Philip Silver
Chairman of the Board and
Co-Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
- --------- ----- ----
/s/ R. Philip Silver Chairman of the Board and
________________________ Co-Chief Executive Officer
(R. Philip Silver (Principal Executive Officer) October 31, 1996
/s/ D. Greg Horrigan* President, Co-Chief Executive
________________________ Officer and Director October 31, 1996
(D. Greg Horrigan)
/s/ Robert H. Niehaus*
________________________ Director October 31, 1996
(Robert H. Niehaus)
/s/ Leigh J. Abramson
________________________ Director October 31, 1996
(Leigh J. Abramson)
/s/ Harley Rankin, Jr.* Executive Vice President,
________________________ Chief Financial Officer and
(Harley Rankin, Jr.) Treasurer(Principal Financial
Officer) October 31, 1996
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Harold J. Rodriguez, Jr.* Vice President, Controller
_____________________________ and Assistant Treasurer
(Harold J. Rodriguez, Jr.) (Principal Accounting October 31, 1996
Officer)
*By /s/ R. Philip Silver
_____________________________
R. Philip Silver
Attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
4.10 Indenture, dated as of July 22, 1996, among Holdings and
Fleet National Bank, as Trustee, with respect to the Exchange
Debentures
4.11 Form of Holdings' Subordinated Debentures due 2006.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Price Waterhouse LLP.
25 Statementof Eligibility of Trustee on form T-1 with respect
to the Exchange Debentures.
<PAGE>
EXHIBIT 4.10
SILGAN HOLDINGS INC.,
as Issuer
and
FLEET NATIONAL BANK,
as Trustee
-------------------------
Indenture
Dated as of July 22, 1996
-------------------------
Subordinated Debentures due 2006
- --------------------------------------------------------------------------------
<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 Trust
Indenture Act..............................................19
SECTION 1.3 Rules of Construction......................................19
ARTICLE 2. The Securities..................................................20
SECTION 2.1 Form and Dating............................................20
SECTION 2.2 Execution, Authentication and
Denominations..............................................20
SECTION 2.3 Registrar and Paying Agent.................................21
SECTION 2.4 Paying Agent to Hold Money in Trust........................22
SECTION 2.5 Transfer and Exchange......................................22
SECTION 2.6 Replacement Securities.....................................23
SECTION 2.7 Outstanding Securities.....................................23
SECTION 2.8 Temporary Securities.......................................23
SECTION 2.9 Cancellation...............................................24
SECTION 2.10 CUSIP Numbers..............................................24
SECTION 2.11 Defaulted Interest.........................................24
ARTICLE 3. Redemption......................................................24
SECTION 3.1 Right of Redemption........................................24
SECTION 3.2 Notices to Trustee.........................................25
SECTION 3.3 Selection of Securities to Be Redeemed.....................25
SECTION 3.4 Notice of Redemption.......................................26
SECTION 3.5 Effect of Notice of Redemption.............................27
SECTION 3.6 Deposit of Redemption Price................................27
SECTION 3.7 Payment of Securities Called for
Redemption.................................................27
SECTION 3.8 Securities Redeemed in Part................................27
ARTICLE 4. Covenants.......................................................28
SECTION 4.1 Payment of Securities......................................28
SECTION 4.2 Maintenance of Office or Agency............................28
SECTION 4.3 Limitation on Indebtedness.................................29
SECTION 4.4 Limitation on Restricted Payments..........................33
SECTION 4.5 Limitation on Dividend and Other
Payment Restrictions Affecting
Restricted Subsidiaries....................................36
SECTION 4.6 Limitation on Transactions with
Shareholders and Affiliates................................37
SECTION 4.7 Limitation on the Issuance of Capital
Stock of Restricted Subsidiaries...........................38
SECTION 4.8 Repurchase of Securities upon Change of
Control....................................................39
SECTION 4.9 Limitation on Asset Sales..................................41
SECTION 4.10 Corporate Existence........................................44
SECTION 4.11 Payment of Taxes and Other Claims..........................45
SECTION 4.12 Notice of Defaults and Other Events........................45
SECTION 4.13 Maintenance of Properties and
<PAGE>
Insurance..................................................45
SECTION 4.14 Compliance Certificates....................................46
SECTION 4.15 Commission Reports and Reports to
Holders....................................................47
SECTION 4.16 Waiver of Stay, Extension or Usury
Laws.......................................................47
SECTION 4.17 Trustee Not Liable.........................................47
ARTICLE 5. Successor Corporation...........................................48
SECTION 5.1 When Holdings May Merge, Etc...............................48
SECTION 5.2 Successor Corporation Substituted..........................49
ARTICLE 6. Default and Remedies............................................50
SECTION 6.1 Events of Default..........................................50
SECTION 6.2 Acceleration...............................................51
SECTION 6.3 Other Remedies.............................................52
SECTION 6.4 Waiver of Past Defaults....................................52
SECTION 6.5 Control by Majority........................................53
SECTION 6.6 Limitation on Suits........................................53
SECTION 6.7 Rights of Holders to Receive Payment.......................54
SECTION 6.8 Collection Suit by Trustee.................................54
SECTION 6.9 Trustee May File Proofs of Claim...........................54
SECTION 6.10 Priorities.................................................55
SECTION 6.11 Undertaking for Costs......................................55
SECTION 6.12 Restoration of Rights and Remedies.........................55
SECTION 6.13 Rights and Remedies Cumulative.............................56
SECTION 6.14 Delay or Omission Not Waiver...............................56
ARTICLE 7. Trustee.........................................................56
SECTION 7.1 Rights of Trustee..........................................56
SECTION 7.2 Individual Rights of Trustee...............................57
SECTION 7.3 Trustee's Disclaimer.......................................57
SECTION 7.4 Notice of Default..........................................57
SECTION 7.5 Reports by Trustee to Holders..............................58
SECTION 7.6 Compensation and Indemnity.................................58
SECTION 7.7 Replacement of Trustee.....................................58
SECTION 7.8 Successor Trustee by Merger, Etc...........................59
SECTION 7.9 Eligibility................................................60
SECTION 7.10 Money Held in Trust........................................60
ARTICLE 8. Discharge of Indenture..........................................60
SECTION 8.1 Termination of Holdings' Obligations.......................60
SECTION 8.2 Defeasance and Discharge of Indenture......................61
SECTION 8.3 Defeasance of Certain Obligations..........................64
SECTION 8.4 Application of Trust Money.................................66
SECTION 8.5 Repayment to Holdings......................................66
SECTION 8.6 Reinstatement..............................................67
ARTICLE 9. Amendments, Supplements and Waivers.............................67
SECTION 9.1 Without Consent of Holders.................................67
SECTION 9.2 With Consent of Holders....................................68
SECTION 9.3 Revocation and Effect of Consent...........................69
SECTION 9.4 Notation on or Exchange of Securities......................70
SECTION 9.5 Trustee to Sign Amendments, Etc............................70
SECTION 9.6 Conformity with Trust Indenture Act........................70
<PAGE>
ARTICLE 10. Subordination of Securities....................................70
SECTION 10.1 Securities Subordinated to Senior
Indebtedness of Holdings or the
Successor Corporation......................................70
SECTION 10.2 No Payment on Securities in Certain
Circumstances..............................................71
SECTION 10.3 Payment over of Proceeds upon
Dissolution, Etc...........................................72
SECTION 10.4 Subrogation................................................75
SECTION 10.5 Obligations of Holdings and the
Successor Corporation Unconditional........................75
SECTION 10.6 Notice to Trustee..........................................76
SECTION 10.7 Reliance of Judicial Order or
Certificate of Liquidating Agent...........................77
SECTION 10.8 Trustee's Relation to Senior
Indebtedness...............................................77
SECTION 10.9 Subordination Rights Not Impaired by
Acts or Omissions of Holdings or the
Successor Corporation or Holders of
Senior Indebtedness........................................77
SECTION 10.10 Holders Authorize Trustee to Effectuate
Subordination of Securities................................78
SECTION 10.11 Not to Prevent Events of Default...........................78
SECTION 10.12 Trustee's Compensation Not Prejudiced......................78
SECTION 10.13 No Waiver of Subordination Provisions......................78
SECTION 10.14 Payments May Be Paid Prior to
Dissolution................................................79
ARTICLE 11. Miscellaneous..................................................79
SECTION 11.1 Trust Indenture Act of 1939................................79
SECTION 11.2 Notices....................................................79
SECTION 11.3 Certificate and Opinion as to
Conditions Precedent.......................................80
SECTION 11.4 Statements Required in Certificate or
Opinion....................................................80
SECTION 11.5 Rules by Trustee, Paying Agent or
Registrar..................................................81
SECTION 11.6 Payment Date Other Than a Business Day.....................81
SECTION 11.7 Governing Law..............................................81
SECTION 11.8 No Adverse Interpretation of Other
Agreements.................................................81
SECTION 11.9 No Recourse Against Others.................................81
SECTION 11.10 Successors.................................................82
SECTION 11.11 Duplicate Originals........................................82
SECTION 11.12 Separability...............................................82
SECTION 11.13 Table of Contents, Headings, Etc...........................82
<PAGE>
INDENTURE, dated as of July 22, 1996, among Silgan Holdings
Inc., a Delaware corporation, as Issuer ("Holdings"), and Fleet National Bank, a
national banking association, as Trustee (the "Trustee").
RECITALS OF HOLDINGS
Holdings has duly authorized the execution and delivery of
this Indenture in connection with the issuance of Holdings' Subordinated
Debentures due 2006 (the "Securities") in exchange for shares of Holdings'
13-1/4% Cumulative Exchangeable Redeemable Preferred Stock (the "Exchangeable
Preferred Stock"), which Securities will be in an aggregate principal amount
equal to the aggregate liquidation preference of, and accrued but unpaid
dividends on, such Preferred Stock on the Closing Date and will be issuable as
provided in this Indenture. All things necessary to make this Indenture a valid
agreement of Holdings, in accordance with its terms, have been done, and
Holdings has done all things necessary to make the Securities, when executed by
Holdings and authenticated and delivered by the Trustee hereunder and duly
issued by Holdings, the valid obligations of Holdings as hereinafter provided.
This Indenture is subject, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act of
1939, as amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders,
as follows.
ARTICLE 1.
Definitions and Incorporation by Reference
SECTION 1.1 Definitions.
"Acceleration Notice" has the meaning provided in Section 6.2
of this Indenture.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of any Person and its consolidated Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of such Person (other than a
Subsidiary of such Person) in which any other Person (other than such Person or
any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to such Person or any
<PAGE>
of its Subsidiaries by such other Person during such period; (ii) solely for the
purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of Section 4.4 of this Indenture
(and in such case, except to the extent includible pursuant to clause (i)
above), the net income (or loss) of such Person accrued prior to the date it
becomes a Subsidiary of any other Person or is merged into or consolidated with
such other Person or any of its Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by such other Person or any of
its Subsidiaries; (iii) the net income (or loss) of any Subsidiary of any Person
to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of such net income is not at the time permitted
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Subsidiary; (iv) any gains or losses (on an after-tax basis) attributable
to Asset Sales; (v) any amounts paid or accrued as dividends on preferred stock
of such Person or preferred stock of any Subsidiary of such Person; and (vi) all
extraordinary gains and extraordinary losses; provided that, solely for the
purposes of calculating the Interest Coverage Ratio (and in such case, except to
the extent includible pursuant to clause (i) above), "Adjusted Consolidated Net
Income" of Holdings shall include the amount of all cash dividends received by
Holdings or any Subsidiary of Holdings from an Unrestricted Subsidiary.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. For purposes of this
definition, neither the Bank Agent nor any Bank nor any affiliate of any of them
shall be deemed to be an Affiliate of Holdings or any Subsidiary of Holdings.
"Agent" means any Registrar, Paying Agent, authenticating
agent or co-registrar.
"Asset Acquisition" means (i) an investment by Holdings or any
of its Subsidiaries in any other Person pursuant to which such Person shall
become a Subsidiary of Holdings or any of its Subsidiaries or shall be merged
into or consolidated with Holdings or any of its Subsidiaries or (ii) an
acquisition by Holdings or any of its Subsidiaries of the property and assets of
any Person other than Holdings or any of its Subsidiaries that constitute
substantially all of an operating unit or business of such Person.
-2-
<PAGE>
"Asset Disposition" means the sale or other disposition by
Holdings or any of its Subsidiaries (other than to Holdings or another
Subsidiary of Holdings) of (i) all or substantially all of the capital stock of
any Subsidiary of Holdings or (ii) all or substantially all of the property and
assets that constitute an operating unit or business of Holdings or any of its
Subsidiaries.
"Asset Sale" means, with respect to any Person, any sale,
transfer or other disposition (including by way of merger, consolidation or
sale-leaseback transaction) in one transaction or a series of related
transactions by such Person or any of its Subsidiaries to any Person other than
Holdings or any of its Subsidiaries of (i) all or any of the capital stock of
any Subsidiary of such Person, (ii) all or substantially all of the property and
assets of an operating unit or business of such Person or any of its
Subsidiaries or (iii) any other property and assets of such Person or any of its
Subsidiaries outside the ordinary course of business of such Person or such
Subsidiary and, in each case, that is not governed by the provisions of Article
5 of this Indenture; provided that sales or other dispositions of inventory,
receivables and other current assets shall not be included within the meaning of
such term.
"Average Life" means, at any date of determination with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the product of (A) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(B) the amount of such principal payment by (ii) the sum of all such principal
payments.
"Bank Agent" means Bankers Trust Company, as co-arranger and
administrative agent for the Banks pursuant to the Silgan Credit Agreement, and
any successor or successors thereto.
"Banks" means the lenders who are from time to time parties to
the Silgan Credit Agreement.
"Board of Directors" means the Board of Directors of Holdings
(or any successor to Holdings) or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by
the Secretary or an Assistant Secretary of Holdings to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in The City of New York, or in the city of
the Corporate Trust Office of the Trustee, are authorized by law to close.
-3-
<PAGE>
"capital stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock of such Person, including,
without limitation, all common stock and preferred stock.
"Capitalized Lease" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and "Capitalized Lease Obligation" means the rental obligations, as aforesaid,
under such lease.
"Change of Control" means such time as (i) (A) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than MSLEF II, D. Greg Horrigan, R. Philip Silver and their respective
Affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 40% of the total voting power of the then outstanding
Voting Stock of Holdings and (B) MSLEF II, D. Greg Horrigan, R. Philip Silver
and their respective Affiliates beneficially own, directly or indirectly, less
than 25% of the total voting power of the then outstanding Voting Stock of
Holdings; (ii) individuals who at the beginning of any period of two consecutive
calendar years constituted the Board of Directors (together with any new
directors whose election by the Board of Directors or whose nomination for
election by Holdings' shareholders was approved by a vote of at least two-thirds
of the members of the Board of Directors then still in office who either were
members of the Board of Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the Board of Directors then in
office; or (iii) Holdings shall not beneficially own, directly or indirectly, at
least a majority of the issued and outstanding Voting Stock of Silgan other than
as a result of a Holdings Merger.
"Change of Control Offer" has the meaning provided in Section
4.8 of this Indenture.
"Change of Control Payment" has the meaning provided in
Section 4.8 of this Indenture.
"Change of Control Payment Date" has the meaning provided in
Section 4.8 of this Indenture.
"Closing Date" means the date on which the Securities are
originally issued under this Indenture in exchange for all of the Exchangeable
Preferred Stock in accordance with the terms of the Exchangeable Preferred
Stock.
-4-
<PAGE>
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"common stock" means, with respect to any Person, any and all
shares, interests, participations and other equivalents (however designated,
whether voting or non-voting) of common stock of such Person, including, without
limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person for
any period, the sum of the amounts for such period of (i) Adjusted Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) income taxes (other than
income taxes (either positive or negative) attributable to extraordinary and
nonrecurring gains or losses or sales of assets), (iv) depreciation expense, (v)
amortization expense and (vi) all other noncash items reducing Adjusted
Consolidated Net Income, less all noncash items increasing Adjusted Consolidated
Net Income, all as determined on a consolidated basis for such Person and its
Subsidiaries in conformity with GAAP; provided that, if a Person has any
Subsidiary that is not a Wholly Owned Subsidiary of such Person, Consolidated
EBITDA of such Person shall be reduced by an amount equal to (A) the Adjusted
Consolidated Net Income of such Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding common stock of such Subsidiary not owned on
the last day of such period by such Person or any Subsidiary of such Person
divided by (2) the total number of shares of outstanding common stock of such
Subsidiary on the last day of such period.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the aggregate amount of interest in respect of
Indebtedness (including amortization of original issue discount on any
Indebtedness and the interest portion of any deferred payment obligation,
calculated in accordance with the interest method of accounting; all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing; and the net costs associated with
Interest Rate Agreements) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or accrued by such Person during such period; excluding, however, (i) any amount
of such interest of any Subsidiary of such Person if the net income (or loss) of
such Subsidiary is excluded in the calculation of Adjusted Consolidated Net
Income for such Person pursuant to clause (iii) of the definition thereof (but
only in the same proportion as the net income (or loss) of such Subsidiary is
excluded from the calculation of Adjusted Consolidated Net Income for such
Person pursuant to clause (iii) of the definition thereof), (ii) any premiums,
fees and expenses (and any amortization thereof) payable in connection with the
-5-
<PAGE>
Refinancing and (iii) amortization of any other deferred financing costs, all as
determined on a consolidated basis in conformity with GAAP.
"Consolidated Net Tangible Assets" means the total amount of
assets of Holdings and its Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of Holdings and its consolidated Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recently available consolidated balance sheet of Holdings and
its consolidated Subsidiaries prepared in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available consolidated
balance sheet of Holdings and its consolidated Subsidiaries (which shall be as
of a date not more than 60 days prior to the date of such computation), less any
amounts attributable to Redeemable Stock or any equity security convertible into
or exchangeable for Indebtedness, the cost of treasury stock and the principal
amount of any promissory notes receivable from the sale of capital stock of
Holdings or any of its Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
"Containers" means Silgan Containers Corporation, a Delaware
corporation and an indirectly Wholly Owned Subsidiary of Holdings.
"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular time,
be principally administered, which office is, at the date of this Indenture,
located at 111 Westminster Street, Mail Code 199, Providence, RI 02903,
Attention: Corporate Trust Administration.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect Holdings or any of its Subsidiaries against fluctuations in currency
values to or under which Holdings or any of its Subsidiaries is a party or a
beneficiary on the date of this Indenture or becomes a party or a beneficiary
hereafter.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
-6-
<PAGE>
"Designated Senior Indebtedness" means (i) Indebtedness under
the Silgan Credit Agreement, including refinancings thereof, and (ii) any other
Indebtedness constituting Senior Indebtedness that, at any date of
determination, has an aggregate principal amount of at least $50 million and is
specifically designated by Holdings or the Successor Corporation in the
instrument creating or evidencing such Senior Indebtedness as "Designated Senior
Indebtedness."
"Discount Debentures" means Holdings' 13-1/4% Senior Discount
Debentures due 2002.
"Event of Default" has the meaning provided in Section 6.1 of
this Indenture.
"Excess Proceeds" has the meaning provided in Section 4.9 of
this Indenture.
"Excess Proceeds Offer" has the meaning provided in Section
4.9 of this Indenture.
"Excess Proceeds Payment" has the meaning provided in Section
4.9 of this Indenture.
"Excess Proceeds Payment Date" has the meaning provided in
Section 4.9 of this Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Closing Date applied on a basis
consistent with the principles, methods, procedures and practices employed in
the preparation of Holdings audited financial statements, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP, except
that calculations made for purposes of determining compliance with the terms of
the covenants set forth In Article 4 and Article 5 and with other provisions of
this Indenture shall be made without giving effect to (i) the amortization of
any expenses incurred in connection with the Refinancing, and (ii) except as
otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
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foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay or advance or supply funds for the purchase or
payment of such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Holder" or "Securityholder" means the registered holder of
any Security.
"Holdings" means the party named as such in this Indenture
until a successor replaces it pursuant to Article 5 of this Indenture and
thereafter means the successor.
"Holdings Merger" means the merger or consolidation of
Holdings and Silgan or either of their successors.
"Holdings Organization Agreement" means the Amended and
Restated Organization Agreement dated as of December 21, 1993, among Holdings,
R. Philip Silver, D. Greg Horrigan, MSLEF II, Bankers Trust New York Corporation
and First Plaza Group Trust.
"Incur" means, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness; provided that neither the accrual of interest (whether such
interest is payable in cash or kind) nor the accretion of original issue
discount shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
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assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person, (viii) all obligations of such Person in respect of
borrowed money under the Silgan Credit Agreement, the Silgan Notes, the Discount
Debentures and any Guarantees thereof and (ix) to the extent not otherwise
included in this definition, all obligations of such Person under Currency
Agreements and Interest Rate Agreements. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations at such date; provided that the amount outstanding at any time of
any Indebtedness issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and, in clarification of this definition, any unused commitment under the Silgan
Credit Agreement or any other agreement relating to Indebtedness shall not be
treated as outstanding.
"Indenture" means this Indenture as originally executed or as
it may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Interest Coverage Ratio" means, with respect to any Person on
any Transaction Date, the ratio of (i) the aggregate amount of Consolidated
EBITDA of such Person for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to such
Transaction Date to (ii) the aggregate Consolidated Interest Expense of such
Person during such four fiscal quarters. In making the foregoing calculation,
(A) pro forma effect shall be given to (1) any Indebtedness Incurred subsequent
to the end of the four-fiscal-quarter period referred to in clause (i) and prior
to the Transaction Date (other than Indebtedness Incurred under a revolving
credit or similar arrangement) to the extent of the commitment thereunder (or
under any predecessor revolving credit or similar arrangement on the last day of
such period), (2) any Indebtedness Incurred during such period to the extent
such Indebtedness is outstanding at the Transaction Date and (3) any
Indebtedness to be Incurred on the Transaction Date, in each case as if such
Indebtedness had been Incurred on the first day of such four-fiscal-quarter
period and after giving effect to the application of the proceeds thereof; (B)
Consolidated Interest Expense attributable to interest on any Indebtedness
(whether existing or being Incurred) computed on a pro forma basis and bearing a
floating interest rate shall be computed as if the rate in effect on the date of
computation (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
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12 months) had been the applicable rate for the entire period; (C) there shall
be excluded from Consolidated Interest Expense any Consolidated Interest Expense
related to any amount of Indebtedness that was outstanding during such
four-fiscal-quarter period or thereafter but which is not outstanding or which
is to be repaid on the Transaction Date, except for Consolidated Interest
Expense accrued (as adjusted pursuant to clause (B)) during such
four-fiscal-quarter period under a revolving credit or similar arrangement) to
the extent of the commitment thereunder (or under any successor revolving credit
or similar arrangement) on the Transaction Date; (D) pro forma effect shall be
given to Asset Dispositions and Asset Acquisitions that occur during such
four-fiscal-quarter period or thereafter and prior to the Transaction Date
(including any Asset Acquisition to be made with the Indebtedness Incurred
pursuant to clause (i) above) as if they had occurred on the first day of such
four-fiscal-quarter period; (E) with respect to any such four-fiscal-quarter
period commencing prior to the Refinancing, the Refinancing shall be deemed to
have taken place on the first day of such period; and (F) pro forma effect shall
be given to asset dispositions and asset acquisitions that have been made by any
Person that has become a Subsidiary of Holdings or has been merged with or into
Holdings or any Subsidiary of Holdings during the four-fiscal-quarter period
referred to above or subsequent to such period and prior to the Transaction Date
and that would have been Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Subsidiary of Holdings as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such period.
"Interest Payment Date" means each semiannual interest payment
date on January 15 and July 15 of each year, commencing with the first such date
to occur after the Closing Date.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect Holdings or any of its Subsidiaries against
fluctuations in interest rates to or under which Holdings or any of its
Subsidiaries is a party or a beneficiary or becomes a party or a beneficiary
thereafter.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor internal revenue code.
"Investment" means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of any Person or its Subsidiaries)
or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
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services for the account or use of others) or any purchase or acquisition of
capital stock, bonds, notes, debentures or other similar instruments issued by,
any other Person. For purposes of the definition of "Unrestricted Subsidiary"
and Section 4.4 of this Indenture, (i) "Investment" shall include the fair
market value of the net assets of any Subsidiary of Holdings at the time that
such Subsidiary of Holdings is designated an Unrestricted Subsidiary and shall
exclude the fair market value of the net assets of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Subsidiary of
Holdings and (ii) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in each
case as determined by the Board of Directors in good faith.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
"Management Agreements" means the amended and restated
management services agreements each dated as of December 21, 1993, between S&H
and Holdings, S&H and Silgan, S&H and Containers and S&H and Plastics, as the
same may be further amended.
"MSLEF II" means The Morgan Stanley Leveraged Equity Fund II,
L. P., a Delaware limited partnership.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to Holdings or any Subsidiary of Holdings) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale computed without
regard to the consolidated results of operations of Holdings and its
Subsidiaries, taken as whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by Holdings
or any Subsidiary of Holdings as a reserve against any liabilities associated
with such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
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matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP.
"Officer" means, with respect to Holdings, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Controller, the Treasurer or any Assistant Treasurer, or the Secretary or any
Assistant Secretary.
"Officers' Certificate" means a certificate signed by two
Officers. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Opinion of Counsel" means a written opinion signed by legal
counsel who is acceptable to the Trustee. Such counsel may be an employee of
(except for purposes of Opinions of Counsel delivered pursuant to Article 8 of
this Indenture) or counsel for Holdings or the Trustee. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
"Paying Agent" has the meaning provided in Section 2.3, except
that, for the purposes of Article 8, the Paying Agent shall not be Holdings or a
Subsidiary of Holdings or an Affiliate of any of them. The term "Paying Agent"
includes any additional Paying Agent.
"Payment Blockage Period" has the meaning set forth in Section
10.2 of this Indenture.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization including a government
or political subdivision or an agency or instrumentality thereof.
"Plastics" means Silgan Plastics Corporation, a Delaware
corporation and an indirectly Wholly Owned Subsidiary of Holdings.
"preferred stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of preferred or preference stock of such Person,
including, without limitation, the Exchangeable Preferred Stock.
"principal" of a debt security, including the Securities,
means the principal amount due on the Stated Maturity as shown on such debt
security.
"Redeemable Stock" means any class or series of capital stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Securities, (ii) redeemable at the option of
the holder of such class or series of capital stock at any time prior to the
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Stated Maturity of the Securities or (iii) convertible into or exchangeable for
capital stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the Securities; provided that
any capital stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require Holdings to repurchase or
redeem such capital stock upon the occurrence of an "asset sale" or a "change of
control" occurring prior to the Stated Maturity of the Securities shall not
constitute Redeemable Stock if the "asset sale" or "change of control" provision
applicable to such capital stock is no more favorable to the holders of such
capital stock than the provisions contained in Sections 4.8 and 4.9 of this
Indenture and such capital stock specifically provides that Holdings will not
repurchase or redeem any such capital stock pursuant to such provisions prior to
Holdings' repurchase of Securities required to be repurchased by Holdings under
Sections 4.8 and 4.9 of this Indenture.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which such Security is to be redeemed pursuant
to this Indenture.
"Refinancing" means, collectively, (i) the original issuance
of the Exchangeable Preferred Stock on the date hereof and the use of the
proceeds therefrom and (ii) the incurrence of $125 million of additional B term
loans in July 1996 and $17.4 million of working capital loans in June 1996 under
the Silgan Credit Agreement and the use of such proceeds to redeem a portion of
the Discount Debentures.
"Registrar" has the meaning provided in Section 2.3 of this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the January 1 or July 1 (whether or not January 1 or July 1
is a Business Day), as the case may be, next preceding such Interest Payment
Date.
"Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee in its Corporate Trust Office or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning specified in Section 4.4
of this Indenture.
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"Restricted Subsidiary" means any Subsidiary of Holdings other
than an Unrestricted Subsidiary.
"S&H" means S&H, Inc., a company wholly owned by D. Greg
Horrigan and R. Philip Silver.
"Securities" means any of the securities, as defined in the
first paragraph of the recitals hereof, that are authenticated and delivered
under this Indenture.
"Security Register" has the meaning provided in Section 2.3 of
this Indenture.
"Senior Indebtedness" means the following obligations of
Holdings or a Successor Corporation: (i) all Indebtedness and other monetary
obligations of Holdings or a Successor Corporation under (or in respect of) the
Silgan Credit Agreement, the Discount Debentures and, in the event of a Holdings
Merger or similar transaction, the Silgan Notes (including any agreement
pursuant to which the Silgan Notes or the Discount Debentures were issued), any
Interest Rate Agreement or any Currency Agreement, (ii) all other Indebtedness
of Holdings or a Successor Corporation (other than Indebtedness evidenced by the
Securities), including principal and interest on such Indebtedness, unless such
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is pari passu with, or
subordinated in right of payment to, the Securities and (iii) all fees, expenses
and indemnities payable in connection with the Silgan Credit Agreement, the
Silgan Notes (including any agreement pursuant to which the Silgan Notes are
issued) and, if applicable, Currency Agreements and Interest Rate Agreements;
provided that the term "Senior Indebtedness" shall not include (A) any
Indebtedness of Holdings or a Successor Corporation that, when Incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code, was without recourse to Holdings or a Successor Corporation,
(B) any Indebtedness of Holdings or a Successor Corporation to a Subsidiary of
Holdings or a Successor Corporation or to a joint venture in which Holdings or a
Successor Corporation has an interest, (C) any Indebtedness of Holdings or a
Successor Corporation (other than such Indebtedness already described in clause
(i) above) of the type described in clause (ii) above and not permitted by
Section 4.3 of this Indenture, (D) any repurchase, redemption or other
obligation in respect of Redeemable Stock, (E) any Indebtedness to any employee
or officer of Holdings or a Successor Corporation or any of its Subsidiaries,
(F) any liability for federal, state, local or other taxes owed or owing by
Holdings or a Successor Corporation or (G) any Trade Payables. "Senior
Indebtedness" will also include interest accruing subsequent to events of
bankruptcy of Holdings or a Successor Corporation and its Subsidiaries at the
rate provided for in the document governing such Indebtedness, whether or not
such interest is an allowed claim enforceable against the debtor in a
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bankruptcy case under federal bankruptcy law.
"Shareholder Subordinated Notes" has the same meaning given
such term in the Silgan Credit Agreement (including the exhibits thereto) as in
effect on the Closing Date.
"Significant Subsidiary" means, at any date of determination,
any Subsidiary of Holdings that, together with its Subsidiaries, (i) for the
most recent fiscal year of Holdings, accounted for more than 10% of the
consolidated revenues of Holdings or (ii) as of the end of such fiscal year, was
the owner of more than 10% of the consolidated assets of Holdings, all as set
forth on the most recently available consolidated financial statements of
Holdings and its consolidated Subsidiaries for such fiscal year prepared in
conformity with GAAP.
"Silgan" means Silgan Corporation, a Delaware corporation and
a Wholly Owned Subsidiary of Holdings.
"Silgan Credit Agreement" means the Credit Agreement, dated as
of August 1, 1995, as amended, among Silgan, Containers, Plastics, the Banks
party thereto and the Bank Agent and Bank of America Illinois, as co-arranger
and as documentation agent, together with the related documents thereof
(including without limitation any Guarantees and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented, replaced or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing or otherwise
restructuring (including, but not limited to, the inclusion of additional
borrowers thereunder that are Subsidiaries of Silgan whose obligations are
Guaranteed by Silgan thereunder and who are included as additional borrowers
thereunder) all or any portion of the Indebtedness under such agreement or any
successor agreement; provided that, with respect to any agreement providing for
the refinancing of Indebtedness under the Silgan Credit Agreement, such
agreement shall only be the Silgan Credit Agreement under the Indenture if a
notice to that effect is delivered by Holdings or Silgan to the Trustee and
there shall be at any time only one debt instrument that is the Silgan Credit
Agreement under the Indenture.
"Silgan Indebtedness" means any of the following Indebtedness
of Silgan and/or any of its Subsidiaries: (i) Indebtedness outstanding at any
time in an aggregate principal amount not to exceed the sum of (a) the aggregate
outstanding Indebtedness and unutilized commitments under the Silgan Credit
Agreement on the date of the original issuance of the Exchangeable Preferred
Stock plus (b) an aggregate amount not to exceed $200 million outstanding at any
time; (ii) Indebtedness issued in exchange for or the net proceeds of which are
used directly or indirectly to refinance, redeem or repurchase all (but not less
than all) of the outstanding Securities; (iii) $150 million outstanding at any
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time of Capitalized Lease Obligations; (iv) Indebtedness in respect of letters
of credit (other than letters of credit issued pursuant to the Silgan Credit
Agreement) in an aggregate amount not to exceed $30 million outstanding at any
time; (v) Indebtedness in an aggregate amount not to exceed $50 million
outstanding at any time; provided that such Indebtedness (a) by its terms or by
the terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is expressly made subordinate in right of payment to the Securities at
least to the extent that the Securities are subordinated to Senior Indebtedness,
(b) does permit or require payments of interest in cash prior to July 15, 2000,
(c) does not mature prior to July 15, 2006, (d) the Average Life of such
Indebtedness (determined as of the date of Incurrence of such Indebtedness) is
greater than the remaining Average Life of the Securities, and (e) by its terms
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, provides that no payments of principal of such
Indebtedness by way of sinking fund, mandatory redemption or otherwise
(including defeasance) may be made by Silgan (including, without limitation, at
the option of the holder thereof other than an option given to a holder pursuant
to an "asset sale" or "change of control" provision that is no more favorable to
the holders of such Indebtedness than the provisions contained in Sections 4.8
and 4.9 of this Indenture and such Indebtedness specifically provides that
Silgan will not repurchase or redeem such Indebtedness pursuant to such
provisions prior to Silgan's repurchase of the Securities required to be
repurchased by Silgan under Sections 4.8 and 4.9 of this Indenture at any time
prior to July 15, 2006; and (vi) any Indebtedness of Silgan or any of its
Subsidiaries that is permitted to be Incurred under the Silgan Notes Indenture
as in effect on the date hereof (other than under clauses (i), (ix) and (x) of
the second paragraph of part (a) of Section 4.03 of the Silgan Notes Indenture
(which clauses are similar to clauses (i), (iv) and (v) above other than the
dollar amounts)).
"Silgan Notes" means Silgan's 11-3/4% Senior Subordinated
Notes that mature on June 15, 2002.
"Stated Maturity" means, with respect to any debt security or
any installment of interest thereon, the date specified in such debt security as
the fixed date on which any principal of such debt security or any such
installment of interest is due and payable.
"Stock Based Plan" means any stock option plan, stock
appreciation rights plan or other similar plan or agreement of Holdings or any
Subsidiary of Holdings relating to capital stock of Holdings or any Subsidiary
of Holdings established and in effect from time to time, including, without
limitation, the Holdings Organization Agreement or any stock option plan, stock
appreciation rights plan or other similar plan or agreement for the benefit of
employees of Holdings and its Subsidiaries.
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"Subordinated Obligations" means any principal of, premium, if
any, or interest on the Securities payable pursuant to the terms of the
Securities or upon acceleration, including any amounts received upon the
exercise of rights of rescission or other rights of action (including claims for
damages) or otherwise, to the extent relating to the purchase price of the
Securities or amounts corresponding to such principal, premium, if any, or
interest on the Securities.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
outstanding Voting Stock is owned, directly or indirectly, by Holdings or any
one or more other Subsidiaries of Holdings, or by such Person and one or more
other Subsidiaries of such Person; provided that, except as the term
"Subsidiary" is used in the definition of "Unrestricted Subsidiary" described
below, an Unrestricted Subsidiary shall not be deemed to be a Subsidiary of
Holdings.
"Successor Corporation" means (i) the surviving entity of any
Holdings Merger, (ii) Silgan, upon the assumption by Silgan of the liabilities
of Holdings represented by the Securities or (iii) any successor corporation to
Silgan that becomes the successor obligor on the Securities, whether by merger,
consolidation, sale of assets, assumption of liabilities or otherwise.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939, as amended from time to time (15 U.S. Code ss.ss. 77aaa-77bbb).
"Trade Payables" means, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Transaction Date" means, with respect to the Incurrence of
any Indebtedness by Holdings or any of its Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph
of this Indenture until a successor replaces it in accordance with the
provisions of Article 7 of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Act of
Title 11 of the United States Code, as amended from time to time hereafter, or
any successor federal bankruptcy law.
"Unrestricted Subsidiary" means (i) any Subsidiary of Holdings
that at the time of determination shall be designated an Unrestricted
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Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of Holdings (including any newly acquired or newly formed
Subsidiary of Holdings) to be an Unrestricted Subsidiary unless such Subsidiary
owns any capital stock of, or owns or holds any Lien on any property of,
Holdings or any other Subsidiary of Holdings that is not a Subsidiary of the
Subsidiary to be so designated; provided that either (a) the Subsidiary to be so
designated has total assets of $1,000 or less or (b) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under Section
4.4 of this Indenture. The Board of Directors may designate any Unrestricted
Subsidiary to be a Subsidiary of Holdings; provided that immediately after
giving effect to such designation (1) Holdings could Incur $1.00 of additional
Indebtedness under the first paragraph in part (a) of Section 4.3 of this
Indenture and (2) no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by filing promptly with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers Certificate certifying that
such designation complied with the foregoing provisions.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Securities, and shall also include a depository
receipt issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"Voting Stock" means, with respect to any Person, capital
stock of any class or kind ordinarily having the power to vote for the election
of directors of such Person.
"Wholly Owned Subsidiary" means, (i) with respect to Silgan
and Holdings, Plastics and Containers, and (ii) with respect to any Person, any
Subsidiary of such Person if all of the common stock or other similar equity
ownership interests (but not including preferred stock) in such Subsidiary
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(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by such Person.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the 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; and
"obligor" on the indenture securities means Holdings 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 a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.3 Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in
the plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "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;
(vii) all ratios and computations based on GAAP contained in
this Indenture shall be computed in accordance with the definition of
GAAP set forth above; and
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(viii) all references to Sections or Articles refer to
Sections or Articles of this Indenture unless otherwise indicated.
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 annexed hereto
as Exhibit A. The Securities may have notations, legends or endorsements
required by law, stock exchange agreements to which Holdings is subject or
usage. Holdings shall approve the form of the Securities and any notation,
legend or endorsement on the Securities. Each Security shall be dated the date
of its authentication.
The terms and provisions contained in the form of the
Securities annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Indenture. To the extent applicable, Holdings and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
The definitive Securities shall be printed, lithographed,
engraved or produced by any combination of these methods on a steel engraved
border or steel engraved borders or may be produced in any other manner, all as
determined by the Officers executing such Securities, as evidenced by their
execution of such Securities.
SECTION 2.2 Execution, Authentication and Denominations. Two
Officers shall execute the Securities for Holdings by facsimile or manual
signature in the name and on behalf of Holdings. The seal of Holdings shall be
reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee or authenticating agent authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee or an authenticating agent shall authenticate for
original issue on the Closing Date Securities in the aggregate principal amount
equal to the aggregate liquidation preference of, and accrued but unpaid
dividends on, the Exchangeable Preferred Stock on the Closing Date, upon a
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written order set forth in an Officers' Certificate. Such order shall specify
the amount of Securities to be authenticated and the date on which the original
issue of Securities is to be authenticated.
The Trustee may appoint an authenticating agent to
authenticate Securities. 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 authenticating
agent. An authenticating agent has the same rights as an Agent to deal with
Holdings or an Affiliate of Holdings.
The Securities shall be issuable only in fully registered form
without coupons, and only in denominations of $1.00 in original principal amount
and integral multiples thereof.
SECTION 2.3 Registrar and Paying Agent. Holdings shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar"), an office or agency where
Securities may be presented for payment (the "Paying Agent") and an office or
agency where notices and demands to or upon Holdings in respect of the
Securities and this Indenture may be served. Holdings shall cause the Registrar
to keep a register of the Securities and of their transfer and exchange (the
"Security Register"). Holdings may have one or more co-registrars and one or
more additional Paying Agents.
Holdings may enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. Holdings shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If Holdings fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue. Holdings may
remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by Holdings and such successor Agent and delivered
to the Trustee or (ii) notification to the Trustee that the Trustee shall serve
as such Agent until the appointment of a successor Agent in accordance with
clause (i) of this proviso. Holdings, any Subsidiary of Holdings, or any
Affiliate of any of them may act as Paying Agent, Registrar or co-registrar.
Holdings initially appoints the Trustee as Registrar, Paying
Agent, authenticating agent and agent for service of notice and demands. If, at
any time, the Trustee is not the Registrar, the Registrar shall make available
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to the Trustee on or before each Interest Payment Date and at such other times
as the Trustee may reasonably request, the names and addresses of the Holders as
they appear in the Security Register.
SECTION 2.4 Paying Agent to Hold Money in Trust. Not later
than each due date of the principal, premium, if any, and interest on any
Securities, Holdings shall deposit with the Paying Agent money sufficient to pay
such principal, premium, if any, and interest so becoming due (or, in the case
of interest, on or prior to July 15, 2000, Securities, executed and
authenticated in accordance herewith, in a principal amount equal to the
interest so becoming due, if Holdings has elected to pay such interest in
additional Securities). Holdings shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money (or Securities, as the case may
be) held by the Paying Agent for the payment of principal of, premium, if any,
and interest on the Securities (whether such money (or Securities, as the case
may be) has been paid to it by Holdings or any other obligor on the Securities),
and such Paying Agent shall promptly notify the Trustee of any default by
Holdings (or any other obligor on the Securities) in making any such payment.
Holdings at any time may require a Paying Agent to pay all money (or Securities,
as the case may be) held by it to the Trustee and account for any funds (or
Securities, as the case may be) 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 pay all money (or Securities, as the case
may be) held by it to the Trustee and to account for any funds (or Securities,
as the case may be) disbursed. Upon doing so, the Paying Agent shall have no
further liability for the money (or Securities, as the case may be) so paid over
to the Trustee. If Holdings or any Subsidiary of Holdings or any Affiliate of
any of them acts as Paying Agent, it will, on or before each due date of any
principal of, premium, if any, or interest on the Securities, segregate and hold
in a separate trust fund for the benefit of the Holders a sum (or Securities, as
the case may be) sufficient to pay such principal, premium, if any, or interest
so becoming due until such sums (or Securities, as the case may be) shall be
paid to such Holders or otherwise disposed of as provided in this Indenture, and
will promptly notify the Trustee of its action or failure to act.
SECTION 2.5 Transfer and Exchange. When Securities are
presented to the Registrar or a co-registrar with a request to register the
transfer or to exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar shall register the transfer or
make the exchange as requested if its requirements for such transactions are
met. To permit registrations of transfers and exchanges, Holdings shall execute
and the Trustee shall authenticate Securities at the Registrar's request. No
service charge shall be made for any registration of transfer or exchange of the
Securities, but Holdings may require payment of a sum sufficient to cover any
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transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon exchanges pursuant to Section 2.8, 3.8 or 9.4 of this Indenture).
The Registrar need not register the transfer or exchange of
Securities for a period of 15 days before a selection of Securities to be
redeemed.
SECTION 2.6 Replacement Securities. If a mutilated Security is
surrendered to the Trustee or if the Holder certifies that the Security has been
lost, destroyed or wrongfully taken, Holdings shall issue and the Trustee shall
authenticate a replacement Security of like tenor and principal amount. If
required by the Trustee or Holdings, an indemnity bond must be furnished that is
sufficient in the judgment of both the Trustee and Holdings to protect Holdings,
the Trustee or any Agent from any loss that any of them may suffer if a Security
is replaced. Holdings may charge such Holder for its expenses in replacing a
Security. In case any such mutilated, lost, destroyed or wrongfully taken
Security has become or is about to become due and payable, Holdings in its
discretion may pay such Security instead of issuing a new Security in
replacement thereof.
Every replacement Security is an additional obligation of
Holdings and shall be entitled to the benefits of this Indenture.
SECTION 2.7 Outstanding Securities. Securities outstanding at
any time are all Securities that have been authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation and those
described in this Section 2.7 as not outstanding. A Security does not cease to
be outstanding because Holdings or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.6, it ceases
to be outstanding unless and until the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than Holdings or an Affiliate of
Holdings) holds on a maturity date money sufficient to pay the principal amount
of, premium, if any, and interest on, any Securities payable on that date, then
on and after that date such Securities cease to be outstanding and interest on
them shall cease to accrue.
SECTION 2.8 Temporary Securities. Until definitive Securities
are ready for delivery, Holdings may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the Officers executing the
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temporary Securities, as evidenced by their execution of such temporary
Securities. Without unreasonable delay, Holdings shall prepare and the Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
Until so exchanged, the temporary Securities shall be entitled to the same
benefits under this Indenture as definitive Securities.
SECTION 2.9 Cancellation. Holdings 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 shall cancel all Securities surrendered for
transfer, exchange, payment or cancellation, shall destroy them in accordance
with its normal procedure and shall notify the Registrar of the same. Holdings
may not issue new Securities to replace Securities it has paid in full or
delivered to the Trustee for cancellation.
SECTION 2.10 CUSIP Numbers. Holdings in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and the Trustee shall use
CUSIP numbers in notices of redemption or exchange as a convenience to Holders;
provided that any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption or exchange and that reliance may be
placed only on the other identification numbers printed on the Securities.
SECTION 2.11 Defaulted Interest. If Holdings defaults in a
payment of interest on the Securities, it shall pay, or shall deposit with the
Paying Agent money in immediately available funds, or, on or prior to July 15,
2000, Securities, if Holdings has elected to pay such interest in additional
Securities, sufficient to 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. A special record date, as used in
this Section 2.11 with respect to the payment of any defaulted interest, shall
mean the 15th day next preceding the date fixed by Holdings for the payment of
defaulted interest, whether or not such day is a Business Day. At least 15 days
before the subsequent special record date, Holdings shall mail to each Holder
and to the Trustee a notice that states the subsequent special record date, the
payment date and the amount of defaulted interest to be paid.
ARTICLE 3.
Redemption
SECTION 3.1 Right of Redemption.
(a) Except as otherwise provided in Sections 3.1(b),
4.8 and 4.9 of this Indenture, the Securities may be redeemed at any time on or
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after July 15, 2000, at Holdings' option, in whole or in part, at the Redemption
Prices specified in the form of the Securities annexed hereto as Exhibit A, plus
an amount in cash equal to all accumulated and unpaid interest thereon to the
Redemption Date, subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date.
(b) On or prior to July 15, 2000, Holdings or a
Successor Corporation may redeem all (but not less than all) outstanding
Securities, at a Redemption Price equal to 110% of the principal amount thereof,
plus accrued and unpaid interest to the Redemption Date, out of the net proceeds
of any sale of its common stock, provided that such redemption occurs within 180
days after consummation of such sale.
SECTION 3.2 Notices to Trustee. If Holdings elects to redeem
Securities pursuant to Section 3.1, it shall notify the Trustee in writing of
the Redemption Date and the principal amount of Securities to be redeemed.
Holdings shall give each notice provided for in this Section
3.2 in an Officers' Certificate and shall furnish to the Trustee an Opinion of
Counsel as required by Section 11.3(ii) at least 45 days before the Redemption
Date (unless a shorter period shall be satisfactory to the Trustee).
SECTION 3.3 Selection of Securities to Be Redeemed. If less
than all of the Securities are to be redeemed at any time, 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 are
listed or, if the Securities are not listed on a national securities exchange,
on a pro rata basis, by lot or by such method as the Trustee in its sole
discretion shall deem fair and appropriate; provided that no Securities of $1.00
in original principal amount shall be redeemed in part; and provided further
that, if the selection of the Securities for redemption is required to comply
with the requirements of any national securities exchange on which the
Securities are listed, the Trustee shall be entitled to rely on Holdings'
written instructions regarding such requirements of any such national securities
exchange, and, in the absence of such instructions, shall be entitled to assume
that no such requirements are applicable to such redemption.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption. Securities in
denominations of $1.00 in original principal amount may only be redeemed in
whole. The Trustee may select for redemption portions (equal to $1.00 in
original principal amount or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1.00 in original principal
amount. Provisions of this Indenture that apply to Securities called for
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redemption also apply to portions of Securities called for redemption. The
Trustee shall notify Holdings and any Registrar promptly in writing of the
Securities or portions of Securities to be called for redemption.
SECTION 3.4 Notice of Redemption. At least 30 days but not
more than 60 days before a Redemption Date, Holdings shall mail a notice of
redemption by first class mail to each Holder whose Securities are to be
redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be
surrendered to the Paying Agent in order to collect the Redemption
Price;
(v) that, unless Holdings 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 is to receive payment of the Redemption Price plus accrued
interest, if any, to the Redemption Date upon surrender of the
Securities to the Paying Agent;
(vi) that, if any Security is being redeemed in part, the
portion of the principal amount (equal to $1.00 in original principal
amount or any integral multiple thereof) of such Security to be
redeemed and that, on and after the Redemption Date, upon surrender of
such Security, a new Security or Securities in principal amount equal
to the unredeemed portion thereof will be reissued; and
(vii) that, if any Security contains a CUSIP number as
provided in Section 2.10 of this Indenture, no representation is being
made as to the correctness of the CUSIP number either as printed on the
Securities or as contained in the notice of redemption and that
reliance may be placed only on the other identification numbers printed
on the Securities.
At Holdings' request, the Trustee shall give the notice of
redemption in the name and at the expense of Holdings. If, however, Holdings
gives such notice to the Holders, Holdings shall concurrently deliver to the
Trustee an Officers' Certificate stating that such notice has been given.
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SECTION 3.5 Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the Redemption Date and at the Redemption Price. Upon surrender of any
Securities to the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued interest, if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of the Securities.
SECTION 3.6 Deposit of Redemption Price. On or prior to any
Redemption Date, Holdings shall deposit with the Paying Agent (or, if Holdings
is acting as its own Paying Agent, shall segregate and hold in trust as provided
in Section 2.4 of this Indenture) money sufficient to pay the Redemption Price
of and accrued interest, if any, on all Securities to be redeemed on that date
other than Securities or portions thereof called for redemption on that date
that have been delivered by Holdings to the Trustee for cancellation.
SECTION 3.7 Payment of Securities Called for Redemption. If
notice of redemption has been given in the manner provided above, the Securities
or portion of Securities specified in such notice to be redeemed shall become
due and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest, if any, to such Redemption Date, and on and
after such date (unless Holdings shall default in the payment of such Securities
at the Redemption Price and accrued interest, if any, to the Redemption Date, in
which case the principal, until paid, shall bear interest from the Redemption
Date at the rate prescribed in the Securities), such Securities shall cease to
accrue interest. Upon surrender of any Security for redemption in accordance
with a notice of redemption, such Security shall be paid and redeemed by
Holdings at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; provided that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders registered as
such at the close of business on the relevant Record Date.
SECTION 3.8 Securities Redeemed in Part. Upon surrender of any
Security that is redeemed in part, the Trustee shall authenticate for the Holder
a new Security equal in principal amount to the unredeemed portion of such
surrendered Security.
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ARTICLE 4.
Covenants
SECTION 4.1 Payment of Securities. Holdings shall pay the
principal of, premium, if any, and interest on the Securities on the dates and
in the manner provided in the Securities and this Indenture. An installment of
principal, premium, if any, or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than Holdings, a Subsidiary of Holdings,
or any Affiliate of any of them) holds on that date money (or Securities, as the
case may be) designated for and sufficient to pay the installment. If Holdings,
any Subsidiary of Holdings or any Affiliate of any of them acts as Paying Agent,
an installment of principal, premium, if any, or interest shall be considered
paid on the due date if the entity acting as Paying Agent complies with the last
sentence of Section 2.4 of this Indenture.
Holdings shall pay interest on overdue principal, premium, if
any, and overdue installments of interest, to the extent lawful, at the rate per
annum borne by the Securities.
SECTION 4.2 Maintenance of Office or Agency. Holdings will
maintain in the Borough of Manhattan, The City of New York an office or agency
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment and where notices and demands to or upon Holdings
in respect of the Securities and this Indenture may be served. Holdings will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time Holdings shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 11.2 of
this Indenture.
Holdings may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided that no such designation or rescission shall in any
manner relieve Holdings of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. Holdings will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
Holdings hereby initially designates the office of the
Trustee, Fleet National Bank, Corporate Trust Department, 14 Wall Street, 8th
Floor, Window Number 2, New York, New York 10005 as such office of Holdings in
accordance with Section 2.3 of this
Indenture.
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SECTION 4.3 Limitation on Indebtedness. (a) So long as any of
the Securities are outstanding, Holdings shall not, and shall not permit any
Subsidiary (other than Silgan and its Subsidiaries) to, Incur any Indebtedness
(other than the Securities (including any Securities issued in payment of
interest) and Indebtedness existing on the date the Securities are issued)
unless after giving effect to the Incurrence of such Indebtedness and the
receipt and application of the proceeds therefrom, the Interest Coverage Ratio
of Holdings would be greater than 1.75:1.
Notwithstanding the foregoing, Holdings and its Subsidiaries (other
than Silgan and its Subsidiaries) may Incur each and all of the following:
(i) Indebtedness in an aggregate principal amount not to
exceed $100 million outstanding at any time;
(ii) Indebtedness to Holdings or any Restricted Subsidiary;
(iii) Indebtedness issued in exchange for, or the net
proceeds of which are used to exchange, refinance or refund,
outstanding Indebtedness, other than Indebtedness Incurred under
clauses (i) and (viii) and any refinancings thereof, in an amount (or,
if such new Indebtedness provides for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration
thereof, with an original issue price) not to exceed the amount
exchanged, refinanced or refunded (plus premiums, accrued interest,
fees and expenses); provided that Indebtedness the proceeds of which
are used to exchange, refinance or refund the Securities or other
Indebtedness that is subordinated in right of payment to the Securities
shall only be permitted under this clause (iii) if: (A) in case the
Securities are exchanged, refinanced or refunded in part, such
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is expressly
made pari passu with, or subordinate in right of payment to, the
remaining Securities, (B) in case the Indebtedness to be exchanged,
refinanced or refunded is subordinated in right of payment to the
Securities, such Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued,
is expressly made subordinate in right of payment to the Securities at
least to the extent that the Indebtedness to be exchanged, refinanced
or refunded is subordinated in right of payment to the Securities and
(C) in case the Securities are exchanged, refinanced or refunded in
part or the Indebtedness to be exchanged, refinanced or refunded is
subordinated in right of payment to the Securities, such Indebtedness
determined as of the date of Incurrence of such new Indebtedness, does
not mature prior to the Stated Maturity of the Indebtedness being
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refinanced, and the Average Life of such Indebtedness is at least equal
to the remaining Average Life of the Indebtedness being refinanced; and
provided further that in no event may Indebtedness of Holdings that is
pari passu with, or subordinated in right of payment to, the Securities
be exchanged, refinanced or refunded by means of Indebtedness of any
Subsidiary of Holdings pursuant to this clause (iii);
(iv) Indebtedness issued in exchange for, or the net proceeds
of which are used to exchange, refinance or refund, Silgan
Indebtedness; provided that (A) the principal amount (or, if such
Indebtedness provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration
thereof, the original issue price) of such new Indebtedness shall not
exceed the principal amount of Silgan Indebtedness exchanged,
refinanced or refunded (plus premiums, if any, accrued interest, fees
and expenses) and (B) the Average Life of such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, is at
least equal to the remaining Average Life of the Indebtedness being
refinanced;
(v) Indebtedness Incurred in connection with the purchase,
redemption, acquisition, cancellation or other retirement for value of
shares of capital stock of Holdings, Silgan or any other Restricted
Subsidiary, options on any such shares or related stock appreciation
rights or similar securities held by officers or employees or former
officers or employees (or their estates or beneficiaries under their
estates) and which were issued pursuant to any Stock Based Plan, upon
death, disability, retirement, termination of employment or pursuant to
the terms of such Stock Based Plan or any other agreement under which
such shares of capital stock, options, related rights or similar
securities were issued; provided that (A) such Indebtedness (other than
any Shareholder Subordinated Notes, which must be pari passu with, or
subordinated in right of payment to, the Securities), by its terms or
by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is expressly made subordinate in right of
payment to the Securities at least to the extent that the Securities
are subordinated in right of payment to Senior Indebtedness in the
event of a Holdings Merger, (B) such Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, provides that no payments of principal of such
Indebtedness by way of sinking fund, mandatory redemption or otherwise
(including defeasance) may be made by Holdings (including, without
limitation, at the option of the holder thereof other than an option
given to a holder pursuant to an "asset sale" or a "change of control"
provision that is no more favorable to the holders of such Indebtedness
than the provisions contained in Sections 4.8 and 4.9 of this Indenture
and such
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and such Indebtedness specifically provides that Holdings will not
repurchase or redeem such Indebtedness pursuant to such provisions
prior to Holdings' repurchase of the Securities required to be
repurchased by Holdings under Sections 4.8 and 4.9 of this Indenture at
any time prior to the Stated Maturity of the Securities and (C) the
scheduled maturity of all principal of such Indebtedness is beyond the
Stated Maturity of the Securities;
(vi) Guarantees of Indebtedness of Silgan and other
Restricted Subsidiaries under the Silgan Credit Agreement;
(vii) Indebtedness (A) in respect of performance bonds,
bankers' acceptances and surety or appeal bonds provided in the
ordinary course of business, (B) under (or in respect of) Currency
Agreements and Interest Rate Agreements; provided that in the case of
Currency Agreements that relate to other Indebtedness, such Currency
Agreements do not increase the Indebtedness of Holdings and its
Subsidiaries outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder and (C) arising from
agreements providing for indemnification, adjustment of purchase price
or similar options, or from Guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of Holdings or any
of its Subsidiaries pursuant to such agreements, in any case Incurred
in connection with the disposition of any business, assets or
Subsidiary of Holdings, other than Guarantees of Indebtedness Incurred
by any Person acquiring all or any portion of such business, assets or
Subsidiary of Holdings for the purpose of financing such acquisition;
and
(viii) unsecured Indebtedness of Holdings; provided that such
Indebtedness, (A) by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is expressly
made subordinate in right of payment to the Securities at least to the
extent that the Securities are subordinated in right of payment to
Senior Indebtedness in the event of a Holdings Merger, (B) determined
as of the date of Incurrence of such Indebtedness, does not mature
prior to the Stated Maturity of the Securities, and the Average Life of
such Indebtedness is greater than the remaining Average Life of the
Securities, (C) by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, provides that
no payments of principal of such Indebtedness by way of sinking fund,
mandatory redemption or otherwise (including defeasance) may be made by
Holdings (including, without limitation, at the option of the holder
thereof other than an option given to a holder pursuant to a "change of
control" or an "asset sale" provision that is no more favorable to the
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holders of such Indebtedness than the provisions contained in Sections
4.8 and 4.9 of this Indenture and such Indebtedness specifically
provides that Holdings will not repurchase or redeem such Indebtedness
pursuant to such provisions prior to Holdings' repurchase of the
Securities required to be repurchased by Holdings under Sections 4.8
and 4.9 of this Indenture at any time prior to the Stated Maturity of
the Securities and (D) by its terms or the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is not
scheduled to pay interest in cash prior to the first date on which
interest on the Securities is required to be paid in cash.
(b) So long as any of the Securities are outstanding,
Holdings shall not permit Silgan or any Subsidiary of Silgan to Incur any
Indebtedness unless (i) after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Interest Coverage Ratio of Silgan would be greater than 1.75:l or (ii) such
Indebtedness so Incurred by Silgan or such Subsidiary of Silgan constitutes
Silgan Indebtedness; provided, however, that any Indebtedness so Incurred
pursuant to clause (i) or (ii) above may not prohibit the payment of dividends
to Holdings (but any such Indebtedness may condition such payments on the
absence of any defaults or events of default thereunder and on compliance with
financial tests) in amounts sufficient to make mandatory interest and principal
payments due on the Securities at the times and in the amount due and payable;
and provided further, however, that in the event the Securities become
obligations of a Successor Corporation, nothing in this part (b) shall prohibit
the Successor Corporation from assuming or otherwise becoming liable for
existing Indebtedness of Holdings or its Subsidiaries.
(c) Notwithstanding any other provision of this Section 4.3,
(i) the maximum amount of Indebtedness that Holdings, Silgan or any of their
respective Subsidiaries may Incur pursuant to this Section 4.3 shall not be
deemed to be exceeded due solely to the result of fluctuations in the exchange
rates of currencies, (ii) solely for purposes of calculating the amount of
Indebtedness outstanding at any time under this Section 4.3, all Indebtedness of
Holdings, Silgan or any of their respective Subsidiaries outstanding on the
Closing Date shall be considered to be outstanding and (iii) Holdings shall not
Incur any Indebtedness that is expressly subordinated to any other Indebtedness
of Holdings unless such Indebtedness, by its terms or the terms of any agreement
or instrument pursuant to which such Indebtedness is issued, is also expressly
made subordinate to the Securities at least to the extent that it is
subordinated to such other Indebtedness.
(d) For purposes of determining any particular amount of
Indebtedness under this Section 4.3, Guarantees of, or obligations with respect
to letters of credit supporting, Indebtedness otherwise included in the
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determination of such particular amount shall not be included. For purposes of
determining compliance with this Section 4.3, (i) in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, Holdings, in its sole discretion, shall classify
such item of Indebtedness and only be required to include the amount and type of
such Indebtedness in one of such clauses and (ii) the amount of Indebtedness
issued at a price that is less than the principal amount thereof shall be equal
to the amount of the liability in respect thereof determined in conformity with
GAAP.
(e) Notwithstanding any of the foregoing, nothing in this
Section 4.3 shall prohibit the occurrence of (i) a Holdings Merger, (ii) the
sale of all or substantially all of the property and assets of Silgan or its
successors to Holdings, and the assumption by Holdings of all or substantially
all of the liabilities of Silgan or its successors or (iii) the assumption by
Silgan or its successors of Indebtedness represented by the Securities.
Immediately upon the occurrence of an event specified in clause (i), (ii) or
(iii) in this Section 4.3(e), Section 4.3(a) of this Indenture and this Section
4.3(e) (other than clause (i)) shall be of no further force and effect, and all
references to Silgan in Section 4.3(b) of this Indenture shall refer to the
Successor Corporation.
SECTION 4.4 Limitation on Restricted Payments. So long as any
of the Securities are outstanding, Holdings will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, (i) declare or pay any
dividend or make any distribution on its capital stock (other than dividends or
distributions payable solely in shares of its or such Restricted Subsidiary's
capital stock (other than Redeemable Stock) of the same class held by such
holders or in options, warrants or other rights to acquire such shares of
capital stock) held by Persons other than Holdings or another Restricted
Subsidiary, (ii) purchase, redeem, retire or otherwise acquire for value, any
shares of capital stock of Holdings, any Restricted Subsidiary or any
Unrestricted Subsidiary (including options, warrants or other rights to acquire
such shares of capital stock) held by Persons other than Holdings or another
Restricted Subsidiary, (iii) make any voluntary or optional principal payment,
or voluntary or optional redemption, repurchase, defeasance or other acquisition
or retirement for value, of Indebtedness of Holdings that is subordinated in
right of payment to the Securities or (iv) make any Investment in any Affiliate
(other than Holdings or a Restricted Subsidiary) or Unrestricted Subsidiary
(such payments or any other actions described in clauses (i) through (iv) being
collectively "Restricted Payments") if at the time of and after giving effect to
the proposed Restricted Payment: (A) an Event of Default or event that, after
the giving of notice or lapse of time or both, would become an Event of Default
shall have occurred and be continuing, (B) Holdings (in the case Holdings or its
Restricted Subsidiaries will make the Restricted Payment) could not Incur at
least $1.00 of Indebtedness under the first paragraph in Section 4.3(a) of this
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Indenture or Silgan (in the case Silgan or its Restricted Subsidiaries will make
the Restricted Payment) could not Incur at least $1.00 of Indebtedness under
clause (i) of Section 4.3(b) of this Indenture or (C) the aggregate amount
expended for all Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution) after the
date hereof (other than any Restricted Payments described in clauses (ii) and
(iii) of the second paragraph of this Section 4.4) shall exceed the sum of (1)
50% of the aggregate amount of Adjusted Consolidated Net Income (or, if Adjusted
Consolidated Net Income is a loss, minus 100% of such amount) of Holdings
(determined by excluding income resulting from the transfers of assets received
by Holdings or a Restricted Subsidiary from an Unrestricted Subsidiary) accrued
on a cumulative basis during the period (taken as one accounting period)
beginning on the first day of the month immediately following the date hereof
and ending on the last day of the last fiscal quarter preceding the Transaction
Date plus (2) the aggregate net proceeds received by Holdings from the issuance
and sale of capital stock of Holdings (other than Redeemable Stock) to any
Person other than a Subsidiary of Holdings, including an issuance or sale
permitted by the Indenture for cash or other property upon the conversion of any
Indebtedness of Holdings subsequent to the date hereof, or from the issuance of
any options, warrants or other rights to acquire capital stock of Holdings (in
each case, exclusive of any Redeemable Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Securities) plus (3) an amount
equal to the net reduction in Investments in Unrestricted Subsidiaries resulting
from payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to Holdings or any
Restricted Subsidiary from Unrestricted Subsidiaries, or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed in the case of any
Unrestricted Subsidiary the amount of Investments previously made by Holdings or
any Restricted Subsidiary in such Unrestricted Subsidiary plus (4) $25 million.
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date
of declaration thereof if, at the date of declaration, such payment
would comply with the foregoing provision;
(ii) the making of Investments in Unrestricted Subsidiaries
in an aggregate amount not to exceed $75 million outstanding at any
time;
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(iii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Securities, including premium,
if any, and accrued and unpaid interest, with the proceeds of
Indebtedness Incurred under clauses (iii) or (viii) of the second
paragraph of Section 4.3(a) of this Indenture;
(iv) the declaration and payment of dividends on the common
stock of Holdings or Silgan, following an initial public offering of
the common stock of Holdings or Silgan, as the case may be, of up to 6%
per annum of the net proceeds received by Holdings or Silgan, as the
case may be, in such initial public offering;
(v) the purchase, redemption, acquisition, cancellation or
other retirement for value of shares of capital stock of Holdings,
Silgan or any other Restricted Subsidiary, options on any such shares
or related stock appreciation rights or similar securities held by
officers or employees or former officers or employees (or their estates
or beneficiaries under their estates) and which were issued pursuant to
any Stock Based Plan, upon death, disability, retirement or termination
of employment or pursuant to the terms of such Stock Based Plan or any
other agreement under which such shares of capital stock, options,
related rights or similar securities were issued; provided that the
aggregate cash consideration paid for such purchase, redemption,
acquisition, cancellation or other retirement for value of such shares
of capital stock, options, related rights or similar securities after
the Closing Date does not exceed $25 million and that any additional
consideration in excess of such $25 million is in the form of
Indebtedness that would be permitted to be Incurred under clause (v) of
the second paragraph of Section 4.3(a) of this Indenture;
(vi) the repurchase of capital stock of Holdings or any
Subsidiary of Holdings followed immediately by the reissuance thereof
for consideration in an amount at least equal to the consideration paid
to acquire such stock, or the redemption, repurchase or other
acquisition for value of capital stock of Holdings or any Subsidiary of
Holdings in exchange for, or with the proceeds of a substantially
concurrent offering of, other shares of the capital stock of such
entity (other than Redeemable Stock); and
(vii) payments or distributions pursuant to or in connection
with a consolidation, merger or transfer of assets that complies with
the provisions of Article 5 of this Indenture; provided that in the
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case of clauses (ii), (iv), (v) and (vii), no Event of Default shall
have occurred and be continuing or shall occur as a consequence
thereof.
SECTION 4.5 Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. So long as any of the Securities
are outstanding, Holdings will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any capital stock of such Restricted Subsidiary
owned by Holdings or any other Restricted Subsidiary, (ii) pay any Indebtedness
owed to Holdings or any other Restricted Subsidiary, (iii) make loans or
advances to Holdings or any other Restricted Subsidiary or (iv) transfer,
subject to certain exceptions, any of its property or assets to Holdings or any
other Restricted Subsidiary.
This covenant shall not restrict or prohibit any encumbrances
or restrictions existing:
(i) in the Silgan Credit Agreement, the Silgan Notes, the
Discount Debentures (including any agreement pursuant to which the
Silgan Notes or the Discount Debentures were issued) or any other
agreements in effect on the date hereof, including extensions,
refinancings, renewals or replacements thereof; provided that the
encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect
to the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(ii) under or by reason of applicable law, rule or regulation
(including, without limitation, applicable currency control laws and
applicable state corporate statutes restricting the payment of
dividends in certain circumstances);
(iii) with respect to any Person or the property or assets of
such Person acquired by Holdings or any Restricted Subsidiary and
existing at the time of such acquisition, which encumbrances or
restrictions are not applicable to any Person or the property or assets
of any Person other than such Person or the property or assets of such
Person so acquired;
(iv) in the case of clause (iv) of the first paragraph of
this Section 4.5, (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset,
(B) by virtue of any transfer of, agreement to transfer, option or
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right with respect to, or Lien on, any property or assets of Holdings
or any Restricted Subsidiary not otherwise prohibited by this Indenture
or (C) arising or agreed to in the ordinary course of business and that
do not, individually or in the aggregate, detract from the value of the
property or assets of Holdings or any Restricted Subsidiary in any
manner material to Holdings or such Restricted Subsidiary; or
(v) with respect to any Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the capital stock of, or
property and assets of, such Restricted Subsidiary.
Nothing contained in this Section 4.5 shall prevent Holdings
or any Restricted Subsidiary from restricting the sale or other disposition of
property or assets of Holdings or any of its Subsidiaries that secure
Indebtedness of Holdings or any of its Subsidiaries.
SECTION 4.6 Limitation on Transactions with Shareholders and
Affiliates. So long as any of the Securities are outstanding, Holdings will not,
and will not permit any Subsidiary of Holdings to, directly or indirectly, enter
into, renew or extend any transaction (including, without limitation, the
purchase, sale, lease or exchange of property or assets, or the rendering of any
service) with any holder (or any Affiliate of such holder) of 5% or more of any
class of capital stock of Holdings (other than the Bank Agent or any of its
Affiliates) or any Subsidiary of Holdings or with any Affiliate of Holdings or
any Subsidiary of Holdings, except upon fair and reasonable terms no less
favorable to Holdings or such Subsidiary of Holdings than could be obtained in a
comparable, arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply
to:
(i) any transaction between Holdings and any Subsidiary of
Holdings or between Subsidiaries of Holdings;
(ii) transactions (A) for which Holdings or any Subsidiary of
Holdings delivers to the Trustee a written opinion of a nationally
recognized investment banking firm stating that the transaction is fair
to Holdings or such Subsidiary of Holdings from a financial point of
view or (B) approved by a majority of the disinterested members of the
Board of Directors;
(iii) the payment of fees pursuant to the Management
Agreements or pursuant to any similar management contracts entered into
by Holdings or any Subsidiary of Holdings;
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(iv) the payment of reasonable and customary regular fees to
directors of Holdings or any Subsidiary of Holdings who are not
employees of Holdings or such Subsidiary of Holdings;
(v) any payments or other transactions pursuant to any
tax-sharing agreement between Holdings and Silgan or any other Person
with which Holdings is required or permitted to file a consolidated tax
return or with which Holdings is or could be part of a consolidated
group for tax purposes;
(vi) any Restricted Payments not prohibited by Section 4.4 of
this Indenture;
(vii) the payment of fees to Morgan Stanley & Co.
Incorporated, S&H or their respective Affiliates for financial,
advisory, consulting or investment banking services that the Board of
Directors deems to be advisable or appropriate for Holdings or any
Subsidiary of Holdings to obtain (including the payment to Morgan
Stanley & Co. Incorporated of any underwriting discounts or commissions
or placement agency fees) in connection with the issuance and sale of
any securities by Holdings or any Subsidiary of Holdings; or
(viii) any transaction contemplated by any of the Stock Based
Plans.
Notwithstanding any of the foregoing, nothing in this Section
4.6 shall prohibit the occurrence of (i) a Holdings Merger, (ii) the sale of all
or substantially all of the property and assets of Silgan or its successors to
Holdings and the assumption by Holdings of all or substantially all of the
liabilities of Silgan or its successors or (iii) the issuance by Silgan or its
successors of Securities. Immediately upon the occurrence of an event specified
in clause (i), (ii) or (iii) of the preceding sentence, all references to
Holdings in this Section 4.6 shall refer to the Successor Corporation.
SECTION 4.7 Limitation on the Issuance of Capital Stock of
Restricted Subsidiaries. So long as any of the Securities are outstanding,
Holdings will not permit any Restricted Subsidiary to, directly or indirectly,
issue or sell any shares of its capital stock (including options, warrants or
other rights to purchase shares of such capital stock) except (i) to Holdings or
another Restricted Subsidiary that is a Wholly Owned Subsidiary of Holdings,
(ii) pursuant to options on such capital stock granted to officers and directors
of such Restricted Subsidiary, (iii) if, immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary or (iv) in connection with an initial public offering of
the common stock of such Restricted Subsidiary; provided that, within 12 months
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after the date the Net Cash Proceeds of such initial public offering are
received by such Restricted Subsidiary, such Restricted Subsidiary shall (A)
apply an amount equal to such Net Cash Proceeds to repay Senior Indebtedness of
Holdings or Indebtedness of a Restricted Subsidiary, in each case owing to a
Person other than Holdings or any of its Subsidiaries, (B) apply an amount equal
to such Net Cash Proceeds to the repurchase of Senior Indebtedness pursuant to
mandatory repurchase or repayment provisions applicable to such Senior
Indebtedness or (C) invest an equal amount, or the amount not so applied
pursuant to subclause (A) or (B) (or enter into a definitive agreement
committing to so invest within 12 months of the date of such agreement), in
property or assets that (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution) are
of a nature or type or are used in a business (or in a company having property
and assets of a nature or type, or engaged in a business) similar or related to
the nature or type of the property and assets of, or the business of, any
Restricted Subsidiary and its Subsidiaries existing on the date thereof.
Notwithstanding any of the foregoing, nothing in this Section
4.7 shall prohibit the occurrence of (i) a Holdings Merger, (ii) the sale of all
or substantially all of the property and assets of Silgan or its successors to
Holdings and the assumption by Holdings of all or substantially all of the
liabilities of Silgan or its successors or (iii) the assumption by Silgan or its
successors of Indebtedness represented by the Securities. Immediately upon the
occurrence of an event specified in clause (i), (ii) or (iii) of the preceding
sentence, all references to Holdings in this Section 4.7 shall refer to the
Successor Corporation.
SECTION 4.8 Repurchase of Securities upon Change of Control.
(a) In the event of a Change in Control, each Holder shall have the right to
require the repurchase of its Securities by Holdings in cash pursuant to the
offer described below (the "Change of Control Offer") at a purchase price equal
to 101% of the principal amount, plus accrued interest (if any) to the date of
purchase (the "Change of Control Payment"). Prior to the mailing of the notice
to Holders provided for in the succeeding paragraph, but in any event within 30
days following any Change of Control, Holdings covenants to, or to cause Silgan
to, (i) repay in full all Indebtedness under the Silgan Credit Agreement and all
other Senior Indebtedness required to be redeemed or repurchased pursuant to the
terms thereof, or to offer to repay in full all Indebtedness under the Silgan
Credit Agreement and all such other Senior Indebtedness and to repay the
Indebtedness of each holder of Senior Indebtedness who has accepted such offer
or (ii) obtain the requisite consents under the Silgan Credit Agreement and such
other Senior Indebtedness to permit the repurchase of the Securities as provided
for in the succeeding paragraph. Holdings shall first comply with the covenant
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in the preceding sentence before it shall be required to repurchase Securities
pursuant to this Section 4.8.
(b) Within 30 days of the Change of Control, Holdings shall
mail a notice to the Trustee and each Holder stating:
(i) that a Change of Control has occurred,
that the Change of Control Offer is being made pursuant to this Section
4.8 and that all Securities validly tendered will be accepted for
payment;
(ii) the purchase price and the date of purchase (which shall
be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Change of Control Payment Date");
(iii) that any Security not tendered will continue to accrue
interest pursuant to its terms;
(iv) that, unless Holdings defaults in the payment of the
Change of Control Payment, any Security accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(v) that Holders electing to have any Security purchased
pursuant to the Change of Control Offer will be required to surrender
such Security, together with the form entitled "Option of the Holder to
Elect Purchase" on the reverse side of such Security completed, to the
Paying Agent at the address specified in the notice prior to the close
of business on the Business Day immediately preceding the Change of
Control Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the close of business on
the third Business Day immediately preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; and
(vii) that Holders whose Securities are being purchased only
in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; provided that each
Security purchased and each new Security issued shall be in an original
principal amount of $1.00 or integral multiples thereof.
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(c) On the Change of Control Payment Date, Holdings shall:
(i) accept for payment Securities or portions thereof
tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Securities or portions thereof so accepted;
and
(iii) deliver, or cause to be delivered, to the Trustee, all
Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof accepted for
payment by Holdings.
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; provided that each Security purchased and each new Security issued
shall be in an original principal amount of $1.00 or integral multiples thereof.
Holdings will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date. For purposes of
this Section 4.8, the Trustee shall act as Paying Agent.
(d) Holdings will comply with 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 the event that a Change of Control
occurs under this Section 4.8 and Holdings is required to repurchase Securities
as described above.
(e) Notwithstanding any of the foregoing, nothing in this
Section 4.8 shall prohibit the occurrence of (i) a Holdings Merger, (ii) the
sale of all or substantially all of the property and assets of Silgan or its
successors to Holdings, and the assumption by Holdings of all or substantially
all of the liabilities of Silgan or its successors or (iii) the assumption by
Silgan or its successors of Indebtedness represented by the Securities.
Immediately upon the occurrence of an event specified in clause (i), (ii) or
(iii) of the preceding sentence, all references to Holdings in this Section 4.8
shall refer to the Successor Corporation.
SECTION 4.9 Limitation on Asset Sales. (a) In the event and to
the extent that the Net Cash Proceeds received by Holdings or any Restricted
Subsidiary from one or more Asset Sales occurring on or after the date hereof in
any period of 12 consecutive months (other than Asset Sales by Holdings or any
Restricted Subsidiary to Holdings or another Restricted Subsidiary) exceed 15%
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of Consolidated Net Tangible Assets in any one fiscal year (determined as of the
date closest to the commencement of such 12-month period for which a
consolidated balance sheet of Holdings and its Subsidiaries has been prepared),
then Holdings shall, or shall cause such Restricted Subsidiary to, (i) within 12
months after the date the Net Cash Proceeds so received exceed 15% of
Consolidated Net Tangible Assets in any one fiscal year (determined as of the
date closest to the commencement of such 12-month period for which a
consolidated balance sheet of Holdings and its Subsidiaries has been prepared),
(A) apply an amount equal to such excess Net Cash Proceeds to repay Senior
Indebtedness of Holdings or Indebtedness of a Restricted Subsidiary, in each
case owing to a Person other than Holdings or any of its Subsidiaries or (B)
invest an equal amount, or the amount not so applied pursuant to subclause (A)
(or enter into a definitive agreement committing to so invest within 12 months
of the date of such agreement), in property or assets that (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a Board Resolution) are of a nature or type or are used in a
business (or in a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, Holdings and its Subsidiaries existing on the
date thereof and (ii) apply such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraphs of this
Section 4.9. The amount of such excess Net Cash Proceeds required to be applied
(or to be committed to be applied) during such 12-month period as set forth in
subclause (A) or (B) of the preceding sentence and not applied as so required by
the end of such period shall constitute "Excess Proceeds."
(b) If, as of the first day of any calendar month, the
aggregate amount of Excess Proceeds not theretofore subject to an Excess
Proceeds Offer (as defined below) totals at least $10 million, Holdings must,
not later than the fifteenth Business Day of such month, make an offer (an
"Excess Proceeds Offer") to purchase from the Holders on a pro rata basis an
aggregate principal amount of Securities equal to the Excess Proceeds on such
date, at a purchase price equal to 101% of the principal amount thereof, plus
accrued interest (if any) to the date of purchase (the "Excess Proceeds
Payment"); provided, however, that no Excess Proceeds Offer shall be required to
be commenced with respect to the Securities until the Business Day following the
dates that payments are made pursuant to similar offers that are made to holders
of Senior Indebtedness, and need not be commenced if the Excess Proceeds
remaining after application to the Senior Indebtedness purchased in the offers
made to the holders of the Senior Indebtedness are less than $10 million; and
provided further, however, that no Securities may be purchased under this
Section 4.9 unless Holdings shall have purchased all Senior Indebtedness
tendered pursuant to the offers applicable thereto.
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(c) Holdings shall commence an Excess Proceeds Offer by
mailing a notice to the Trustee and each Holder stating:
(i) that the Excess Proceeds Offer is being made pursuant to
this Section 4.9 and that all Securities validly tendered will be
accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall
be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Excess Proceeds Payment Date");
(iii) that any Security not tendered will continue to accrue
interest pursuant to its terms;
(iv) that, unless Holdings defaults in the payment of the
Excess Proceeds Payment, any Security accepted for payment pursuant to
the Excess Proceeds Offer shall cease to accrue interest after the
Excess Proceeds Payment Date;
(v) that Holders electing to have any Security purchased
pursuant to the Excess Proceeds Offer will be required to surrender the
Security, together with the form entitled "Option of the Holder to
Elect Purchase" on the reverse side of such Security completed, to the
Paying Agent at the address specified in the notice prior to the close
of business on the Business Day immediately preceding the Excess
Proceeds Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the close of business on
the third Business Day immediately preceding the Excess Proceeds
Payment Date, a telegram, telex, facsimile transmission or letter,
setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; and
(vii) that Holders whose Securities are being purchased only
in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; provided that each
Security purchased and each new Security issued shall be in an original
principal amount of $1.00 or integral multiples thereof.
(d) On the Excess Proceeds Payment Date, Holdings shall:
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(i) accept for payment on a pro rata basis Securities or
portions thereof tendered pursuant to the Excess Proceeds Offer;
(ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Securities or portions thereof so accepted;
and
(iii) deliver, or cause to be delivered, to the Trustee, all
Securities or portions thereof so accepted, together with an Officer's
Certificate specifying the Securities or portions thereof accepted for
payment by Holdings.
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 a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered; provided that each Security purchased and each new Security issued
shall be in an original principal amount of $1.00 or integral multiples thereof.
Holdings will publicly announce the results of the Excess Proceeds Offer as soon
as practicable after the Excess Proceeds Payment Date. For purposes of this
Section 4.9, the Trustee shall act as the Paying Agent.
(e) Holdings will comply with Rule 14e-l under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable, in the event that such Excess Proceeds are
received by Holdings under this Section 4.9 and Holdings is required to
repurchase Securities as described above.
(f) Notwithstanding the foregoing, nothing in this Section
4.9 shall prohibit the occurrence of (i) a Holdings Merger, (ii) the sale of all
or substantially all of the property and assets of Silgan or its successors to
Holdings, and the assumption by Holdings of all or substantially all of the
liabilities of Silgan or its successors or (iii) the assumption by Silgan or its
successors of Indebtedness represented by the Securities. Immediately upon the
occurrence of an event specified in clause (i), (ii) or (iii) of the preceding
sentence, all references to Holdings in this Section 4.9 shall refer to the
Successor Corporation.
SECTION 4.10 Corporate Existence. Subject to Articles 4 and 5
of this Indenture, so long as any of the Securities are outstanding, Holdings
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate existence of each
Subsidiary in accordance with the respective organizational documents of
Holdings and of each Subsidiary of Holdings and the rights (charter and
statutory), licenses and franchises of Holdings and its Subsidiaries; provided
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that Holdings shall not be required to preserve any such right, license or
franchise, or the corporate existence of any Subsidiary of Holdings, if the
preservation thereof is no longer desirable in the conduct of the business of
Holdings and its Subsidiaries taken as a whole; and provided further that any
Subsidiary of Holdings may consolidate with, merge into, or sell, convey,
transfer, lease or otherwise dispose of all or part of its property and assets
to Holdings or any Wholly Owned Subsidiary of Holdings.
SECTION 4.11 Payment of Taxes and Other Claims. So long as
any of the Securities are outstanding, Holdings will pay or discharge, or cause
to be paid or discharged, before any penalty accrues thereon (i) all material
taxes, assessments and governmental charges levied or imposed upon Holdings or
any Subsidiary of Holdings or upon the income, profits or property of Holdings
or any Subsidiary of Holdings and (ii) all material lawful claims for labor,
materials and supplies that, if unpaid, might by law become a Lien upon the
property of Holdings or any Subsidiary of Holdings; provided that Holdings shall
not be -------- required to pay or discharge, or cause to be paid or discharged,
any such tax, assessment, charge or claim the amount, applicability or validity
of which is being contested in good faith by appropriate proceedings and for
which adequate reserves have been made.
SECTION 4.12 Notice of Defaults and Other Events. In the event
that any issue or issues of Indebtedness of Holdings and/or any Significant
Subsidiary of Holdings having an outstanding principal amount of $20 million or
more in the aggregate for all such issues has been or could be declared due and
payable before its maturity because of the occurrence of any event of default
under such Indebtedness (including, without limitation, any Default or Event of
Default under this Indenture), so long as any of the Securities are outstanding,
Holdings, promptly after it becomes aware thereof, will give written notice
thereof to the Trustee.
SECTION 4.13 Maintenance of Properties and Insurance. So long
as any of the Securities are outstanding, Holdings will cause all properties
used or useful in the conduct of its business or the business of any Subsidiary
of Holdings and material to Holdings and its Subsidiaries taken as a whole to be
maintained and kept in normal condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of Holdings may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 4.13 shall prevent Holdings or any
Subsidiary of Holdings from discontinuing the use, operation or maintenance of
any of such properties or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or the board of directors
of such Subsidiary, or an Officer (or other agent employed by Holdings or any
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Subsidiary of Holdings) of Holdings or such Subsidiary of Holdings having
managerial responsibility for any such property, desirable in the conduct of the
business of Holdings or such Subsidiary of Holdings.
So long as any of the Securities are outstanding, Holdings
will provide or cause to be provided, for itself and its Subsidiaries, insurance
(including appropriate self-insurance) against loss or damage of the kinds
customarily insured against by corporations similarly situated and owning like
properties, including, but not limited to, products liability insurance and
public liability insurance with reputable insurers or with the government of the
United States of America, or an agency or instrumentality thereof, in such
amounts, with such deductibles and by such methods as shall be customary for
corporations similarly situated in the industry.
SECTION 4.14 Compliance Certificates. (a) So long as any of
the Securities are outstanding, Holdings shall deliver to the Trustee, within
120 days after the end of each fiscal year, an Officers' Certificate, which
shall contain a certification from a Chief Executive Officer, Chief Financial
Officer or Controller that a review has been conducted of the activities of
Holdings and its Subsidiaries and Holdings' and its Subsidiaries' performance
under this Indenture and that Holdings has fulfilled all obligations hereunder,
or, if there has been a Default in the fulfillment of any such obligation, such
certificate shall contain a description of such Default and the nature and
status thereof. For purposes of this Section 4.14, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
(b) So long as any of the Securities are outstanding,
Holdings shall deliver to the Trustee, within 120 days after the end of
Holdings' fiscal year, a certificate signed by Holdings' independent certified
public accountants stating (i) that their audit examination has included a
review of the terms of this Indenture and the Securities as they relate to
accounting matters, (ii) that they have read the most recent Officers
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.14 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that Holdings was not in
compliance with any of the terms, covenants, provisions or conditions of Article
4 and Section 5.1 of this Indenture as they pertain to accounting matters and,
if any Default or Event of Default has come to their attention, specifying the
nature and period of existence thereof; provided that such independent certified
public accountants shall not be liable in respect of such statement by reason of
any failure to obtain knowledge of any such Default or Event of Default that
would not be disclosed in the course of an audit examination conducted in
accordance with generally accepted auditing standards in effect at the date of
such examination.
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SECTION 4.15 Commission Reports and Reports to Holders. So
long as any of the Securities are outstanding, within 15 days after Holdings
files with the Commission copies of its annual reports and other information,
documents and reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that it is required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act,
Holdings shall file the same with the Trustee. So long as any Securities remain
outstanding, Holdings shall cause quarterly reports (containing unaudited
financial statements) for the first three quarters of each fiscal year and
annual reports (containing audited financial statements and an opinion thereon
by Holdings' independent certified public accountants) that it would be required
to file under Section 13 of the Exchange Act if it had a class of debt
securities listed on a national securities exchange to be filed with the
Commission and the Trustee within 15 days of when such report would have been
required to be filed with the Commission under Section 13 of the Exchange Act.
So long as any of the Securities are outstanding, Holdings also shall comply
with the other provisions of TIA Section 314(a).
SECTION 4.16 Waiver of Stay, Extension or Usury Laws. Holdings
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or 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 Holdings from paying all or any portion of the
principal of, premium, if any, or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) Holdings 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 4.17 Trustee Not Liable. Holdings is solely
responsible for performing the duties and responsibilities contained in Sections
4.8 and 4.9 of this Indenture, other than the obligations of the Trustee as
Paying Agent expressly set forth therein. The Trustee shall not be responsible
for any failure of Holdings to make any deposit with the Trustee as Paying Agent
or to deliver to the Trustee Securities accepted by it or, subject to TIA
Sections 315(a) through (d), any failure of Holdings to comply with any of the
other covenants of Holdings contained in Sections 4.8 and 4.9 of this Indenture.
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ARTICLE 5.
Successor Corporation
SECTION 5.1 When Holdings May Merge, Etc. Holdings shall not
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially as an entirety in one transaction or a series of
related transactions) to, any Person (other than a Restricted Subsidiary that is
a Wholly Owned Subsidiary of Holdings; provided that, in connection with any
merger of Holdings with any Restricted Subsidiary that is a Wholly Owned
Subsidiary of Holdings, no consideration (other than common stock in the
surviving Person or Holdings) shall be issued or distributed to the stockholders
of Holdings) or permit any Person to merge with or into Holdings, unless:
(i) Holdings shall be the continuing Person, or the Person
(if other than Holdings) formed by such consolidation or into which
Holdings is merged or that acquired or leased such property and assets
of Holdings shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof
and shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all of
the obligations of Holdings on all of the Securities and under this
Indenture;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on
a pro forma basis, the Interest Coverage Ratio of Holdings (or any
Person becoming the successor obligor on the Securities) is at least
1:1; provided that if the Interest Coverage Ratio of Holdings before
giving effect to such transaction is within the range set forth in
column (A) below, then the Interest Coverage Ratio of Holdings (or any
Person becoming the successor obligor on the Securities) shall be at
least equal to the lesser of (1) the ratio determined by multiplying
the percentage set forth in column (B) below by the Interest Coverage
Ratio of Holdings prior to such transaction and (2) the ratio set forth
in column (C) below:
(A) (B) (C)
--- --- ---
1.11:1 to 1.99:1 90% 1.5:1
2.00:1 to 2.99:1 80% 2.1:1
3.00:1 to 3.99:1 70% 2.4:1
4.00:1 or more 60% 2.5:1
and provided further that, if the Interest Coverage Ratio of
Holdings (or any Person becoming the successor obligor on
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the Securities) is 3:1 or more, the calculation in the preceding
proviso shall be inapplicable and such transaction shall be deemed to
have complied with the requirements of this clause (iii);
(iv) immediately after giving effect to such transaction on a
pro forma basis, Holdings (or any Person that becomes the successor
obligor on the Securities) shall have a Consolidated Net Worth equal to
or greater than the Consolidated Net Worth of Holdings immediately
prior to such transaction; and
(v) Holdings delivers to the Trustee an Officer's Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv)) and an Opinion of Counsel, in each case stating
that such consolidation, merger or transfer and such supplemental
indenture comply with this Section 5.1 and that all conditions
precedent provided for herein relating to such transaction have been
complied with;
provided, however, that clause (iv) of this Section 5.1 shall not apply
to, and the Interest Coverage Ratio required by clause (iii) of this
Section 5.1 (A) shall be 1.75:1 with respect to, (1) a Holdings Merger,
(2) the sale of all or substantially all of the property and assets of
Silgan or its successors to Holdings, and the assumption by Holdings of
all or substantially all of the liabilities of Silgan or its successors
or (3) the assumption by Silgan or its successors of Indebtedness
represented by the Securities and (B) does not apply if, in the good
faith determination of the Board of Directors, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of Holdings; and
provided further, however, that any such transaction shall not have as
one of its purposes the evasion of the limitations of this Section 5.1.
SECTION 5.2 Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, conveyance, transfer, lease or other
disposition of all or substantially all of the property and assets of Holdings
in accordance with Section 5.1 of this Indenture, the successor corporation
formed by such consolidation or into which Holdings is merged or to which such
sale, conveyance, transfer, lease or other disposition is made shall succeed to,
and be substituted for, and may exercise every right and power of, Holdings
under this Indenture with the same effect as if such successor corporation had
been named as Holdings herein.
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ARTICLE 6.
Default and Remedies
SECTION 6.1 Events of Default. An "Event of Default" occurs
with respect to the Securities if:
(i) Holdings defaults in the payment of principal of (or
premium, if any, on) any Security when the same becomes due and payable
at maturity, upon acceleration, redemption or otherwise, whether or not
such payment is prohibited by Article 10 of this Indenture, if Article
10 is then applicable;
(ii) Holdings defaults in the payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days, whether or not such payment is
prohibited by Article 10 of this Indenture, if Article 10 is then
applicable;
(iii) Holdings defaults in the performance of or breaches any
other covenant or agreement of Holdings in this Indenture or under the
Securities, and such default or breach continues for a period of 30
consecutive days after written notice by the Trustee or the Holders of
25% or more in aggregate principal amount of the Securities in the
manner described below;
(iv) there occurs with respect to any issue or issues of
Indebtedness of Holdings and/or any Significant Subsidiary having an
outstanding principal amount of $20 million or more in the aggregate
for all such issues of Holdings and/or any Significant Subsidiary,
whether such Indebtedness now exists or shall hereafter be created, (A)
an event of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and
such Indebtedness has not been discharged in full or such acceleration
has not been rescinded or annulled within 30 days of such acceleration
and/or (B) the failure to make a principal payment at the final (but
not any interim) fixed maturity and such defaulted payment shall not
have been made, waived or extended within 30 days of such payment
default;
(v) any final judgment or order (not covered by insurance)
for the payment of money in excess of $10 million individually or $20
million or more in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or
retention as not so covered) shall be rendered against Holdings or any
Significant Subsidiary and shall not be discharged, and there shall be
any period of 60 consecutive days following entry of the final judgment
or order in excess of $10 million individually or that causes the
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aggregate amount for all such final judgments or orders outstanding
against all such Persons to exceed $20 million during which a stay of
enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(vi) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of Holdings or any
Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
(B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of Holdings or any
Significant Subsidiary or for all or substantially all of the property
and assets of Holdings or any Significant Subsidiary or (C) the winding
up or liquidation of the affairs of Holdings or any Significant
Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; and
(vii) Holdings or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B)
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of Holdings or any Significant Subsidiary or for all or
substantially all of the property and assets of Holdings or any
Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors.
A Default under clause (iii) is not an Event of Default until
the Trustee notifies Holdings in writing, or the Holders of at least 25% of the
aggregate principal amount of the Securities then outstanding notify Holdings
and the Trustee in writing, of the Default and Holdings does not cure the
Default within 30 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default." Such notice shall be given by the Trustee if so requested in writing
by the Holders of 25% of the aggregate principal amount of the Securities then
outstanding.
SECTION 6.2 Acceleration. If an Event of Default (other than
an Event of Default specified in clause (vi) or (vii) of Section 6.1 of this
Indenture that occurs with respect to Holdings or Silgan) occurs and is
continuing, the Trustee or the Holders of at least 25% of the aggregate
principal amount of the Securities then outstanding, by written notice to
Holdings (and to the Trustee if such notice is given by the Holders (the
"Acceleration Notice")), may, and the Trustee at the request of the Holders of
at least 25% in aggregate principal amount of the Securities then outstanding
shall, declare the principal of and all accrued and unpaid interest on the
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Securities to be immediately due and payable. Any such declaration of
acceleration shall not become effective until the earlier of (A) five Business
Days after receipt of the Acceleration Notice by the Bank Agent, Holdings and
the agent for the holders of the Silgan Notes and Discount Debentures or (B)
acceleration of the Indebtedness under the Silgan Credit Agreement, the Silgan
Notes or the Discount Debentures; provided that such acceleration shall
automatically be rescinded and annulled without any further action required on
the part of the Holders in the event that any and all Events of Default
specified in the Acceleration Notice under this Indenture shall have been cured,
waived or otherwise remedied as provided in this Indenture prior to the
expiration of the period referred to in the preceding clauses (A) and (B). In
the event of a declaration of acceleration because an Event of Default set forth
in clause (iv) of Section 6.1 of this Indenture has occurred and is continuing,
such declaration of acceleration shall be automatically rescinded and annulled
if the event of default triggering such Event of Default pursuant to clause (iv)
of Section 6.1 of this Indenture shall be remedied, cured by Holdings and/or
such Significant Subsidiary or waived by the holders of the relevant
Indebtedness within 60 days after the declaration of acceleration with respect
thereto. If an Event of Default specified in clause (vi) or (vii) of Section 6.1
of this Indenture occurs with respect to Holdings or Silgan, the principal of
and all accrued and unpaid interest on the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of at least a majority in aggregate
principal amount of the outstanding Securities, by written notice to Holdings
and to the Trustee, may waive all past defaults and rescind and annul a
declaration of acceleration and its consequences if (1) all existing Events of
Default, other than the non-payment of the principal of, premium, if any, and
interest on the Securities that have become due solely by such declaration of
acceleration, have been cured or waived and (2) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction.
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, premium, if any, 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.
SECTION 6.4 Waiver of Past Defaults. Subject to Sections 6.2,
6.7 and 9.2 of this Indenture, the Holders of at least a majority in aggregate
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
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Default in the payment of principal of, premium, if any, or interest on any
Security as specified in clause (i) or (ii) of Section 6.1 of this Indenture.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereto.
SECTION 6.5 Control by Majority. The Holders of at least a
majority in aggregate 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 the Trustee.
However, the Trustee may refuse to follow any direction that the Trustee is
advised by counsel conflicts with law or this Indenture, that may involve the
Trustee in personal liability or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders not joining in the giving of such
direction.
SECTION 6.6 Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal
amount of outstanding Securities make a written request to the Trustee
to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Securities do not give
the Trustee a direction that is inconsistent with the request.
For purposes of Section 6.5 of this Indenture and this Section
6.6, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Securities have concurred in any request or direction of the
Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Securities or otherwise under the law.
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A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
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 the principal of, premium, if any, or interest on its
Securities, or to bring suit for the enforcement of any such payment, on or
after the respective due dates expressed in its Securities, shall not be
impaired or affected without the consent of the Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default
in payment of principal, premium or interest specified in clause (i) or (ii) of
Section 6.1 of this Indenture occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against Holdings or
any other obligor of the Securities for the whole amount of principal, premium,
if any, and accrued interest (if any) remaining unpaid, together with interest
on overdue principal, premium, if any, and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each case
at the rate borne by the Securities, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.9 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, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.6 of this Indenture) and the Holders allowed in any judicial
proceedings relative to Holdings (or any other obligor of the Securities), its
creditors or its 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 Holder 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 Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.6 of this
Indenture. To the extent that such payment of reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel out of the
estate in any such judicial proceeding shall be denied for any reason, payment
of the same shall be secured by a lien on, and shall be paid out of, any and all
dividends, distributions, monies, securities and other property that the Holders
may be entitled to receive in such judicial proceedings, whether in liquidation
or under any plan of reorganization, arrangement or otherwise. Nothing herein
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contained shall be deemed to empower the Trustee to authorize or consent to, or
accept or adopt on behalf of any Holder, 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 Holder in any such proceeding.
SECTION 6.10 Priorities. If the Trustee collects any money
pursuant to this Article 6, it shall pay out the money in the following order,
subject to Article 10 of this Indenture:
First: to the Trustee for amounts due under
Section 7.6 of this Indenture;
Second: to Holders for amounts then due and unpaid
for principal of, premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium, if any, and interest, respectively; and
Third: to Holdings or any other obligors of the
Securities, as their interests may appear, or as a court of
competent jurisdiction may direct.
The Trustee, upon prior written notice to Holdings, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, 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 of this
Indenture, or a suit by Holders of more than 10% in principal amount of the
outstanding Securities.
SECTION 6.12 Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then, and in every such case, subject to any determination in such
proceeding, Holdings, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
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and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 6.13 Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Securities in Section 2.6 of this Indenture,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.14 Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article 6 or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE 7.
Trustee
SECTION 7.1 Rights of Trustee. Subject to TIA Sections 315(a)
through (d):
(i) the Trustee may rely on 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;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Section 11.4 of this Indenture. 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;
(iii) 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;
(iv) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders, unless such Holders shall have
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offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee or Paying Agent shall not be liable for
interest on any money recovered by it except as the Trustee or Paying
Agent may agree in writing with Holdings. Money held in trust by the
Trustee or Paying Agent need not be segregated from other funds except
to the extent required by law; and
(vi) the Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or
within its rights or powers; provided that the Trustee's conduct does
not constitute negligence or bad faith.
SECTION 7.2 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 Holdings or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.3 Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Securities, (ii) shall not be accountable for Holdings' use of the proceeds from
the Securities and (iii) shall not be responsible for any statement in the
Securities other than its certificate of authentication.
SECTION 7.4 Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to the Trustee, the Trustee shall mail to each Holder in the manner and to
the extent provided in TIA Section 313(c) notice of the Default or Event of
Default within 30 days after it occurs, unless such Default or Event of Default
has been cured; provided, however, that, except in the case of a default in the
payment of the principal of, premium, if any, or interest on any Security, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders.
The Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Section 6.1(i), 6.1(ii) or 4.1 of this Indenture if the Trustee is then
acting as Paying Agent or (ii) any Default or Event of Default of which a
Responsible Officer of the Trustee shall have received written notification or
obtained actual knowledge, and such notification shall not be deemed to include
receipt of information obtained in any report or other documents furnished under
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Section 4.15 of this Indenture, which reports and documents the Trustee shall
have no duty to examine.
SECTION 7.5 Reports by Trustee to Holders. Within 60 days
after each May 15, beginning with May 15, 1993, the Trustee shall mail to each
Holder as provided in TIA Section 313(c) a brief report dated as of such May 15,
if required by TIA Section 313(a).
SECTION 7.6 Compensation and Indemnity. Holdings shall pay to
the Trustee such compensation as shall be agreed upon in writing for its
services. The compensation of the Trustee shall not be limited by any law on
compensation of a trustee of an express trust. Holdings shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses and advances
incurred or made by it. Such expenses shall include the reasonable compensation
and expenses of the Trustee's agents and counsel.
Holdings shall indemnify the Trustee for, and hold it harmless
against, any loss or liability or expense incurred by it without negligence or
bad faith on its part in connection with the administration of this Indenture
and its duties under this Indenture and the Securities, including the costs and
expenses of defending itself against any claim or liability and of complying
with any process served upon it or any of its officers in connection with the
exercise or performance of any of its powers or duties under this Indenture and
the Securities. The Trustee shall notify Holdings promptly of any claim asserted
against the Trustee for which it may seek indemnity. Holdings shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and Holdings shall pay reasonable fees and expenses of such
counsel. Holdings need not pay for any settlements made without its consent;
provided that such consent shall not be unreasonably withheld. Holdings need not
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee through negligence or bad faith.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (vi) or (vii) of Section
6.1 of this Indenture, the expenses and the compensation for the services will
be intended to constitute expenses of administration under Title 11 of the
United States Bankruptcy Code or any applicable federal or state law for the
relief of debtors.
SECTION 7.7 Replacement of Trustee. A resignation or removal
of the Trustee and appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in this
Section 7.7.
The Trustee may resign by so notifying Holdings in writing at
least 30 Business Days prior to the date of the proposed resignation.
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The Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of Holdings. Holdings may remove the Trustee
if:
(i) the Trustee fails to comply with Section 7.9 of this
Indenture;
(ii) the Trustee is adjudged a bankrupt or an insolvent;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) 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, Holdings 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 outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by
Holdings. If the successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Holdings or the
Holders of a majority in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section 6.9
of this Indenture, (i) the retiring Trustee shall transfer all property held by
it as Trustee to the successor Trustee, (ii) the resignation or removal of the
retiring Trustee shall become effective and (iii) 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 Holder.
If the Trustee fails to comply with Section 7.9 of this
Indenture, any Holder who satisfies the requirements of TIA Section 310(b) 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 7.7, Holdings' obligations under Section 7.6 of this Indenture shall
continue for the benefit of the retiring Trustee.
SECTION 7.8 Successor Trustee by Merger, Etc. If the
Trustee consolidates with, merges or converts into, or transfers all or
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substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee corporation
or national banking association without any further act shall be the successor
Trustee with the same effect as if the successor Trustee had been named as the
Trustee herein.
SECTION 7.9 Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee
shall have a combined capital and surplus of at least $25,000,000 as set forth
in its most recent published annual report of condition.
SECTION 7.10 Money Held in Trust. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
with Holdings. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law and except for money held in
trust under Article 8 of this Indenture.
ARTICLE 8.
Discharge of Indenture
SECTION 8.1 Termination of Holdings' Obligations. Except as
otherwise provided in this Section 8.1, Holdings may terminate its obligations
under the Securities and this Indenture if:
(i) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities that are paid pursuant to Section 4.1 of this
Indenture or Securities for whose payment money or securities have
theretofore been held in trust and thereafter repaid to Holdings, as
provided in Section 8.5 of this Indenture) have been delivered to the
Trustee for cancellation and Holdings has paid all sums payable by it
hereunder; or
(ii) (A) the Securities mature within one year or all of them
are to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B)
Holdings irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if any, and interest on the Securities to maturity
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or redemption, as the case may be, and to pay all other sums payable by
it hereunder, (C) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, (D) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which Holdings is a party or by which it is bound and (E)
Holdings has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), Holdings'
obligations under Section 7.6 of this Indenture shall survive. With respect to
the foregoing clause (ii), Holdings' obligations in Sections 2.2, 2.3, 2.4, 2.5,
2.6, 2.11, 4.1, 4.2, 7.6, 7.7, 8.4, 8.5 and 8.6 of this Indenture shall survive
until the Securities are no longer outstanding. Thereafter, only Holdings'
obligations in Sections 7.6, 8.5 and 8.6 of this Indenture shall survive. After
any such irrevocable deposit, the Trustee upon request shall acknowledge in
writing the discharge of Holdings' obligations under the Securities and this
Indenture except for those surviving obligations specified above.
SECTION 8.2 Defeasance and Discharge of Indenture. Holdings
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Securities and the provisions of this Indenture will no longer
be in effect with respect to the Securities on the 123rd day after the date of
the deposit referred to below, and the Trustee, at the expense of Holdings,
shall execute proper instruments acknowledging the same, except as to (i) rights
of registration of transfer and exchange, (ii) substitution of apparently
mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of
Holders to receive payments of principal thereof and interest thereon, (iv)
Holdings' obligations under Section 4.2, (v) the rights, obligations and
immunities of the Trustee hereunder and (vi) the rights of the Holders as
beneficiaries of this Indenture with respect to the property so deposited with
the Trustee payable to all or any of them; provided that the following
conditions shall have been satisfied:
(A) with reference to this Section 8.2, Holdings has
irrevocably deposited or caused to be irrevocably deposited
with the Trustee (or another trustee satisfying the
requirements of Section 7.9 of this Indenture) and conveyed all
right, title and interest for the benefit of the Holders, under
the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust,
specifically pledged to the Trustee for the benefit of the
Holders as security for payment of the principal of, premium,
if any, and interest, if any, on the Securities, and dedicated
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solely to, the benefit of the Holders, in and to (1) money in
an amount, (2) U.S. Government Obligations that, through the
payment of interest and principal in respect thereof in
accordance with their terms, will provide, not later than one
day before the due date of any payment referred to in this
clause (A), money in an amount or (3) a combination thereof in
an amount 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, without consideration of the reinvestment of such
interest and after payment of all federal, state and local
taxes or other charges and assessments in respect thereof
payable by the Trustee, the principal of, premium, if any, and
interest on the outstanding Securities at the Stated Maturity
of such principal or interest; provided that the Trustee shall
have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of
such principal, premium, if any, and interest with respect to
the Securities;
(B) such deposit will not result in a breach or
violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which Holdings is a party
or by which it is bound;
(C) immediately after giving effect to such deposit
on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or
during the period ending on the 123rd day after such date of
deposit;
(D) Holdings shall have delivered to the Trustee (1)
either (x) a ruling directed to the Trustee received from the
Internal Revenue Service to the effect that the Holders will
not recognize income, gain or loss for federal income tax
purposes as a result of Holdings' exercise of its option under
this Section 8.2 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
or (y) an Opinion of Counsel to the same effect as the ruling
described in clause (x) above accompanied by a ruling to that
effect published by the Internal Revenue Service, unless there
has been a change in the applicable federal income tax law
since the date of this Indenture such that a ruling from the
Internal Revenue Service is no longer required and (2) an
Opinion of Counsel to the effect that (x) the creation of the
defeasance trust does not violate the Investment Company Act of
1940 and (y) after the passage of 123 days following the
deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an "insider" for
purposes of the United States Bankruptcy Code, after one year
following the deposit), the trust funds will not be subject
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to the effect of Section 547 of the United States Bankruptcy
Code or Section 15 of the New York Debtor and Creditor Law in a
case commenced by or against Holdings under either such
statute, and either (I) the trust funds will no longer remain
the property of Holdings (and therefore will not be subject to
the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally) or (II) if a court were to rule under any such law
in any case or proceeding that the trust funds remained
property of Holdings, (a) assuming such trust funds remained in
the possession of the Trustee prior to such court ruling to the
extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid and perfected security interest
in such trust funds that is not avoidable in bankruptcy or
otherwise except for the effect of Section 552(b) of the United
States Bankruptcy Code on interest on the trust funds accruing
after the commencement of a case under such statute, (b) the
Holders will be entitled to receive adequate protection of
their interests in such trust funds if such trust funds are
used in such case or proceeding, and (c) no property, rights in
property or other interests granted to the Trustee or the
Holders in exchange for, or with respect to, such trust funds
will be subject to any prior rights of holders of Senior
Indebtedness, including, without limitation, those arising
under Article 10 of this Indenture;
(E) if the Securities are then listed on a national
securities exchange, Holdings shall have delivered to the
Trustee an Opinion of Counsel to the effect that such deposit,
defeasance and discharge will not cause the Securities to be
delisted;
(F) the Successor Corporation, if any, shall not be
prohibited from making payments in respect of the Securities by
the provisions of Article 10 hereof; and
(G) Holdings has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, in each case
stating that all conditions precedent provided for herein
relating to the defeasance contemplated by this Section 8.2
have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day
period referred to in clause (D)(2)(y) above, none of Holdings' obligations
under this Indenture shall be discharged. Subsequent to the end of such 123-day
period with respect to this Section 8.2, Holdings' obligations in Sections 2.2,
2.3, 2.4, 2.5, 2.6, 2.11, 4.1, 4.2, 7.6, 7.7, 8.5 and 8.6 of this Indenture
shall survive until the Securities are no longer outstanding. Thereafter, only
Holdings' obligations in Sections 7.6, 8.5 and 8.6 of this Indenture shall
survive. If and when a ruling from the Internal Revenue Service or an Opinion of
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Counsel referred to in clause (D)(l) above is able to be provided specifically
without regard to, and not in reliance upon, the continuance of Holdings'
obligations under Section 4.1 of this Indenture, then Holdings' obligations
under such Section 4.1 of this Indenture shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance contemplated
by this Section 8.2.
After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of Holdings' obligations under the
Securities and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.3 Defeasance of Certain Obligations. Holdings may
omit to comply with any term, provision or condition set forth in clauses (iii)
and (iv) of Section 5.1 and Sections 4.3 through 4.14 of this Indenture, and
clause (iii) of Section 6.1 of this Indenture with respect to such Sections and
clauses (iii) and (iv) of Section 5.1 and clauses (iv) and (v) of Section 6.1 of
this Indenture shall be deemed not to be Events of Default, and if the
defeasance is permitted under the Silgan Credit Agreement, Article 10 of this
Indenture shall not apply, in each case with respect to the outstanding
Securities, if:
(i) with reference to this Section 8.3, Holdings has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.9
of this Indenture) and conveyed all right, title and interest to the
Trustee for the benefit of the Holders, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee as trust funds in trust, specifically pledged to the Trustee
for the benefit of the Holders as security for payment of the principal
of, premium, if any, and interest, if any, on the Securities, and
dedicated solely to, the benefit of the Holders, in and to (A) money in
an amount, (B) U.S. Government Obligations that, through the payment of
interest and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount 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, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee, the
principal of, premium, if any, and interest on the outstanding
Securities on the Stated Maturity of such principal or interest;
provided that the Trustee shall have been irrevocably instructed to
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apply such money or the proceeds of such U.S. Government Obligations to
the payment of such principal, premium, if any, and interest with
respect to the Securities;
(ii) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which Holdings is a party or by which it is
bound;
(iii) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(iv) Holdings has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940, (B) the Holders
have a valid first-priority security interest in the trust funds, (C)
the Holders will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and defeasance of certain
obligations 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 deposit and defeasance had not occurred and (D) after
the passage of 123 days following the deposit (except, with respect to
any trust funds for the account of any Holder who may be deemed to be
an "insider" for purposes of the United States Bankruptcy Code, after
one year following the deposit), the trust funds will not be subject to
the effect of Section 547 of the United States Bankruptcy Code or
Section 15 of the New York Debtor and Creditor Law in a case commenced
by or against Holdings under either such statute, and either (1) the
trust funds will no longer remain the property of Holdings (and
therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally) or (2) if a court were to rule under any
such law in any case or proceeding that the trust funds remained
property of Holdings, (x) assuming such trust funds remained in the
possession of the Trustee prior to such court ruling to the extent not
paid to the Holders, the Trustee will hold, for the benefit of the
Holders, a valid and perfected security interest in such trust funds
that is not avoidable in bankruptcy or otherwise except for the effect
of Section 552(b) of the United States Bankruptcy Code on interest on
the trust funds accruing after the commencement of a case under such
statute, (y) the Holders will be entitled to receive adequate
protection of their interests in such trust funds if such trust funds
are used in such case or proceeding and (z) no property, rights in
property or other interests granted to the Trustee or the Holders in
exchange for, or with respect to, such trust funds will be subject to
any prior rights of holders of Senior Indebtedness, including, without
limitation, those arising under Article 10 of this Indenture;
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(v) if the Securities are then listed on a national
securities exchange, Holdings shall have delivered to the Trustee an
Opinion of Counsel to the effect that such deposit defeasance and
discharge will not cause the Securities to be delisted;
(vi) the Successor Corporation, if any, shall not be
prohibited from making payments in respect of the Securities by the
provisions of Article 10 hereof; and
(vii) Holdings has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.3 have been complied with.
In the event Holdings exercises its option to omit compliance
with certain covenants and provisions of this Indenture with respect to the
Securities as described in this Section 8.3 and the Securities are declared due
and payable because of the occurrence of an Event of Default that remains
applicable and the amount of money and/or U.S. Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Securities at the
time of their Stated Maturity but are not sufficient to pay amounts due on the
Securities at the time of the acceleration resulting from such Event of Default,
Holdings shall remain liable for such payments.
SECTION 8.4 Application of Trust Money. Subject to Section 8.6
of this Indenture, the Trustee or Paying Agent shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to Section 8.1, 8.2 or 8.3 of
this Indenture, as the case may be, and shall apply the deposited money and the
money from U.S. Government Obligations in accordance with the Securities and
this Indenture to the payment of principal of, premium, if any, and interest on
the Securities; but such money need not be segregated from other funds except to
the extent required by law.
SECTION 8.5 Repayment to Holdings. Subject to Sections 7.6,
8.1, 8.2 and 8.3 of this Indenture, the Trustee and the Paying Agent shall
promptly pay to Holdings upon request set forth in an Officers' Certificate any
excess money held by them at any time and thereupon shall be relieved from all
liability with respect to such money. The Trustee and the Paying Agent shall pay
to Holdings upon request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years; provided that
the Trustee or such Paying Agent before being required to make any payment may
cause to be published at the expense of Holdings once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money at such Holder's address (as set forth in the Security Register) notice
that such money remains unclaimed and that after a date specified therein (which
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shall be at least 30 days from the date of such publication or mailing) any
unclaimed balance of such money then remaining will be repaid to Holdings. After
payment to Holdings, Holders entitled to such money must look to Holdings for
payment as general creditors unless an applicable law designates another Person,
and all liability of the Trustee and such Paying Agent with respect to such
money shall cease.
SECTION 8.6 Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03 of this Indenture, as the case may be, 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, Holdings' obligations under this Indenture and the Securities shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.01, 8.02 or 8.03 of this Indenture, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.01, 8.02 or 8.03 of this Indenture, as
the case may be; provided that, if Holdings has made any payment of principal
of, premium if any, or interest on any Securities because of the reinstatement
of its obligations, Holdings shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9.
Amendments, Supplements and Waivers
SECTION 9.1 Without Consent of Holders. Holdings, when
authorized by a resolution of its Board of Directors, and the Trustee may amend
or supplement this Indenture or the Securities without notice to or the consent
of any Holder;
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5 of this Indenture;
(3) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(4) to provide for uncertificated Securities in addition
to or in place of certificated Securities; or
(5) to make any change that does not adversely affect the
rights of any Holder.
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SECTION 9.2 With Consent of Holders. Subject to Sections 6.4
and 6.7 of this Indenture and without prior notice to the Holders, Holdings,
when authorized by its Board of Directors (as evidenced by a Board Resolution),
and the Trustee may amend this Indenture and the Securities with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Securities then outstanding, and the Holders of a majority in aggregate
principal amount of the Securities then outstanding by written notice to the
Trustee may waive future compliance by Holdings with any provision of this
Indenture or the Securities.
Notwithstanding the provisions of this Section 9.2, without
the consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.4, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or adversely affect any right of repayment
at the option of any Holder of any Security, or change any place of
payment where, or the currency which, any Security or any Premium or
the interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date);
(ii) reduce the percentage in principal amount of the
outstanding Securities required for any such supplemental indenture,
for any waiver of compliance with certain provisions of this Indenture
or certain defaults and their consequences provided for in this
Indenture;
(iii) waive a default in the payment of principal of,
premium, if any, or interest on, any Security;
(iv) modify any of the provisions of this Section 9.2, except
to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Security affected thereby; or
(v) modify any of the provisions of Article 10 in a manner
adverse to the Holders in any material respect; provided, however, that
no such modification of any provision of Article 10 of this Indenture
shall affect adversely the rights of any holder of Senior Indebtedness
of Holdings or the Successor Corporation, or any Indebtedness that
becomes Senior Indebtedness of Holdings or the Successor Corporation
(in the event that the Securities were to become obligations of any
Successor Corporation whether as a result of (i) a Holdings Merger,
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(ii) the sale of all or substantially all of the property and assets of
Silgan or its successors to Holdings, and the assumption by Holdings of
all or substantially all of the liabilities of Silgan or its successors
or (iii) the assumption by Silgan or its successors of Indebtedness
represented by the Securities), at the time outstanding to the benefits
of subordination hereunder without the consent of such holder.
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, Holdings shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. HoldIngs will
mail supplemental indentures to Holders upon request. Any failure of Holdings to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental Indenture or waiver.
SECTION 9.3 Revocation and Effect of Consent. Until an
amendment or waiver 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 Security of the
consenting Holder, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to its
Security or portion of its Security. Such revocation shall be effective only if
the Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver shall
become effective on receipt by the Trustee of written consents from the Holders
of the requisite percentage in principal amount of the outstanding Securities.
Holdings 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. If a record date is fixed, then, notwithstanding the last
two sentences 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 consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it is of the type described in any of clauses (i)
through (v) of Section 9.2 of this Indenture. In case of an amendment or waiver
of the type described in clauses (i) through (v) of Section 9.2 of this
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Indenture, the amendment or waiver shall bind each Holder who has consented to
it and every subsequent Holder of a Security that evidences the same
indebtedness as the Security of the consenting Holder.
SECTION 9.4 Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder 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 and the Trustee may place an appropriate notation on any Security
thereafter authenticated. Alternatively, if Holdings or the Trustee so
determines, Holdings in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms.
SECTION 9.5 Trustee to Sign Amendments, Etc. The Trustee shall
be entitled to receive, and shall be fully protected in relying upon an Opinion
of Counsel, reasonably acceptable to the Trustee, stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article 9 is
authorized or permitted by this Indenture. Subject to the preceding sentence,
the Trustee shall sign such amendment, supplement or waiver if the same does not
adversely affect the rights of the Trustee. The Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.6 Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article 9 shall conform to the
requirements of the TIA as then in effect.
ARTICLE 10.
Subordination of Securities
SECTION 10.1 Securities Subordinated to Senior Indebtedness of
Holdings or the Successor Corporation. Notwithstanding the provisions of Section
6.1 of this Indenture, Holdings covenants and agrees and the Trustee and each
Holder, by its acceptance thereof, likewise covenant and agree that all
Securities shall be issued subject to the provisions of this Article 10; and
each Person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that (i) all payments of
Subordinated Obligations by Holdings or the Successor Corporation (in the event
that the Securities become obligations of any Successor Corporation, whether as
a result of (A) a Holdings Merger, (B) the sale of all or substantially all of
the property and assets of Silgan or its successors to Holdings, and the
assumption by Holdings of all or substantially all of the liabilities of Silgan
or its successors or (C) the assumption by Silgan or its successors of
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of Indebtedness represented by the Securities) shall, to the extent and in the
manner set forth in this Article 10, be subordinated in right of payment to the
prior payment in full, in cash or cash equivalents, of all amounts payable under
Senior Indebtedness of Holdings or the Successor Corporation, as the case may be
(including any interest accruing subsequent to an event specified in clause (vi)
or (vii) of Section 6.1 of this Indenture, whether or not such interest is an
allowed claim enforceable against the debtor under the United States Bankruptcy
Code), existing on the date of such transaction or assumed or incurred
thereafter and (ii) other than as set forth in clause (i) above, the Securities
will not be subordinated by their terms to any other existing or future
indebtedness of Holdings or its successors.
SECTION 10.2 No Payment on Securities in Certain
Circumstances. (a) No direct or indirect payment by or on behalf of Holdings or
a Successor Corporation of Subordinated Obligations, whether pursuant to the
terms of the Securities or upon acceleration or otherwise, shall be made if, at
the time of such payment, there exists a default in the payment of all or any
portion of the obligations on any Senior Indebtedness and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of such Senior Indebtedness.
(b) During the continuance of any other event of
default with respect to (i) the Silgan Credit Agreement pursuant to which the
maturity thereof may be accelerated and (a) upon receipt by the Trustee of
written notice from the Bank Agent or (b) if such event of default under the
Silgan Credit Agreement results from the acceleration of the Securities, from
and after the date of such acceleration, no payment of Subordinated Obligations
may be made by or on behalf of Holdings or a Successor Corporation upon or in
respect of the Securities for a period (a "Payment Blockage Period") commencing
on the earlier of the date of receipt of such notice or the date of such
acceleration and ending 159 days thereafter (unless such Payment Blockage Period
shall be terminated by written notice to the Trustee from the Bank Agent or such
event of default has been cured or waived) or (ii) any other Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated, upon
receipt by the Trustee of written notice from the trustee or other
representative for the holders of such other Designated Senior Indebtedness (or
the holders of at least a majority in principal amount of such other Designated
Senior Indebtedness then outstanding), no payment of Subordinated Obligations
may be made by or on behalf of Holdings or a Successor Corporation upon or in
respect of the Securities for a Payment Blockage Period commencing on the date
of receipt of such notice and ending 119 days thereafter (unless, in each case,
such Payment Blockage Period shall be terminated by written notice to the
Trustee from such trustee or other representatives for such holders). Not more
than one Payment Blockage Period may be commenced with respect to the Securities
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during any period of 360 consecutive days; provided that, subject to the
limitations set forth in the next sentence, the commencement of a Payment
Blockage Period by the representatives for, or the holders of, Designated Senior
Indebtedness other than under the Silgan Credit Agreement or under clause (i)(b)
of this paragraph shall not bar the commencement of another Payment Blockage
Period by the Bank Agent within such period of 360 consecutive days.
Notwithstanding anything in this Indenture to the contrary, there must be 180
consecutive days in any 360-day period in which no Payment Blockage Period is in
effect. For all purposes of this Section 10.2(b), no event of default (other
than an event of default pursuant to the financial maintenance covenants under
the Silgan Credit Agreement) that existed or was continuing (it being
acknowledged that any subsequent action that 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) on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis for the commencement of a second Payment
Blockage Period by the representative for, or the holders of, such Designated
Senior Indebtedness, 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.
(c) 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) or 10.2(b) of this Indenture, the
Trustee shall promptly notify the holders of Senior Indebtedness of such
prohibited payment and such payment shall be held in trust for the benefit of,
and shall be paid over or delivered to, the holders of Senior Indebtedness or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice from the Trustee to the holders of Senior Indebtedness that such
prohibited payment has been made, the holders of the Senior Indebtedness (or
their representative or representatives or a trustee) within 30 days of receipt
of such notice from the Trustee notify the Trustee of the amounts then due and
owing on the Senior Indebtedness, if any, and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
SECTION 10.3 Payment over of Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets or securities of Holdings or a
Successor Corporation of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or partial liquidation
or reorganization of Holdings or a Successor Corporation, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
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amounts due or to become due upon all Senior Indebtedness (including any
interest accruing subsequent to an event specified in Sections 6.1(vi) and
6.1(vii) of this Indenture, whether or not such interest is an allowed claim
enforceable against the debtor under the United States Bankruptcy Code) shall
first be paid in full, in cash or cash equivalents, before the Holders or the
Trustee on behalf of the Holders shall be entitled to receive any payment by
Holdings or a Successor Corporation on account of Subordinated Obligations, or
any payment to acquire any of the Securities for cash, property or securities,
or any distribution with respect to the Securities of any cash, property or
securities. Before any payment may be made by or on behalf of Holdings or a
Successor Corporation of any Subordinated Obligations upon any such dissolution,
winding up, liquidation or reorganization, any payment or distribution of assets
or securities of the Successor Corporation of any kind or character, whether in
cash, property or securities, to which the Holders or the Trustee on behalf of
the Holders would be entitled, but for the provisions of this Article 10, shall
be made by Holdings or a Successor Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, or by the Holders or the Trustee if received by them or
it, directly to the holders of the Senior Indebtedness (pro rata to such holders
on the basis of the respective amounts of Senior Indebtedness held by such
holders) or their representatives, or to the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued,
as their respective interests appear, to the extent necessary to pay all such
Senior Indebtedness 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 Indebtedness.
(b) To the extent any payment of Senior Indebtedness
(whether by or on behalf of Holdings, a Successor Corporation, 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, 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 Indebtedness or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay any Senior Indebtedness
is declared to be fraudulent, invalid or otherwise set aside under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
the obligations so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligations not
been so affected) shall be deemed to be reinstated and outstanding as Senior
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Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
(c) In the event that, notwithstanding the
foregoing provision prohibiting such payment or distribution, any payment or
distribution of assets or securities of the Successor Corporation of any kind or
character, whether in cash, property or securities, shall be received by the
Trustee or any Holder at a time when such payment or distribution is prohibited
by Section 10.3(a) of this Indenture and before all obligations in respect of
Senior Indebtedness are paid in full, in cash or cash equivalents, such payment
or distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amount of Senior Indebtedness
held by such holders) or their representatives, or to the trustee or trustees
under any other indenture pursuant to which any such Senior Indebtedness may
have been issued, as their respective interests appear, for application to the
payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness 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 Indebtedness.
(d) For purposes of this Section 10.3, the words
"cash, property or securities" shall not be deemed to include, so long as the
effect of this clause is not to cause the Securities to be treated in any case
or proceeding or similar event described in this Section 10.3 as part of the
same class of claims as the Senior Indebtedness or any class of claims pari
passu with, or senior to, the Senior Indebtedness for any payment or
distribution, securities of Holdings or the Successor Corporation, as the case
may be, or any other corporation provided for by a plan of reorganization or
readjustment that are subordinated at least to the extent that the Securities
are subordinated to the payment of all Senior Indebtedness then outstanding;
provided that (1) if a new corporation results from such reorganization or
readjustment, such corporation assumes the Senior Indebtedness and (2) the
rights of the holders of the Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment. The consolidation
of Holdings or the Successor Corporation, as the case may be, with, or the
merger of Holdings or the Successor Corporation, as the case may be, with or
into, another corporation or the liquidation or dissolution of Holdings or the
Successor Corporation, as the case may be, following the sale, conveyance,
transfer, lease or other disposition of all or substantially all of its property
and assets to another corporation upon the terms and conditions provided in
Article 5 of this Indenture shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this Section 10.3 if such
other corporation shall, as a part of such consolidation, merger, sale,
conveyance, transfer, lease or other dispotition, comply with the conditions
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stated in Article 5 of this Indenture.
SECTION 10.4 Subrogation. (a) Upon the payment in full of all
Senior Indebtedness in cash or cash equivalents, the Holders shall be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of Holdings or the Successor
Corporation, as the case may be, made on such Senior Indebtedness until the
principal of, premium, if any, and Interest on the Securities shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the Holders or the Trustee on their behalf would be entitled except for
the provisions of this Article 10, and no payment pursuant to the provisions of
this Article 10 to the holders of Senior Indebtedness by Holders or the Trustee
on their behalf shall, as between the Successor Corporation, its creditors other
than holders of Senior Indebtedness and the Holders, be deemed to be a payment
by Holdings or the Successor Corporation, as the case may be, to or on account
of the Senior Indebtedness. It is understood that the provisions of this Article
10 are intended solely for the purpose of defining the relative rights of the
Holders on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
(b) If any payment or distribution to which the
Holders would otherwise have been entitled but for the provisions of this
Article 10 shall have been applied, pursuant to the provisions of this Article
10, to the payment of all amounts payable under Senior Indebtedness, then, and
in such case, the Holders shall be entitled to receive from the holders of such
Senior Indebtedness any payments or distributions received by such holders of
Senior Indebtedness in excess of the amount required to make payment in full, in
cash or cash equivalents, of such Senior Indebtedness of such holders.
SECTION 10.5 Obligations of Holdings and the Successor
Corporation Unconditional. (a) Nothing contained in this Article 10 or elsewhere
in this Indenture or in the Securities is intended to or shall impair, as among
Holdings or the Successor Corporation, as the case may be, and the Holders, the
obligation of Holdings or the Successor Corporation, as the case may be, which
is absolute and unconditional, to pay to the Holders the principal of, premium,
if any, and 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 and creditors of Holdings or the Successor
Corporation, as the case may be, other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Holders or the
Trustee on their behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article 10 of the holders of the Senior Indebtedness in respect of
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cash, property or securities of Holdings or the Successor Corporation, as the
case may be, received upon the exercise of any such remedy.
(b) Without limiting the generality of the
foregoing, nothing contained in this Article 10 will restrict the right of the
Trustee or the Holders to take any action to declare the Securities to be due
and payable prior to their Stated Maturity pursuant to Section 6.1 of this
Indenture or to pursue any rights or remedies hereunder; provided, however, that
all Senior Indebtedness then due and payable or thereafter declared to be due
and payable shall first be paid in full, in cash or cash equivalents, before the
Holders or the Trustee are entitled to receive any direct or indirect payment
from the Successor Corporation of Subordinated Obligations.
SECTION 10.6 Notice to Trustee. (a) Holdings or the Successor
Corporation, as the case may be, shall give prompt written notice to the Trustee
of any fact known to Holdings or the Successor Corporation, as the case may be,
that would prohibit the making of any payment to or by the Trustee in respect of
the Securities pursuant to the provisions of this Article 10. The Trustee shall
not be charged with knowledge of the existence of any default or event of
default with respect to any Senior Indebtedness or of any other facts that would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing at its Corporate Trust Office to
that effect signed by an Officer of Holdings or the Successor Corporation, as
the case may be, or by a holder of Senior Indebtedness or trustee or agent
therefor; and prior to the receipt of any such written notice, the Trustee
shall, subject to Article 7 of this Indenture, be entitled to assume that no
such facts exist; provided that, if the Trustee shall not have received the
notice provided for in this Section 10.6 at least two Business Days prior to the
date upon which, by the terms of this Indenture, any monies shall become payable
for any purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security), then, notwithstanding anything
herein to the contrary, the Trustee shall have full power and authority to
receive any monies from Holdings or the Successor Corporation, as the case may
be, and to apply the same to the purpose for which they were received, and shall
not be affected by any notice to the contrary that may be received by it on or
after such prior date except for an acceleration of the Securities prior to such
application. Nothing contained in this Section 10.6 shall limit the right of the
holders of Senior Indebtedness to recover payments as contemplated by this
Article 10. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Indebtedness (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder.
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(b) 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 Indebtedness to participate in any payment or distribution
pursuant to this Article 10, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness 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 10 and, if such
evidence is not furnished to the Trustee, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 10.7 Reliance of Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets or securities
referred to in this Article 10, the Trustee and the Holders 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 similar Person making such
payment or distribution, delivered to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
Holdings or the Successor Corporation, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.8 Trustee's Relation to Senior Indebtedness. (a)
The Trustee and any paying Agent shall be entitled to all the rights set forth
in this Article 10 with respect to any Senior Indebtedness that 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 Indebtedness and nothing in this Indenture shall deprive
the Trustee or any Paying Agent of any of its rights as such holder.
(b) With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article 10, and
no implied covenants or obligations with respect to the holders of Senior
Indebtedness 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
Indebtedness (except to the extent that it may hold funds for the benefit of the
holders of Senior Indebtedness as provided in Sections 10.2(c) and 10.3(c) of
this Indenture).
SECTION 10.9 Subordination Rights Not Impaired by Acts or
Omissions of Holdings or the Successor Corporation or Holders of Senior
Indebtedness. No right of any present or future holders of any Senior
Indebtedness to enforce subordination as provided in this Article 10 will at
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any time in any way be prejudiced or impaired by any act or failure to act on
the part of Holdings or the Successor Corporation or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by Holdings or
the Successor Corporation with the terms of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
The provisions of this Article 10 are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 10.10 Holders Authorize Trustee to Effectuate
Subordination of Securities. Each Holder by his acceptance of any Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article 10 and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of Holdings or the Successor Corporation, as the case may be
(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 property and assets of Holdings or the
Successor Corporation, the filing of a claim for the unpaid balance of its
Securities in the form required in those proceedings. If the Trustee does not
file a proper claim or proof of indebtedness in the form required in such
proceeding at least 30 days before the expiration of the time to file such claim
or claims, each holder of Senior Indebtedness is hereby authorized to file an
appropriate claim for and on behalf of the Holders.
SECTION 10.11 Not to Prevent Events of Default. The failure to
make a payment on account of principal of, premium, if any, 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 10.12 Trustee's Compensation Not Prejudiced. Nothing
in this Article 10 will apply to amounts due to the Trustee pursuant to other
Sections of this Indenture.
SECTION 10.13 No Waiver of Subordination Provisions. Without
in any way limiting the generality of Section 10.9 of this Indenture, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Holders and without impairing or releasing the
subordination provided in this Article 10 or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
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outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against
Holdings or the Successor Corporation and any other person.
SECTION 10.14 Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article 10 or elsewhere in this Indenture shall
prevent (i) Holdings or the Successor Corporation, as the case may be, except
under the conditions described in Section 10.2 or 10.3 of this Indenture, from
making payments of principal of, premium, if any, and interest on the
Securities, or from depositing with the Trustee any money for such payments, or
(ii) the application by the Trustee of any money deposited with it for the
purpose of making such payments of principal of, premium, if any, and interest
on the Securities to the holders entitled thereto unless, at least two Business
Days prior to the date upon which such payment becomes due and payable, the
Trustee shall have received the written notice provided for in Section 10.2(b)
(or there shall have been an acceleration of the Securities prior to such
application) or in Section 10.6 of this Indenture. Holdings or the Successor
Corporation, as the case may be, shall give prompt written notice to the Trustee
of any dissolution, winding up, liquidation or reorganization of Holdings or the
Successor Corporation, as the case may be.
ARTICLE 11.
Miscellaneous
SECTION 11.1 Trust Indenture Act of 1939. This Indenture is
subject to the provisions of the TIA that are required to be a part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 11.2 Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail addressed as follows:
if to Holdings:
Silgan Holdings Inc.
4 Landmark Square
Stamford, CT 06901
Attention: Harley Rankin, Jr.
-79-
<PAGE>
if to the Trustee:
Fleet National Bank
111 Westminster Street
Mail Code 199
Providence, RI 02903
Attention: Corporate Trust Department
Holdings or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Security Register by first class mail
and shall be sufficiently given to him if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
and except as otherwise provided in this Indenture, if a notice or communication
is mailed in the manner provided above, it is duly given, whether or not the
addressee received it.
SECTION 11.3 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by Holdings to the Trustee to take
any action under this Indenture Holdings shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
SECTION 11.4 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in the Indenture shall include:
(i) a statement that the person making such certificate or
opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
-80-
<PAGE>
(iii) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with, and such
other opinions as the Trustee may reasonably request; provided,
however, that, with respect to matter of fact, an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.5 Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.6 Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Stated Maturity or date of maturity of
any Security shall not be a Business Day at any place of payment, then payment
of principal of, premium, if any, or interest on such Security as the case may
be, need not be made on such date, but may be made on the next succeeding
Business Day at such place of payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity or
date of maturity of such Security; provided that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or date of maturity, as the case may be.
SECTION 11.7 Governing Law. The laws of the State of New York
shall govern this Indenture and the Securities. The Trustee, Holdings and the
Holders agree to submit to the jurisdiction of the courts of the State of New
York in any action or proceeding arising out of or relating to this Indenture or
the Securities.
SECTION 11.8 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of Holdings or any Subsidiary of Holdings. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.9 No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the
Securities, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of Holdings
contained in this Indenture, or in any of the Securities, or because of the
creation of any Indebtedness represented thereby, shall be had against any
incorporator or against any past, present or future shareholder, officer,
director, employee or controlling person of Holdings or of any successor Person,
-81-
<PAGE>
either directly or through Holdings or any successor Person, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Securities.
SECTION 11.10 Successors. All agreements of Holdings in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.11 Duplicate Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.
SECTION 11.12 Separability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.13 Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
-82-
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
SILGAN HOLDINGS INC.,
as Issuer
By:/s/ Harley Rankin, Jr.
-----------------------------
Harley Rankin, Jr.
Executive Vice President,
Chief Financial Officer and
Treasurer
FLEET NATIONAL BANK,
as Trustee
By:/s/ Frank Kimball
-----------------------------
Name: Frank Kimball
Title: Vice President
-83-
<PAGE>
STATE OF CONNECTICUT)
) ss.:
COUNTY OF FAIRFIELD)
On this 28th day of October, 1996, before me personally came Harley
Rankin, Jr., to me known, who, being by me duly sworn, did depose and say that
he resides at 66 Stanton Road, Darien, CT 06820, that he is Executive Vice
President, Chief Financial Officer and Treasurer of Silgan Holdings Inc., one of
the corporations described in and that executed the above instrument; and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
/s/ Sharon Budds
--------------------------------
Notary Public
(Notarial Seal)
STATE OF RHODE ISLAND)
) ss.:
COUNTY OF PROVIDENCE )
On this 23rd day of October, 1996, before me personally came Frank
Kimball to me known, who, being by me duly sworn, did depose and say that he
resides at , that he is a Vice President of Fleet National Bank, a national
banking association described in and that executed the above instrument; and
that he signed his name thereto by authority of the Board of Directors of said
association.
/s/ Vincenza D. Williams
---------------------------------
Notary Public
(Notarial Seal)
<PAGE>
Exhibit 4.11
(FACE OF DEBENTURE)
SILGAN HOLDINGS INC.
Subordinated Debentures due 2006
No. $
SILGAN HOLDINGS INC., a Delaware corporation ("Holdings,"
which term includes any successor corporation) under the Indenture hereinafter
referred to, for value received, promises to pay to _________________ or its
registered assigns, the principal sum of __________________ on July 15, 2006.
Interest Payment Dates: January 15 and July 15, commencing on
the Issue Date of the Debentures.
Regular Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, Holdings has caused this Debenture to be
signed manually or by facsimile by its duly authorized officers.
SILGAN HOLDINGS INC.
By:-----------------------------
Chairman of the Board and
Chief Executive Officer
By:-----------------------------
Executive Vice President
and Chief Financial Officer
A-1
<PAGE>
(Form of Trustee's Certificate of Authentication)
This is one of the Subordinated Debentures due 2006 described in the
within-mentioned Indenture.
Authentication Date: ___________, _____
FLEET NATIONAL BANK,
as Trustee
By:-----------------------------
Authorized Signature
A-2
<PAGE>
(REVERSE SIDE OF DEBENTURE)
SILGAN HOLDINGS INC.
Subordinated Debentures due 2006
1. Principal and Interest.
-----------------------
Holdings will pay the principal of this Debenture on July 15, 2006.
Holdings promises to pay interest on the principal amount of this
Debenture on each Interest Payment Date commencing on the first Interest Payment
Date after the date that this Debenture is issued (the "Issue Date") as set
forth below, at a rate per annum (the "Interest Rate") equal to the dividend
rate in effect on the Closing Date with respect to Holdings' 13-1/4% Cumulative
Exchangeable Redeemable Preferred Stock.
Interest will be payable semiannually (to the holders of record of the
Debentures at the close of business on January 1 or July 1 immediately preceding
the applicable Interest Payment Date) in cash or, on or prior to July 15, 2000,
at the option of Holdings, in additional Debentures in an aggregate principal
amount equal to such interest, in arrears on each Interest Payment Date,
commencing on the first Interest Payment Date after the Issue Date. From and
after the Interest Payment Date following July 15, 2000, interest will be
payable only in cash. Interest on the Debentures will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the Issue Date; provided that, if there is no existing default in the
payment of interest and if this Debenture is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed.
Holdings shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at the
rate per annum of the Interest Rate plus 2%.
2. Method of Payment.
------------------
Holdings will pay interest (except defaulted interest) on the principal
amount of the Debentures on each January 15 and July 15, commencing with the
first such date after the Issue Date, to the persons who are Holders (as
reflected in the Security Register) at the close of business on the January 1
and July 1 immediately preceding the Interest Payment Date, in each
A-3
<PAGE>
case, even if the Debenture is canceled on registration of transfer or
registration of exchange after such record date; provided that, with respect to
the payment of principal, Holdings will make payment to the Holder that
surrenders this Debenture to a Paying Agent on or after July 15, 2006. Holdings
will pay principal, premium, if any, and interest (other than interest that
Holdings pays by issuing additional Debentures) in money of the United States
that at the time of payment is legal tender for payment of public and private
debts. However, Holdings may pay principal, premium, if any, and interest by its
check payable in such money. It may mail an interest check to a Holder's
registered address (as reflected in the Security Register) . If a payment date
is a date other than a Business Day at a place of payment, payment may be made
at that place on the next succeeding day that is a Business Day and no interest
shall accrue for the intervening period.
3. Paying Agent and Registrar.
---------------------------
Initially, the Trustee will act as authenticating agent, Paying Agent
and Registrar. Holdings may change any authenticating agent, Paying Agent or
Registrar without notice. Holdings, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-registrar.
4. Indenture; Limitations.
-----------------------
Holdings issued the Debentures under an Indenture dated as of July 22,
1996 (the "Indenture") between Holdings and Fleet National Bank, as trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless
otherwise indicated. The terms of the Debentures include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Debentures are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Debenture and the terms of the
Indenture, the terms of the Indenture shall control.
The Debentures are general obligations of Holdings. The Indenture
limits the original aggregate principal amount of the Debentures to the
aggregate liquidation preference of, and accrued but unpaid dividends on,
Holdings' 13-1/4% Cumulative Exchangeable Redeemable Preferred Stock on the
Closing Date.
5. Optional Redemption.
--------------------
(a) The Debentures may be redeemed at any time on or after July 15,
2000, at Holdings' option, in whole or in part, upon not less than 30 nor more
than 60 days' prior written notice mailed by first-class mail to each Holder's
last address as it appears in the Security Register, at the Redemption Prices
(expressed as a percentage of the principal amount thereof) set forth below,
A-4
<PAGE>
plus an amount in cash equal to all accumulated and unpaid interest thereon to
the Redemption Date, subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date, if redeemed during the 12-month period
beginning July 15 of each of the years set forth below.
Year Percentage
2000......................................... 109.938%
2001......................................... 106.625%
2002......................................... 103.313%
2003 and thereafter ......................... 100.000%
(b) In addition, on or prior to July 15, 2000, Holdings may redeem all
(but not less than all) outstanding Debentures, at a Redemption Price equal to
110% of the principal amount thereof, plus accrued and unpaid interest to the
Redemption Date, out of the net proceeds of any sale of its common stock,
provided that such redemption occurs within 180 days after consummation of such
sale.
6. 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 a Debenture to be redeemed
at his last address as it appears in the Security Register. Debentures in
original denominations larger than $1.00 may be redeemed in part. On and after
the Redemption Date, interest ceases to accrue on Debentures or portions of
Debentures called for redemption, unless Holdings defaults in the payment of the
Redemption Price.
7. Denominations; Transfer; Exchange.
----------------------------------
The Debentures are in registered form without coupons only in
denominations in original principal amount of $1.00 and multiples in original
principal amount of $1.00. A Holder may register the transfer or exchange of
Debentures in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer or exchange of any Debentures selected
for redemption. Also, it need not register the transfer or exchange of any
Debentures for a period of 15 days before a selection of Debentures to be
redeemed is made.
8. Persons Deemed Owners.
----------------------
A Holder may be treated as the owner of a Debenture for all purposes.
A-5
<PAGE>
9. Unclaimed Money.
----------------
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to Holdings at its request. After that, Holders entitled to the money
must look to Holdings for payment, unless an abandoned property law designates
another Person, and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
------------------------------------------
If Holdings deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest (if any) on the Debentures (a) to redemption or
maturity, Holdings will be discharged from the Indenture and the Debentures,
except in certain circumstances for certain sections thereof, and (b) to the
Stated Maturity, Holdings will be discharged from certain covenants set forth in
the Indenture.
11. Amendment; Supplement: Waiver.
------------------------------
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Debentures then outstanding, and any
existing default or compliance with any provision may be waived with the consent
of the Holders of a majority in aggregate principal amount of the Debentures
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Debentures to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Debentures in addition to or in place of certificated Debentures and make any
change that does not adversely affect the rights of any Holder.
12. Restrictive Covenants.
----------------------
The Indenture imposes certain limitations on the ability of Holdings
and its Subsidiaries to pay dividends, make investments in Unrestricted
Subsidiaries, sell assets, engage in transactions with Affiliates or incur
Indebtedness. At the end of each fiscal quarter, Holdings must report to the
Trustee on compliance with such limitations.
13. Successor Corporations.
-----------------------
When a successor person or other entity assumes all the obligations of
its predecessor under the Debentures and the Indenture, the predecessor person
will be released from those obligations.
A-6
<PAGE>
14. Defaults and Remedies.
----------------------
Events of Default include: a default in payment of principal on the
Debentures; default in the payment of interest on the Debentures for 30 days;
failure by Holdings for 30 days after notice to it to comply with any of its
other agreements in the Indenture; certain events of bankruptcy or insolvency;
certain final judgments which remain undischarged; and certain events of default
on other Indebtedness of Holdings.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Debentures may declare all the Debentures to be due and payable.
If a bankruptcy or insolvency default with respect to Holdings occurs and is
continuing, the Debentures automatically become due and payable. Holders may not
enforce the Indenture or the Debentures except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Debentures. Subject to certain limitations, Holders of at least
a majority in principal amount of the Debentures then outstanding may direct the
Trustee in its exercise of any trust or power.
15. Subordination.
--------------
The payment of the Debentures will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior Indebtedness.
16. Trustee Dealings with Holdings.
-------------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for
Holdings or its Affiliates and may otherwise deal with Holdings or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
---------------------------
No stockholder, director, officer, employee or incorporator as such,
past, present or future, of Holdings or any successor corporation shall have any
liability for any obligations of Holdings under the Debentures or the Indenture
or for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Debenture waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Debentures.
A-7
<PAGE>
18. Authentication.
---------------
This Debenture shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Debenture.
19. Abbreviations.
--------------
Customary abbreviations may be used in the name of a Holder 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).
Holdings will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Silgan Holdings
Inc., 4 Landmark Square, Stamford, CT 06901, Attention: Harold J. Rodriguez, Jr.
A-8
<PAGE>
I or we assign and transfer this Debenture to:
Please insert social security or other identifying number of
assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Print or type name, address and zip code of assignee and
irrevocably appoint ____________________________________ as agent, to transfer
this Debenture on the books of Holdings. The agent may substitute another to act
for him. Dated ______________________ Signed _____________________
- --------------------------------------------------------------------------------
(Sign exactly as the name appears on the other side of this
Debenture)
A-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Debenture purchased by Holdings
pursuant to Section 4.8 or 4.9 of the Indenture, check the Box: [ ].
If you wish to have a portion of this Debenture purchased by
Holdings pursuant to Section 4.8 or 4.9 of the Indenture, state the amount (in
original principal amount):
$---------------
Date:----------------- Your Signature:--------------------
(Sign exactly as your name appears on the other side of this Debenture)
Signature Guarantee: ----------------------
A-10
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the references to our firm under the captions "Selected Historical
and Pro Forma Financial Information" and "Experts" and to the use of our reports
dated March 8, 1996 with respect to the consolidated financial statements of
Silgan Holdings Inc. included in the Registration Statement (Amendment No. 2 to
Form S-4, No. 333-9979) and related Prospectus of Silgan Holdings Inc. for the
registration of 90,000 shares of its exchangeable preferred stock and
$90,000,000 of subordinated debentures due 2006, and to the incorporation by
reference therein of our reports dated March 8, 1996 with respect to the
consolidated financial statements and schedules of Silgan Holdings Inc. included
in its Annual Report (Form 10-K) for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
October 28, 1996
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 2 to the Registration Statement on Form
S-4 of Silgan Holdings Inc. of our report dated September 14, 1995 relating to
the financial statements of the Food Metal & Specialty Division of American
National Can Company, as of December 31, 1994 and 1993 and for each of the three
years in the period ended December 31, 1994, which appears in the Current Report
on form 8-K/A of Silgan Holdings Inc. dated October 16, 1995. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
Chicago, Illinois
October 28, 1996
<PAGE>
EXHIBIT 25
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
----------
/ / CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK
---------------------------------------------------------
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
Not applicable 04-317415
- ------------------------------- -----------------------------
(State of incorporation (I.R.S. Employer
if not a national bank) Identification No.)
One Monarch Place, Springfield, MA 01102
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Pat Beaudry, 777 Main Street, Hartford, CT 06115 (203) 728-2065
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
Silgan Holdings Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 06-1269834
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 Landmark Square
Stamford, Connecticut 06901
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Subordinated Debentures due 2006
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
Item 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:
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise
corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor and underwriter. If the obligor or
any underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.
None with respect to the trustee.
Item 16. List of exhibits.
List below all exhibits filed as a part of this statement of
eligibility and qualification.
(1) A copy of the Articles of Association of the trustee as
now in effect.
(2) A copy of the Certificate of Authority of the trustee
to do business.
(3) A copy of the Certification of Fiduciary Powers of the
trustee.
(4) A copy of the By-Laws of the trustee as now in effect.
(5) Consent of the trustee required by Section 321(b)
of the Act.
(6) A copy of the latest Consolidated Reports of Condition
and Income of the trustee published pursuant to law or
the requirements of its supervising or examining authority.
NOTES
In as much as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base its answer to Item 2, the answer to said Item is
based upon incomplete information. Said Item may, however, be considered correct
unless amended by an amendment to this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, Fleet National Bank, a national banking 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, all in the City of Hartford, and State of
Connecticut, on the 18th day of October, 1996.
FLEET NATIONAL BANK,
AS TRUSTEE
By: /s/ Frank Kimball
-------------------------
Frank Kimball
Its Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FLEET NATIONAL BANK
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Fleet National Bank."
SECOND. The main office of the Association shall be in Springfield, Hampden
County Commonwealth of Massachusetts. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three million
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE>
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and whether they shall be
payable in preference to, or in another relation to, the dividends payable
to any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Association and
whether such rights shall be in preference to, or in another relation to,
the comparable rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of preferred
stock and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions providing for the
issue of any series of preferred stock, after payment shall have been made to
the holders of preferred stock of the full amount of dividends to which they
shall be entitled pursuant to the resolution or resolutions providing for the
issue of any other series of preferred stock, the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE>
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, including service with respect
to an employee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) hereof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association, the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indemnification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
Secretary/Assistant Secretary
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Dated at , as of .
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Revision of February 15, 1996
<PAGE>
EXHIBIT 2
[LOGO]
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COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:
(1) The Comptroller of the Currency, pursuant to Revised Statutes
324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession,
custody and control of all records pertaining to the chartering, regulation and
supervision of all National Banking Associations.
(2) "Fleet National Bank", Springfield, Massachusetts
(Charter No. 1338), is a National Banking Association formed under the
laws of the United States and is authorized thereunder to transact the
business of banking on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department, in the City of
Washington and District of Columbia, this
14th day of August, 1996.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 2
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
Certification of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
the records in this Office evidence "Fleet National Bank",
Springfield, Massachusetts, (Charter No. 1338), was granted, under the hand
and seal of the Comptroller, the right to act in all fiduciary capacities
authorized under the provisions of The Act of Congress approved
September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the
authority so granted remains in full force and effect.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of the Currency
to be affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia, this
4th day of April, 1996.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 4
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the
shareholders shall be mailed, postage prepaid, at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote thereat
at his address as shown upon the books of the Association; but any failure to
mail such notice to any shareholder or any irregularity therein, shall not
affect the validity of such meeting or of any of the proceedings thereat.
Notice of a special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cashier, but no officer, clerk, teller or bookeeper of the Association may act
as a proxy.
<PAGE>
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names of more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meeting by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attanined the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.
-2-
<PAGE>
Section 3. General Powers. The Board of Directors shall exercise all the
coporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and dispositon of all its
property and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time, and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such a meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee, with full voting powers, not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member of the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee or, in his absence, a member of the Committee chosen by
a majority of the members present shall preside at meetings of the Executive
Committee.
-3-
<PAGE>
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts.
All acts done and powers and authority conferred by the Executive Committee,
from time to time, within the scope of its authority, shall be deemed to be,
and may be certified as being, the acts of and under the authority of the
Board.
Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liablity
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its members and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Commitee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls, including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in liew thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.
The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.
-4-
<PAGE>
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Commmunity Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee of the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place and stead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committes of the Board of Directors shall keep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder,
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
-5-
<PAGE>
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and-
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The President shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.
-6-
<PAGE>
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.
-7-
<PAGE>
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, employees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
-8-
<PAGE>
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to time by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.
ARTICLE XI
BUSINESS HOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business on such days, and for such
hours as the Chairman, or the President, or any Executive Vice President, or
such other officer as the Board of Directors shall from time to time
designate, may determine as to each office to conform to local custom and
convenience, provided that any one or more of the main and branch offices or
certain departments thereof may be open for such hours as the President, or
such other officer as the Board of Directors shall from time to time designate,
may determine as to each office or department on any legal holiday on which
work is not prohibited by law, and provided further that any one or more of
the main and branch offices or certain departments thereof may be ordered
closed or open on any day for such hours as to each office or department as
the President, or such other officer as the Board of Directors shall from time
to time designate, subject to applicable laws regulations, may determine when
such action may be required by reason of disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
A true copy
Attest:
Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
-9-
<PAGE>
EXHIBIT 5
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under the Indenture to be entered into between
Silgan Holdings, Inc. and Fleet National Bank, as Trustee,
does hereby consent that, pursuant to Section 321(b) of the Trust Indenture
Act of 1939, reports of examinations with respect to the undersigned by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK,
AS TRUSTEE
By /s/ Frank Kimball
-------------------------------
Frank Kimball
Its: Vice President
Dated:
<PAGE>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Council
- --------------------------------------------------------------------------------
[FEDERAL FINANCIAL Please refer to page i, [1]
INSTITUTIONS EXAMINATION Table of Contents, for
COUNCIL LOGO] the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(960630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Giro S. DeRosa, Vice President
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.
/s/ Giro DeRosa
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
July 25, 1996
- --------------------------------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Banks: Return the original and one copy to the appropriate Federal
Reserve District Bank.
State Nonmember Banks: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
National Banks: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | Banks should affix
--------------------- the address label
(RCRI 90150) in this space.
CALL NO. 196 31 06-30-96
STAR: 25-0590 00327 STCERT: 25-02490
FLEET NATIONAL BANK
ONE MONARCH PLACE
SPRINGFIELD, MA 01102
Board of Governors of the Federal Reserve System, Federal Deposit
Insurance Corporation, Office of the Comptroller of the Currency
<PAGE>
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
___ ___
FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | | Banks should affix the address label in this space. |
______________________
(RCRI 9050) CALL NO. 196 31 06-30-96
STBK: 25-0590 00327 STCERT: 25-02499
FLEET NATIONAL BANK
ONE MONARCH PLACE
SPRINGFIELD, MA 01102
|___ ___|
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
FFIEC 031
Page i
/2/
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
________________________________________________________________________________
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement...........................................RI-1,2,3
Schedule RI-A--Changes in Equity Capital....................................RI-4
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses..................................................................RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..........................................................RI-5
Schedule RI-D--Income from
International Operations..................................................RI-6
Schedule RI-E--Explanations...............................................RI-7,8
REPORT OF CONDITION
Schedule RC--Balance Sheet................................................RC-1,2
Schedule RC-A--Cash and Balances Due
From Depository Institutions..............................................RC-3
Schedule RC-B--Securities...............................................RC-3,4,5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases..............................................RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).....................................................RC-7a,7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)..................................RC-8
Schedule RC-E--Deposit Liabilities....................................RC-9,10,11
Schedule RC-F--Other Assets................................................RC-11
Schedule RC-G--Other Liabilities...........................................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.........................................................RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBFs..................................................................RC-13
Schedule RC-K--Quarterly Averages..........................................RC-13
Schedule RC-L--Off-Balance Sheet Items...............................RC-14,15,16
Schedule RC-M--Memoranda................................................RC-17,18
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets..............................................RC-19,20
Schedule RC-O--Other Data for Deposit
Insurance Assessments.................................................RC-21,22
Schedule RC-R--Regulatory Capital.......................................RC-23,24
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Condition and Income.....................................................RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
Consolidated Report of Income
for the period January 1, 1996 - June 30, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
Schedule RI--Income Statement _________
| I480 |
______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________|_____________________|
<S> <C> <C>
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate .................................................. | 4011 616,395 | 1.a.(1)(a)
(b) Loans to depository institutions .............................................. | 4019 588 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ........... | 4024 286 | 1.a.(1)(c)
(d) Commercial and industrial loans ............................................... | 4012 562,807 | 1.a.(1)(d)
(e) Acceptances of other banks .................................................... | 4026 261 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................ | 4054 9,643 | 1.a.(1)(f)(1)
(2) Other ..................................................................... | 4055 97,346 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ........................ | 4056 0 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ....................................................... | 4503 0 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations .................................................... | 4504 5,232 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ........................................... | 4058 84,576 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4059 1,981 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases .................................................................... | 4505 75,341 | 1.b.(1)
(2) Tax-exempt leases ................................................................. | 4307 791 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ............................................................... | 4105 914 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4106 142 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations ... | 4027 209,142 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................ | 4506 0 | 1.d.(2)(a)
(b) Tax-exempt securities ......................................................... | 4507 2,953 | 1.d.(2)(b)
(3) Other domestic debt securities .................................................... | 3657 12,164 | 1.d.(3)
(4) Foreign debt securities ........................................................... | 3658 3,348 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) ......................... | 3659 10,212 | 1.d.(5)
e. Interest income from trading assets.................................................... | 4069 360 | 1.e.
______________________
</TABLE>
____________
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
<S> <C> <C>
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 24,925 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 1,719,407 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) .............. | 4508 8,583 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................... | 4509 133,915 | 2.a.(1)(b)(1)
(2) Other savings deposits .................................. | 4511 26,678 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ | 4174 88,690 | 2.a.(1)(b)(3)
(4) All other time deposits ................................. | 4512 214,225 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs .......................................... | 4172 50,022 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 152,094 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// |
liabilities, and other borrowed money ............................... | 4185 121,525 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases .................................................. | 4072 361 | 2.d.
e. Interest on subordinated notes and debentures ....................... | 4200 26,110 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 822,203 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 897,204 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | 21,672 | 4.a.
b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities .................................... | 4070 144,614 | 5.a.
b. Service charges on deposit accounts in domestic offices ............. | 4080 111,736 | 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum | ////////////////// |
items 8.a through 8.d)............................................... A220 10,646 5.c.
d. Other foreign transaction gains (losses) ............................ | 4076 247 | 5.d.
e. Not applicable | ////////////////// |
f. Other noninterest income: | ////////////////// |
(1) Other fee income ................................................ | 5407 372,950 | 5.f.(1)
(2) All other noninterest income* ................................... | 5408 211,593 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 851,786 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 1 | 6.a.
b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 16,126 | 6.b.
___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ...................................... | 4135 322,146 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) .... | 4217 114,912 | 7.b.
c. Other noninterest expense* .......................................... | 4092 631,554 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 1,068,612 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 674,833 | 8.
9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 280,303 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 394,530 | 10.
_________________________________________________
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
4
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________ ______________
<S> <C> <C>
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |__________________________
(item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 394,530 | 12.
_________________________________________________
</TABLE>
<TABLE>
<CAPTION>
__________
| I481 |
_______________
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 1,798 | M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 8) ............................................................... | 8431 20,910 | M.2.
3.-4. Not applicable | ////////////////// |
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) ........................................................................... | 4150 9,852 | M.5.
6. Not applicable | ////////////////// |
7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY |
accounting this calendar year, report the date of the bank's acquisition ........................ | 9106 00/00/00 | M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// |
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): | //// Bil Mil Thou |
a. Interest rate exposures ...................................................................... | 8757 1,428 | M.8.a.
b. Foreign exchange exposures ................................................................... | 8758 9,218 | M.8.b.
c. Equity security and index exposures .......................................................... | 8759 0 | M.8.c.
d. Commodity and other exposures ................................................................ | 8760 0 | M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// |
a. Net increase (decrease) to interest income.....................................................| 8761 (5,575)| M.9.a.
b. Net (increase) decrease to interest expense ...................................................| 8762 (5,752)| M.9.b.
c. Other (noninterest) allocations ...............................................................| 8763 (172)| M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions).................................| A251 0 | M.10.
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
5
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses. _________
| I483 |
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition | ////////////////// |
and Income ...................................................................................... | 3215 1,342,473 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,342,473 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 394,530 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5.
6. Changes incident to business combinations, net .................................................. | 4356 4,161,079 | 6.
7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7.
8. LESS: Cash dividends declared on common stock ................................................... | 4460 490,634 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) .............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (46,607)| 11.
12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 (1,003,722)| 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ........................................................................................ | 3210 4,357,119 | 14.
______________________
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
<TABLE>
<CAPTION>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
__________
| I486 |
__________________________________________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4651 35,701 | 4661 8,412 | 1.a.
b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ...... | 4655 2 | 4665 22 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4645 38,139 | 4617 19,005 | 4.a.
b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 102 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ........................................ | 4656 1,137 | 4666 733 | 5.a.
b. Other (includes single payment, installment, and all student loans) ... | 4657 7,864 | 4667 2,681 | 5.b.
6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6.
7. All other loans .......................................................... | 4644 826 | 4628 541 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ......................................... | 4658 3,729 | 4668 3,241 | 8.a.
b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b.
9. Total (sum of items 1 through 8) ......................................... | 4635 87,398 | 4605 34,737 | 9.
___________________________________________
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Continued
Part I. Continued
Memoranda
__________________________________________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1-3. Not applicable | ////////////////// | ////////////////// |
4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 383 | 5410 1,374 | M.4.
5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// |
a. Construction and land development ..................................... | 3582 189 | 3583 253 | M.5.a.
b. Secured by farmland ................................................... | 3584 145 | 3585 131 | M.5.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ..................... | 5411 2,650 | 5412 108 | M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties ...... | 5413 13,892 | 5414 1,231 | M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ............. | 3588 837 | 3589 395 | M.5.d.
e. Secured by nonfarm nonresidential properties .......................... | 3590 17,988 | 3591 6,294 | M.5.e.
|_________________________________________|
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.......... | 3124 266,943 | 1.
2. Recoveries (must equal part I, item 9, column B above) ........................................ | 4605 34,737 | 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................. | 4635 87,398 | 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................... | 4230 21,672 | 4.
5. Adjustments* (see instructions for this schedule) ................................ ............ | 4815 636,497 | 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// |
item 4.b) ..................................................................................... | 3123 872,451 | 6.
|____________________|
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
| I489 | <-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Federal ....................................................................................... | 4780 N/A | 1.
2. State and local................................................................................ | 4790 N/A | 2.
3. Foreign ....................................................................................... | 4795 N/A | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4.
____________________________| |
5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5.
__________________________________________________
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-6
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-D--Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.
Part I. Estimated Income from International Operations
__________
| I492 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked ................................................................... | 4837 N/A | 1.a.
b. Interest expense booked .................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8.
______________________
<CAPTION>
Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2.
______________________
</TABLE>
<TABLE>
<CAPTION>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
______________________
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-7
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
__________
| I495 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 | Income on Mortgages Held for Resale | 4461 81,194 | 1.d.
e. | TEXT 4462 | Gain From Branch Divestitures | 4462 77,976 | 1.e.
___________
f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f.
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ................................................ | 4531 135,939 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
_____________
e. | TEXT 4464 | Intercompany Corporate Support Function Charges | 4464 143,184 | 2.e.
___________
f. | TEXT 4467 | Intercompany Data Processing & Programming Charges | 4467 158,034 | 2.f.
___________
g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g.
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 | 4496 | 6.a.
___________|______________________________________________________________________________
b. | TEXT 4497 4497 | 6.b.
____________|____________________________________________________________________________________________________
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-8
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
_____________
a. | TEXT 4498 | Fleet National Bank Surplus Distribution to FFG | 4498 (1,003,722) | 7.a.
__________________________________________________________________________________________| |
b. | TEXT 4499 | | 4499 | 7.b.
___________________________________________________________________________________________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
_____________ | |
a. | TEXT 4521 | 12/31/95 Ending Balance of Pooled Entities | 4521 | 8.a.
___________________________________________________________________________________________| |
b. | TEXT 4522 | | 4522 | 8.b.
___________________________________________________________________________________________| |
____________________
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | <-
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment |X| (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-1
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
__________
| C400 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 4,130,928 | 1.a.
b. Interest-bearing balances(2) ............................................................ | 0071 46,521 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 257,441 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 7,250,067 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ...................................................................... | 0276 17,428 | 3.a.
b. Securities purchased under agreements to resell ......................................... | 0277 0 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 31,278,251 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 872,451 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 30,405,800 | 4.d.
5. Trading assets (from schedule RC-D )........................................................ | 3545 71,354 | 5.
6. Premises and fixed assets (including capitalized leases) ................................... | 2145 534,844 | 6.
7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 34,546 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 16,634 | 9.
10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 2,283,414 | 10.
11. Other assets (from Schedule RC-F) .......................................................... | 2160 3,978,638 | 11.
12. Total assets (sum of items 1 through 11) ................................................... | 2170 49,027,615 | 12.
______________________
</TABLE>
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, | /////////////////////// |
part I) ............................................................................... | RCON 2200 34,110,580 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 10,202,036 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 23,908,544 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) .............................................................................. | RCFN 2200 1,745,663 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 400 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 1,745,263 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased ............................................................... | RCFD 0278 4,302,800 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 566,036 | 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 14,411 | 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. | RCFD 3548 57,446 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With a remaining maturity of one year or less.......................................... | RCFD 2332 487,435 | 16.a.
b. With a remaining maturity of more than one year........................................ | RCFD 2333 893,259 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 11,561 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 16,634 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 1,213,219 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 1,251,452 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 44,670,496 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 125,000 | 23.
24. Common stock ............................................................................. | RCFD 3230 19,487 | 24.
25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 2,551,927 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 1,693,408 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 (32,703)| 26.b.
27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 4,357,119 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) .................................................................................. | RCFD 3300 49,027,615 | 29.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1995 ............................................................... | RCFD 6724 N/A | M.1.
__________________
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
____________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
12
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
__________
| C405 | <-
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin .................................................................... | 0022 3,402,522 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 2,655,163 | 1.a.
b. Currency and coin .................................................... | ////////////////// | 0080 747,539 | 1.b.
2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 500,301 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) ................................... | 0085 500,373 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 7,902 | 3.
a. Foreign branches of other U.S. banks ................................. | 0073 690 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks ........... | 0074 7,948 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................. | 0090 265,916 | 0090 0 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 4,177,449 | 0010 4,176,641 | 5.
___________________________________________
<CAPTION>
______________________
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) .............................................................................. | 0050 453,780 | M.1.
______________________
</TABLE>
Schedule RC-B--Securities
Exclude assets held for trading.
<TABLE>
<CAPTION>
_______
| C410 | <-
___________________________________________________________________________ ________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C>
1. U.S. Treasury securities ......... | 0211 250 | 0213 250 | 1286 1,274,624 | 1287 1,252,546 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) ................... | 1294 0 | 1295 0 | 1297 498 | 1298 505 | 2.b.
_____________________________________________________________________________________
</TABLE>
_____________
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
13
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
_____________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// |
and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// |
in the U.S.: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. General obligations ......... | 1676 150,357 |1677 150,242 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ......... | 1681 8,887 |1686 8,889 | 1690 0 | 1691 0 | 3.b.
c. Industrial development | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and similiar obligations .....| 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// |
GNMA ....................... | 1698 0 |1699 0 | 1701 861,176 | 1702 852,929 | 4.a.(1)
(2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and FHLMC ................. | 1703 908 |1705 908 | 1706 4,854,605 | 1707 4,831,023 | 4.a.(2)
(3) Other pass-through | ////////////////// |////////////////// | ///////////////////| ///////////////// |
secruities ................. | 1709 4 |1710 4 | 1711 0 | 1713 0 | 4.a.(3)
b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// |
MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
or GNMA ............... | 1714 0 |1715 0 | 1716 0 | 1717 0 | 4.b.(1)
(2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// |
guaranteed by FNMA, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// |
backed securities ..... | 1733 0 |1734 0 | 1735 518 | 1736 518 | 4.b.(3)
5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities.................. | 1737 0 |1738 0 | 1739 817 | 1741 812 | 5.a.
b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities ................. | 1742 97,035 |1743 78,878 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// |
funds ...................... | ////////////////// |////////////////// | 1747 0 | 1748 0 | 6.a.
b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// |
with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// |
able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (1) ............. | ////////////////// |////////////////// | 1752 311,734 | 1753 311,734 | 6.c.
7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// |
through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// |
column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// |
Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// |
equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
item 2.b) ..................... | 1754 257,441 | 1771 239,171 | 1772 7,303,972 | 1773 7,250,067 | 7.
|__________________________________________________________________________________|
</TABLE>
____________
1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
<CAPTION>
___________
Memoranda | C412 | <-
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Pledged securities(2) ......................................................................... | 0416 2,308,912 | M.1.
2. Maturity and repricing data for debt securities(2),(3),(4) (excluding those in | ////////////////// |
nonaccrual status): | ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 72,490 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 77,125 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 2,734,577 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 2,925,207 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 5,809,399 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 531,365 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 855,010 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 1,386,375 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 7,195,774 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2),(4) (included in | ////////////////// |
Memorandum items 2.b(1) through 2.b.(4) above)................................................. | 5519 3,700 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date (report the amortized cost at date of sale | ////////////////// |
or transfer ................................................................................... | 1778 0 | m.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost ............................................................................. | 8780 0 | M.8.a.
b. Fair Value ................................................................................. | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items 2, 3, and 5): | ////////////////// |
a. Amortized cost ............................................................................. | 8782 0 | M.9.a.
b. Fair Value ................................................................................. | 8783 0 | M.9.b.
----------------------
</TABLE>
____________
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
15
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
_________
Do not deduct the allowance for loan and lease losses from amounts | C415 | <-
reported in this schedule. Report total loans and leases, net of unearned _________________________________|________|
income. Exclude assets held for trading. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate ........................................... | 1410 11,754,916 | ////////////////// | 1.
a. Construction and land development ................................... | ////////////////// | 1415 433,880 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ....................................................... | ////////////////// | 1420 2,172 | 1.b
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ................... | ////////////////// | 1797 2,022,596 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ...................................... | ////////////////// | 5367 4,418,239 | 1.c.(2)(a)
(b) Secured by junior liens ..................................... | ////////////////// | 5368 492,952 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 559,373 | 1.d.
e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 3,825,704 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 143,682 | 2.a.
(1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ........................... | 1507 143,682 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 12,345 | 2.b.
c. To banks in foreign countries ....................................... | ////////////////// | 1510 672 | 2.c.
(1) To foreign branches of other U.S. banks ......................... | 1513 149 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................. | 1516 523 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... | 1590 5,889 | 1590 5,889 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ....................................... | 1763 12,446,547 | 1763 12,402,858 | 4.a.
b. To non-U.S. addressees (domicile) ................................... | 1764 83,521 | 1764 54,074 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ....................................................... | 1756 0 | 1756 0 | 5.a.
b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 2,217,352 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................. | 2008 161,652 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans).. | 2011 2,055,700 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................. | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) ........................................................... | 2107 167,100 | 2107 167,100 | 8.
9. Other loans ............................................................ | 1563 2,146,172 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured).. | ////////////////// | 1545 156,275 | 9.a.
b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,989,897 | 9.b.
10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 2,300,055 | 10.
a. Of U.S. addressees (domicile) ....................................... | 2182 2,300,055 | ////////////////// | 10.a.
b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 0 | 2123 0 | 11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a).. | 2122 31,278,251 | 2122 31,205,115 | 12.
___________________________________________
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page: RC-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued
Part I. Continued
___________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// |
or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
(1) To U.S. addressees (domicile) ................................... | 1687 511 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans | ////////////////// |
to individuals for household, family, and other personal expenditures)| 8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables | ////////////////// |
of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// |
above ............................................................... | 8692 0 | M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less ............................................ | 0348 10,215,575 | M.3.a.(1)
(2) Over three months through 12 months ............................. | 0349 369,421 | M.3.a.(2)
(3) Over one year through five years ................................ | 0356 3,479,742 | M.3.a.(3)
(4) Over five years ................................................. | 0357 5,791,166 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 19,855,904 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently .................................... | 4554 8,960,876 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly . | 4555 1,848,295 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually ........................................................ | 4561 250,031 | M.3.b.(3)
(4) Less frequently than every five years ........................... | 4564 12,721 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) ................................................ | 4567 11,071,923 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 30,927,827 | M.3.c.
d. FLOATING RATE LOANS WITH A REMAINING MATURITY OF ONE YEAR OR LESS | ////////////////// |
(INCLUDED IN MEMORANDUM ITEMS 3.b.(1) THROUGH 3.b.(4) ABOVE)......... | A246 1,543,411 | M.3.d.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (NOT SECURED BY REAL ESTATE) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 271,706 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// |
above .................................................................. | 5369 0 | M.5.
| ////////////////// |_____________________
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// | RCON Bil Mil Thou |
residential properties (included in Schedule RC-C, part I, item | ////////////////// | ___________________|
1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 1.655.898 | M.6.
|_________________________________________|
</TABLE>
_____________________________
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplememtal Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.
17
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-7a
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<S> <C>
Schedule RC-C--Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less
and farm loans with "original amounts" of $500,000 or less. The following guidelines should be used to determine the "original
amount" of a loan: (1) For loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the
size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or
renewed prior to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the
"original amount" is the amount currently outstanding on the report date. (2) For loan participations and syndications, the
"original amount" of the loan participation or syndication is the entire amount of the credit originated by the lead lender.
(3) For all other loans, the "original amount" is the total amount of the loan at origination or the amount currently
outstanding as of the report date, whichever is larger.
Loans to Small Businesses
</TABLE>
<TABLE>
<S> <C>
1. Indicate in the appropriate box at the right whether all or substantially all of the dollar volume of your
bank's "Loans secured by nonfarm nonresidential properties" in domestic offices reported in Schedule RC-C,
part I, item 1.e, column B, and all or substantially all of the dollar volume of your bank's
"Commercial and industrial loans to U.S. addressees" in domestic offices reported in Schedule RC-C, __________
part I, item 4.a, column B, have original amounts of $100,000 or less (If your bank has no loans ________| C415 | <-
outstanding in both of these two loan categories, place an "X" in the box marked "NO" and go to | RCON YES NO|
Item 5; otherwise, see instructions for further information.).................................. | 6999 | |///| x | 1.
___________________
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO and your bank has loans outstanding in either loan category, skip items 2.a and 2.b,
complete items 3 and 4 below, and go to item 5. _____________________
| Number of Loans |
2. Report the total number of loans currently outstanding for each of the |____________________|
following Schedule RC-C, part I, loan categories: | RCON |/////////// |
a. "Loans secured by nonfarm nonresidential properties" in domestic | ////////////////// |
offices reported in Schedule RC-C, part I, item 1.e, column B....... | 5562 N/A | 2.a.
b. "Commercial and industrial loans to U.S. addressees" in domestic | ////////////////// |
offices reported in Schedule RC-C, part I, item 4.a, column B ...... | 5563 N/A | 2.b.
______________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
____________________ ____________________
Dollar Amounts in Thousands | RCON | ///////////| RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
3. Number and amount currently outstanding of "Loans secured by nonfarm | /////////////////////////////////////// | 1.
nonresidential properties" in domestic offices reported in Schedule RC-C | /////////////////////////////////////// | 1.a.
part I item 1.e, column B (sum of items 3.a through 3.c must be less | /////////////////////////////////////// |
or equal to Schedule RC-C, part I, item 1.e, column B): | /////////////////////////////////////// | 1.b
a. With original amounts of $100,000 or less ........................... | 5564 1,988 | 5565 76,370 | 3.a.
b. With original amounts of more than $100,000 through $250,000 ........ | 5566 2,805 | 5567 332,639 | 3.b.
c. With original amounts of more than $250,000 through $1,000,000 ...... | 5568 2,736 | 5569 952,476 | 3.c.
4. Number and amount currently outstanding of "Commercial and industrial | /////////////////////////////////////// |
loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | /////////////////////////////////////// |
part I, item 4.a, column B (sum of items 4.a through 4.c must be less | /////////////////////////////////////// |
than or equal to Schedule RC-C, part I, item 4.a, column B): | /////////////////////////////////////// |
a. With original amounts of $100,000 or less ........................... | 5570 11,433 | 5571 337,759 | 4.a.
b. With original amounts of more than $100,000 through $250,000 ........ | 5572 2,127 | 5573 228,713 | 4.b.
c. With original amounts of more than $250,000 through $1,000,000 ...... | 5574 1,968 | 5575 601,126 | 4.c.
___________________________________________
</TABLE>
17a
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-7b
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
Schedule RC-C -- Continued
Part II. Continued
Agricultural Loans to Small Farms
<TABLE>
<S> <C> <C>
5. Indicate in the appropriate box at the right whether all or substantially all of the
dollar volume of your bank's "Loans secured by farmland (including farm residential
and other improvements)" in domestic offices reported in Schedule RC-C, part I, item
1.b, column B, and all or substantially all of the dollar volume of your bank's
"Loans to finance agricultural production and other loans to farmers" in domestic
offices reported in Schedule RC-C, part I, item 3, column B, have original amounts
of $100,000 or less (If your bank has no loans outstanding in both of these two YES NO
loan categories, place an "X" in the box marked "NO" and do not complete items 7 _______________________
and 8; otherwise, see instructions for further information.)................................... | 6860 | | /// | X | 5.
|_____________________|
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items 6.a and 6.b
and complete items 7 and 8 below.
</TABLE>
<TABLE>
<S> <C>
______________________
| Number of Loans |
6. Report the total number of loans currently outstanding for each of the |____________________|
following Schedule RC-C, part I, loan categories: | RCON |//////////// |
a. "Loans secured by farmland (including farm residential and other |______| |
improvements)" in domestic offices reported in Schedule RC-C, part I, | ////////////////// |
item 1.b, column B........................................................ | 5576 N/A | 6.a.
b. "Loans to finance agricultural production and other loans to farmers" in | ////////////////// |
domestic offices reported in Schedule RC-C, part I, item 3, column B...... | 5577 N/A | 6.b.
|____________________|
</TABLE>
<TABLE>
<S> <C> <C>
_____________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
|_____________________|______________________|
Dollar Amounts in Thousands | RCON |/////////////| RCON Bil Mil Thou |
________________________________________________________________________________| ______| |_____________________ |
7. Number and amount currently outstanding of "Loans secured by farmland | ////////////////////////////////////////// |
(including farm residential and other improvements)" in domestic offices | ////////////////////////////////////////// |
reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | ////////////////////////////////////////// |
through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | ////////////////////////////////////////// |
column B): | ////////////////////////////////////////// |
a. With original amounts of $100,000 or less............................... | 5578 18 | 5579 292 | 7.a.
b. With original amounts of more than $100,000 through $250,000............ | 5580 8 | 5581 850 | 7.b.
c. With original amounts of more than $250,000 through $500,000............ | 5582 4 | 5583 1,030 | 7.c.
8. Number and amount currently outstanding of "Loans to finance agricultural | ////////////////////////////////////////// |
production and other loans to farmers" in domestic offices reported in | ////////////////////////////////////////// |
Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | ////////////////////////////////////////// |
must be less than or equal to Schedule RC-C, part I, item 3, column B): | ////////////////////////////////////////// |
a. With original amounts of $100,000 or less............................... | 5584 46 | 5585 992 | 8.a.
b. With original amounts of more than $100,000 through $250,000............ | 5586 17 | 5587 1,877 | 8.b.
c. With original amounts of more than $250,000 through $500,000............ | 5588 4 | 5589 1,054 | 8.c.
|_____________________|______________________|
</TABLE>
17b
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-D--Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
__________
| C420 |
__________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou|
__________________________________________________________________________________________________| ________________________|
<S> <C> <C>
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) .......................................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices: | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// |
(include CMOs, REMICs, and stripped MBS) ................................................. | RCON 3535 0 | 4.b.
c. All other mortgage-backed securities ......................................................| RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6.
7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ...................................................................... | RCON 3543 66,696 | 11.a.
b. In foreign offices ....................................................................... | RCFN 3544 4,658 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 71,354 | 12.
<CAPTION>
___________________________
___________________________
| ///////// Bil Mil Thou |
LIABILITIES | ________________________|_
<S> <C> <C>
13. Liability for short positions ............................................................... | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts ................................................................................... | RCFD 3547 57,446 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 57,446 | 15.
___________________________
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-9
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
__________
| C425 | <-
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
_________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including| demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations .......... | 2201 8,615,650 | 2240 8,158,203 | 2346 22,594,478 | 1.
2. U.S. Government ...................................... | 2202 58,650 | 2280 58,605 | 2520 42,512 | 2.
3. States and political subdivisions in the U.S. ........ | 2203 818,151 | 2290 706,072 | 2530 702,686 | 3.
4. Commercial banks in the U.S. ......................... | 2206 836,005 | 2310 836,005 | 2550 771 | 4.
5. Other depository institutions in the U.S. ............ | 2207 221,571 | 2312 221,571 | 2349 2,968 | 5.
6. Banks in foreign countries ........................... | 2213 18,445 | 2320 18,445 | 2236 0 | 6.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) .................... | 2216 108 | 2300 108 | 2377 0 | 7.
8. Certified and official checks ........................ | 2330 198,585 | 2330 198,585 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) ........................................... | 2215 10,767,165 | 2210 10,197,594 | 2385 23,343,415 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 2,735,425 | M.1.a.
b. Total brokered deposits ..................................................................... | 2365 1,636,611 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ........................................... | 2343 2,350 | M.1.c.(1)
(2) Issued EITHER in denominations of $100,000 OR in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ........................ | 2344 1,634,261 | M.1.c.(2)
d. MATURITY DATA FOR BROKERED DEPOSITS: | ////////////////// |
(1) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000 WITH A REMAINING | ////////////////// |
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.c.(1) ABOVE)................. | A243 171 | M.1.d.(1)
(2) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE WITH A REMAINING | ////////////////// |
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.b ABOVE)..................... | A244 509,265 | M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 457,587 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................... | 6810 10,738,339 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ................................................. | 0352 2,655,659 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................... | 6648 7,247,099 | M.2.b.
c. Time certificates of deposit of $100,000 or more ............................................ | 6645 2,702,318 | M.2.c.
d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above) .................................................. | 2398 569,571 | M.3.
4. Not applicable
______________________
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-10
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
_________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of | ////////////////// |
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) | ////////////////// |
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: | ////////////////// |
(1) Three months or less.................................................................... | A225 1,684,248 | M.5.a.(1)
(2) Over three months through 12 months..................................................... | A226 3,493,722 | M.5.a.(2)
(3) Over one year........................................................................... | A227 2,002,999 | M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently............................................................ | A228 66,130 | M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly......................... | A229 0 | M.5.b.(2)
(3) Less frequently than annually........................................................... | A230 0 | M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above)............... | A231 45,084 | M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates | ////////////////// |
of deposit of $100,000 or more and open-account time deposits of $100,000 or more) | ////////////////// |
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum | ////////////////// |
items 2.c and 2.d above):(1) | ////////////////// |
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | A232 534,657 | M.6.a.(1)
(2) Over three months through 12 months .................................................... | A233 754,429 | M.6.a.(2)
(3) Over one year through five years ....................................................... | A234 1,282,541 | M.6.a.(3)
(4) Over five years ........................................................................ | A235 36,761 | M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | A236 31,182 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | A237 37,950 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | A238 24,798 | M.6.b.(3)
(4) Less frequently than every five years .................................................. | A239 0 | M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)............... | A240 19,186 | M.6.c.
______________________
</TABLE>
_______________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
20
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-11
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 1,730,162 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).... | 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 15,501 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 1,745,663 | 7.
Memorandum
Dollar Amounts in Thousands |RCFN Bil Mil Thou |
________________________________________________________________________________________________________________________
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) |A245 1,745,263 | M.1.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F--Other Assets
__________
| C430 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Income earned, not collected on loans ........................................................ | RCFD 2164 167,538 | 1.
2. Net deferred tax assets(1) ................................................................... | RCFD 2148 0 | 2.
3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 134,288 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2168 3,676,812 | 4.
_____________ ___________________________
a. | TEXT 3549 | Mortgages held for Resale | RCFD 3549 | 1,858,683 | /////////////////////// | 4.a.
_________________________________________________________________| | | |
___________
b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b.
___________
c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 3,978,638 | 5.
___________________________
<CAPTION>
Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G--Other Liabilities
__________
| C435 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 58,011 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 594,954 | 1.b.
2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 119,644 | 2.
3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2938 478,843 | 4.
_____________ ___________________________
a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 1,251,452 | 5.
</TABLE>
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-12
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
__________
| C440 | <-
____________ ________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 16,634 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 16,634 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 17,428 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 4,868,836 | 4.
5. Other borrowed money ............................................................................ | 3190 1,380,694 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 1,669,058 | 7.
| ////////////////// |
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 48,946,123 | 8.
| ////////////////// |
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 42,919,946 | 9.
______________________
</TABLE>
<TABLE>
<CAPTION>
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
<S> <C> <C>
10. U.S. Treasury securities ....................................................................... | 1779 1,252,796 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) .................................................................................... | 1785 505 | 11.
12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 159,244 | 12.
13. Mortgage-backed securities (MBS): | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 5,684,860 | 13.a.(1)
(2) Other pass-through securities ........................................................... | 1869 4 | 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1877 0 | 13.b.(1)
(2) All other mortgage-backed securities..................................................... | 2253 518 | 13.b.(2)
14. Other domestic debt securities ................................................................. | 3159 812 | 14.
15. Foreign debt securities ........................................................................ | 3160 97,035 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds ................................................................. | 3161 0 | 16.a.
b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b.
c. All other equity securities ................................................................. | 3169 311,734 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 7,507,508 | 17.
______________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 0 | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-13
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. __________
| C445 | <-
____________ ________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) ................. | 2133 0 | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ..................................................................................... | 2076 0 | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) .... | 2077 0 | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ..................................... | 2898 0 | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ....................................................................... | 2379 0 | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ..... | 2381 0 | 6.
______________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule RC-K--Quarterly Averages (1)
__________
| C455 | <-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions .............................. | RCFD 3381 10,737 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ...... | RCFD 3382 6,349,267 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) ................... | RCFD 3383 155,938 | 3.
4. a. Other debt securities(2) ............................................................. | RCFD 3647 98,458 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock). | RCFD 3648 347,675 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3365 812,114 | 5.
6. Loans: | ///////////////////// // |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ...................................................................... | RCON 3360 31,884,320 | 6.a.(1)
(2) Loans secured by real estate ..................................................... | RCON 3385 14,940,513 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers .............. | RCON 3386 5,935 | 6.a.(3)
(4) Commercial and industrial loans .................................................. | RCON 3387 12,923,362 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ...... | RCON 3388 2,224,980 | 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............ | RCFN 3360 70,458 | 6.b.
7. Trading assets .......................................................................... | RCFD 3401 105,824 | 7.
8. Lease financing receivables (net of unearned income) .................................... | RCFD 3484 2,231,479 | 8.
9. Total assets (4) ........................................................................ | RCFD 3368 52,282,230 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............ | RCON 3485 965,535 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................ | RCON 3486 9,210,475 | 11.a.
b. Other savings deposits ............................................................... | RCON 3487 3,907,216 | 11.b.
c. Time certificates of deposit of $100,000 or more ..................................... | RCON 3345 2,653,452 | 11.c.
d. All other time deposits .............................................................. | RCON 3469 7,513,443 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs.. | RCFN 3404 1,765,593 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3353 6,363,286 | 13.
14. Other borrowed money .................................................................... | RCFD 3355 2,670,145 | 14.
___________________________
</TABLE>
_______________
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the
quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-14
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________
| C460 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines ............................................................................... | 3814 1,637,875 | 1.a.
b. Credit card lines .......................................................................... | 3815 32,940 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ....................................... | 3816 648,369 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate ................................... | 6550 383,022 | 1.c.(2)
d. Securities underwriting .................................................................... | 3817 0 | 1.d.
e. Other unused commitments ................................................................... | 3818 18,626,522 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 2,337,268 | 2.
___________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 158,029 | ////////////////// | 2.a.
___________________________
3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 175,703 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
___________________________
others .......................................................... | RCFD 3822 | 12,580 | ////////////////// | 3.a.
___________________________
4. Commercial and similar letters of credit ...................................................... | 3411 176,335 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ............................................................................ | 3428 16,524 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank ........................................................................... | 3429 7,409 | 6.
7. Securities borrowed ........................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) ........................................................... | 3433 0 | 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for | ////////////////// |
Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 246,244 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 246,244 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 33,550 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 33,550 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the | ////////////////// |
Riegle Community Development and Regulatory Improvement Act of 1994: | ////////////////// |
(1) Outstanding principal balance of small business obligations transferred | ////////////////// |
as of the report date................................................................... | A249 0 | 9.d.(1)
(2) Amount of retained recourse on these obligations as of the report date.................. | A250 0 | 9.d.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a.
b. Gross commitments to sell .................................................................. | 3435 0 | 10.b.
11. Spot foreign exchange contracts ............................................................... | 8765 622,366 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12.
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a.
b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d.
_____________ _______________________________________________
Dollar Amounts in Thousands RCFD Bil Mil Thou
_________________________________________________________________________________________________________________________
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital") | 5591 0 | 13.
_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d.
_____________
________________________________________________
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-15
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
_____________
| C461 | <-
_________________________________________ ____________________________|___________|
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou |
_______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
____________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
14. Gross amounts (e.g., notional | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
amounts) (for each column, sum of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
items 14.a through 14.e must equal | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
sum of items 15, 16.a, and 16.b): |___________________|____________________|___________________ |____________________|
a. Futures contracts ............. | 1,229,392 | 0 | 0 | 36,486 | 14.a.
|___________________|____________________|____________________|____________________|
| RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 |
|___________________|____________________|____________________|____________________|
b. Forward contracts ............. | 2,576,500 | 1,931,682 | 0 | 21,832 | 14.b.
|___________________|____________________|____________________|____________________|
| RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 |
|___________________|____________________|____________________|____________________|
c. Exchange-traded option contracts:| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
|___________________|____________________|____________________|____________________|
(1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1)
|___________________|____________________|____________________|____________________|
| RCFD 8701 | RCFD 8702 | RCFD 8703 | RCFD 8704 |
|___________________|____________________|____________________|____________________|
(2) Purchased options ........ | 450,000 | 0 | 0 | 2,206 | 14.c.(2)
|___________________|____________________|____________________|____________________|
| RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 |
|___________________|____________________|____________________|____________________|
d. Over-the-counter option contracts: | //////////////////| ///////////////// | ///////////////// | //////////////// |
(1) Written options .......... | 1,324,980 | 3,887 | 0 | 0 | 14.d.(1)
|___________________|____________________|____________________|____________________|
| RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 |
|___________________|____________________|____________________|____________________|
(2) Purchased options ........ | 10,131,934 | 3,887 | 0 | 0 | 14.d.(2)
|___________________|____________________|____________________|____________________|
| RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 |
|___________________|____________________|____________________|____________________|
e. Swaps ............................ | 19,502,262 | 0 | 0 | 0 | 14.e.
|___________________|____________________|____________________|____________________|
| RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 |
|___________________|____________________|____________________|____________________|
15. Total gross notional amount of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading ......................... | 3,386,305 | 1,939,456 | 0 | 2,206 | 15.
|___________________|____________________|____________________|____________________|
| RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 |
|___________________|____________________|____________________|____________________|
16. Total gross notional amount of | ///////////////// | //////////////// | ///////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
purposes other than trading: | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
|___________________|____________________|____________________|____________________|
a. Contracts marked to market ... | 4,202,500 | 0 | 0 | 36,486 | 16.a.
|___________________|____________________|____________________|____________________|
| RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 |
|___________________|____________________|____________________|____________________|
b. Contracts not marked to market | 27,626,263 | 0 | 0 | 21,832 | 16.b.
|___________________|____________________|____________________|____________________|
| RCFD 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 |
|___________________|____________________|____________________|____________________|
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-16
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
<CAPTION>
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
Dollar Amounts in Thousands | Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
___________________________________| Contracts | Contracts | Contracts | Contracts |
| Off-balance Sheet Derivatives |___________________|____________________|____________________|____________________|
| Position Indicators |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
|_____________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
17. Gross fair values of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8733 29,782 | 8734 41,523 | 8735 0 | 8736 58 | 17.a.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8737 20,932 | 8738 36,511 | 8739 0 | 8740 0 | 17.a.(2)
b. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are marked | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8741 524 | 8742 0 | 8743 0 | 8744 1,452 | 17.b.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8745 2,834 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2)
c. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are not | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
marked to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value .................. | 8749 64,085 | 8750 0 | 8751 0 | 8752 100 | 17.c.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8753 111,703 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2)
|__________________________________________________________________________________|
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________________________________
<S> <C> <C>
1. -2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ................................................ | 3833 16,829,602 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
exceeding one year conveyed to others ................................|RCFD 3834 | 1,310,691 | ////////////////// | M.3.a.
________________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 341,139 | M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// |
by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles (to be completed for the | ////////////////// |
September report only)....................................................................... | 2741 N/A | M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)................................... | 2742 0 | M.5.b.
c. All other consumer installment credit (including mobile home loans)(to be completed for the | ////////////////// |
September report only........................................................................ | 2743 N/A | M.5.c
|____________________|
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-17
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9| _____________
| C465 |
_________|___________|
Schedule RC-M--Memoranda | |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// |
shareholders, and their related interests as of the report date: | ////////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// |
shareholders and their related interests ..................................................... | 6164 605,294 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// |
extensions of credit by the reporting bank (including extensions of credit to | ////////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// |
___________________________| ////////////////// |
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 24 | ////////////////// |
___________________________| ////////////////// | 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2.
3. Not applicable. | ////////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// |
(include both retained servicing and purchased servicing): | ////////////////// |
a. Mortgages serviced under a GNMA contract ...................................................... | 5500 28,855,729 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ////////////////// |
(1) Serviced with recourse to servicer ........................................................ | 5501 55,604 | 4.b.(1)
(2) Serviced without recourse to servicer ..................................................... | 5502 32,340,522 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ////////////////// |
(1) Serviced under a regular option contract .................................................. | 5503 190,640 | 4.c.(1)
(2) Serviced under a special option contract .................................................. | 5504 38,282,672 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ............................................ | 5505 8,508,320 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// |
equal Schedule RC, item 9): | ////////////////// |
a. U.S. addressees (domicile) .................................................................... | 2103 16,297 | 5.a.
b. Non-U.S. addressees (domicile) ................................................................ | 2104 337 | 5.b.
6. Intangible assets: | ////////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 1,483,959 | 6.a.
b. Other identifiable intangible assets: | ////////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 126,463 | 6.b.(2)
c. Goodwill ...................................................................................... | 3163 672,992 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 2,283,414 | 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ////////////////// |
are otherwise qualifying for regulatory capital purposes ...................................... | 6442 0 | 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ////////////////// |
redeem the debt ...................................................................................| 3295 75,000 | 7.
______________________
</TABLE>
- ------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
27
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-18
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M--Continued ________________________
Dollar Amounts in Thousands | Bil Mil Thou|
_____________________________________________________________________________________________ |_______________________|
<S> <C> <C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ....................... | RCON 5508 4,537 | 8.a.(2)(a)
(b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 8,067 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 740 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 21,202 | 8.a.(2)(e)
(f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 34,546 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 125,000 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party products): | /////////////////////// |
a. Money market funds .................................................................. | RCON 6441 55,245 | 10.a.
b. Equity securities funds ............................................................. | RCON 8427 108,359 | 10.b.
c. Debt securities funds ............................................................... | RCON 8428 13,250 | 10.c.
d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d.
e. Annuities ........................................................................... | RCON 8430 102,292 | 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a through | /////////////////////// |
10.e. above) ........................................................................... | RCON 8784 150,100 | 10.f.
_________________________
</TABLE>
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. |
______________________
| |
_________________________________________________________________________________________________________________________________
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-19
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
The FFIEC regards the information reported in __________
all of Memorandum item 1, in items 1 through 10, | C470 | <-
column A, and in Memorandum items 2 through 4, ______________________________________________________ ________
column A, as confidential. | (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1245 | 1246 71,390 | 1247 223,962 | 1.a.
b. To non-U.S. addressees (domicile) ............ | 1248 | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | ///// | ////////////////// | ////////////////// |
acceptances of other banks: | ///// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | ///// | ////////////////// | ////////////////// |
institutions ................................. | 5377 | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................. | 5380 | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | ///// | ////////////////// | ////////////////// |
other loans to farmers .......................... | 1594 | 1597 385 | 1583 531 | 3.
4. Commercial and industrial loans: | ///// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1251 | 1252 11,945 | 1253 108,334 | 4.a.
b. To non-U.S. addressees (domicile) ............ | 1254 | 1255 0 | 1256 0 | 4.b.
5. Loans to individuals for household, family, and | ///// | ////////////////// | ////////////////// |
other personal expenditures: | ///// | ////////////////// | ///////////////// |
a. Credit cards and related plans ............... | 5383 | 5384 1,187 | 5385 669 | 5.a.
b. Other (includes single payment, installment, | ///// | ////////////////// | ////////////////// |
and all student loans) ....................... | 5386 | 5387 22,600 | 5388 8,465 | 5.b.
6. Loans to foreign governments and official | ///// | ////////////////// | ////////////////// |
institutions .................................... | 5389 | 5390 0 | 5391 0 | 6.
7. All other loans ................................. | 5459 | 5460 14,909 | 5461 1,919 | 7.
8. Lease financing receivables: | ///// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ................ | 1257 | 1258 95 | 1259 6,544 | 8.a.
b. Of non-U.S. addressees (domicile) ............ | 1271 | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | ///// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets) . | 3505 | 3506 0 | 3507 85,778 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
________________________________________________________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
10. Loans and leases reported in items 1 | | | |
through 8 above which are wholly or partially | ///// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government ............... | 5612 | 5613 18,447 | 5614 21,415 | 10.
a. Guaranteed portion of loans and leases | ///// | ////////////////// | ////////////////// |
included in item 10 above .................... | 5615 | 5616 18,250 | 5617 16,952 | 10.a.
________________________________________________________________
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-20
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Continued
__________
| C473 | <-
______________________________________________________ ________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in | ///// | /////////////////// | ///////////////// |
Schedule RC-N, items 1 through 8, above (and not | ///// | //// | |
reported in Schedule RC-C, part I, Memorandum | ///// | //// | |
item 2) ......................................... | 1658 | 1659 | | M.1.
2. Loans to finance commercial real estate, | ///// | //// | |
construction, and land development activities | ///// | //// | |
(not secured by real estate) included in | ///// | /////////////////// | ///////////////// |
Schedule RC-N, items 4 and 7, above ............. | 6558 | 6559 826 | 6560 7,043 | M.2.
|____________________|____________________ |___________________
3. Loans secured by real estate in domestic offices | RCON | RCON Bil Mil Thou | RCON Bil Mil Thou|
|___________________ |____________________ ____________________
(included in Schedule RC-N, item 1, above): | ///// | ////////////////// | ////////////////// |
a. Construction and land development ............ | 2759 | 2769 1,100 | 3492 26,422 | M.3.a.
b. Secured by farmland .......................... | 3493 | 3494 161 | 3495 0 | M.3.b.
c. Secured by 1-4 family residential properties: | ///// | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ///// | ////////////////// | ////////////////// |
1-4 family residential properties and | ///// | ////////////////// | ////////////////// |
extended under lines of credit ........... | 5398 | 5399 5,114 | 5400 17,374 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ///// | ////////////////// | ////////////////// |
residential properties ................... | 5401 | 5402 58,079 | 5403 75,430 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ///// | ////////////////// | ////////////////// |
residential properties ....................... | 3499 | 3500 521 | 3501 12,491 | M.3.d.
e. Secured by nonfarm nonresidential properties . | 3502 | 3503 6,415 | 3504 92,245 | M.3.e.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other | ///// | ////////////////// |
commodity and equity contracts: | ///// | ////////////////// |
a. Book value of amounts carried as assets ...... | 3522 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ///// | ////////////////// |
positive replacement cost .................... | 3529 | 3530 0 | M.4.b.
___________________________________________
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-21
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
______________________
Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 |
|____________________|
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ...................................................... | 0030 216 | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits ................................... | 0031 N/A | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 N/A | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits ..................................................... | 3510 216 | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits .................................. | 3512 N/A | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 N/A | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 3520 101,763 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries .............................................. | 2211 206,111 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 20,089 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 8 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// |
of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, item 4 or 5, column B)..... | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// |
item 4 or 5, column A or C, but not column B).............................................. | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ...................................................................... | 5516 769 | 7.a.
b. Unamortized discounts ..................................................................... | 5517 0 | 7.b.
______________________
_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | |
| the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 2,188,589 | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 8432 0 | 10.
______________________
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</TABLE>
31
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-22
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// |
certain reciprocal demand balances: | ////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// |
between the reporting bank and savings associations were reported on a net basis | ////////////////// |
rather than a gross basis in Schedule RC-E .................................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-E .......................... | A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// |
collection were included in the calculation of net reciprocal demand balances between | ////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// |
in Schedule RC-E ............................................................................ | A182 0 | 11.c.
____________________
Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________ ___________________________|____________________|
1. Total deposits in domestic offices of the bank (sum of Memorandum it ems 1.a. (1) and | ////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposits accounts of $100,000 or less: | ////////////////// |
(1) amount of deposit accounts of $100,000 or less ....................................... | 2702 19,755,631 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
completed for the June report only) .............................|RCON 3779 3,742,107 | ////////////////// | M.1.a.(2)
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 ..................................... | 2710 14,354,949 | M.1.b.(1)
Number | ////////////////// |
(2) Number of deposit accounts of more than $100,000 ................|RCON 2722 27,062 | ////////////////// | M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by mutiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the ____________YES_______NO__
estimated described above .................................................................. | 6861| |///| x | M.2.a.
____________________
b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou|
determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b.
_____________________________________________________________________________________________________________________________
| C477 | <-
Person to whom questions about the Reports of Condition and Income should be directed: __________
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
</TABLE>
32
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-23
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than
$1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C>
____________
| C480 | <-
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____|__________|
only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO |
box at the right whether the bank has total capital greater than or equal to eight percent___________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1)| Other |
_________________________________________________________________ | and Intermediate | Limited- |
| NOTE: All banks are required to complete items 2 and 3 below | | Term Preferred | Life Capital |
| See optional worksheet for items 3.a through 3.f. | | Stock | Instruments |
|________________________________________________________________| ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | | |
weighted average maturity of at least five years) with a remaining | | |
maturity of: | | |
a. One year or less ...................................................... | 3780 25,737 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 737 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 10,745 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 1,101,000 | 3791 0 | 2.f.
3. Amounts used in calculating regulatory capital ratios (report amounts | ////////////////// | ////////////////// |
determined by the bank for its own internal regulatory capital analyses): | ////////////////// | RCFD Bil Mil Thou |
a. Tier 1 capital......................................................... | ////////////////// | 8274 3,590,367 | 3.a.
b. Tier 2 capital......................................................... | ////////////////// | 8275 1,755,646 | 3.b.
c. Total risk-based capital............................................... | ////////////////// | 3792 5,346,013 | 3.c.
d. Excess allowance for loan and lease losses............................. | ////////////////// | A222 297,250 | 3.d.
e. Risk-weighted assets................................................... | ////////////////// | A223 45,718,856 | 3.e.
f. "Average total assets"................................................. | ////////////////// | A224 51,482,775 | 3.f.
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memoranda items 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items assigned | | |
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 2,147,648 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 1,115,265 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 101,488 | 4.b.
___________________________________________
</TABLE>
_____
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-24
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Continued
___________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ....................... | 3798 714,375 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2)
(3) All other ......................................................... | 3800 8,774,345 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 791,065 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3802 5,265,173 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 409,680 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3804 31,799,547 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 10,122,631 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) .............................................. | 3806 83,713 | ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) .......................................... | 3807 49,900,066 | ////////////////// | 9.
___________________________________________
Memoranda
______________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// |
risked-based capital standards .................................................................| 8764 135,825| M.1.
|___________________|
_____________________________________________________________________
| With a remaining maturity of |
|____________________________________________________________________|
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
|______________________|______________________|______________________|
|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|
|______________________|______________________|______________________|
2. Notional principal amounts of | | | |
off-balance sheet derivative contracts(3):| | | |
a. Interest rate contracts ................. | 3809 8,320,956 | 8766 18,597,686 | 8767 801,055 | M.2.a.
b. Foreign exchange contracts .............. | 3812 1,578,420 | 8769 101,907 | 8770 0 | M.2.b.
c. Gold contracts .......................... | 8771 15,291 | 8772 0 | 8773 0 | M.2.c.
d. Other precious metals contracts ......... | 8774 8,748 | 8775 0 | 8776 0 | M.2.d.
e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e.
f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f.
|____________________________________________________________________|
</TABLE>
_________________
1) Do not report in column B the risk-weighted amount of
assets reported in column A.
2) Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of these
securities in items 4 through 7 above. Item 8 also includes on-balance sheet
asset values (or portions thereof) of off-balance sheet interest rate, foreign
exchange rate, and commodity contracts and those contracts (e.g., futures
contracts) not subject to risk-based capital. Exclude from item 8 margin
accounts and accrued receivables as well as any portion of the allowance for
loan and lease losses in excess of the amount that may be included in Tier 2
capital. 3) Exclude foreign exchange contracts with an original maturity of 14
days or less and all futures contracts.
34
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK
Address: ONE MONARCH PLACE Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
City, State, Zip: SPRINGFIELD, MA 01102 Page RC-25
FDIC Certificate No.: 02499
</TABLE>
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on June 30, 1996
FLEET NATIONAL BANK SPRINGFIELD , MASSACHUSETTS
- ------------------- ----------------- -------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public.
BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL
BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS
IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE
MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks
choosing not to make a statement may check the "No comment" box below and
should make no entries of any kind in the space provided for the narrative
statement; i.e., DO NOT enter in this space such phrases as "No statement,"
"Not applicable," "N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should
not exceed 100 words. Further, regardless of the number of words, the
statement must not exceed 750 characters, including punctuation, indentation,
and standard spacing between words and sentences. If any submission should
exceed 750 characters, as defined, it will be truncated at 750 characters with
no notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in computer-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
__________________________________________________________________________
No comment |X| (RCON 6979) | c471 | C472 |<-
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
/s/__Gero DeRosa_______________________________ ___7/25/96________
Signature of Executive Officer of Bank Date of Signature
35
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